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WGL: No Way to Fix Leaks in Time for Cove Point Expansion

The injection of hexane into regasified liquefied natural gas (LNG) volumes from Dominion Cove Point LP's LNG terminal in Maryland has reduced the number of incremental coupling leaks on the distribution system of Washington Gas Light (WGL), but hexane alone will not solve the leakage problem that has plagued the utility for several years, a WGL executive said last Thursday.

"Hexane [appears to be] the correct solution on paper. But in reality it still creates leaks," said Douglas A. Staebler, WGL vice president of engineering and construction, during a technical conference at the Federal Energy Regulatory Commission headquarters in Washington, DC. FERC called the technical conference to address the narrow issue of whether the Cove Point terminal expansion project can go forward without causing unsafe leaks on the DC-based utility's system, which serves parts of Virginia, Maryland and the District of Columbia [CP05-130].

Even with the injection of hexane, which helps to eliminate the role of heavy hydrocarbons in causing the leaks, WGL told FERC that it experienced an increase in leaks in what it called its Virginia Reintroduction Area, which represents 5% of the coupled pipe on its system (91 miles of coupled main). Cove Point regasified LNG blended with hexane was introduced into this area of WGL's system in March 2007, and a leak survey was conducted from February through June of this year. The survey found that the leak rates in the Virginia area rose 247% from 200 leaks to 500 leaks during the period.

Although high, the 247% rise was far below the 1,692% increase to more than 1,600 coupling leaks in 2004 that occurred when unblended regasified LNG was introduced into its system in Prince George's County in Maryland, according to WGL. After ongoing remediation efforts, the utility estimates that it has reduced leaks in Prince George's County to less than 100 this year. But WGL fears that the number of leaks could balloon when additional volumes of LNG, even those which are hexane-treated, flow on its distribution system.

"Extrapolating this 247% increase to other parts of the balance of the coupled pipe [on WGL's] system amounts to the company experiencing an incremental 3,500 coupling leaks per year, primarily in the winter" as a result of Cove Point's expansion, Staebler said. The leaks are projected to occur even though WGL has constructed three hexane treatment plants in Charles County, MD; Rockville, MD; and Fairfax, VA, which is due to be completed in November. WGL estimated it would take 14 years to completely fix the incremental 3,500 coupled pipe leaks, and would cost $525.5 million.

Total projected leaks post-Cove Point expansion on WGL's system could go as high as 6,099, according to WGL.

"Nothing...ties Cove Point to unsafe leaks" on WGL, countered Paul Ruppert, vice president of engineering and plant operations at Dominion.

Although the utility has taken several steps to mitigate the impact of regasified LNG on its system, such as building the hexane treatment facilities, "it is not possible for the company acting alone to provide a possible solution to unsafe leakage in time for Dominion's proposed Cove Point expansion in-service date of fall 2008," he said.

Aside from the hexane injections, WGL is proposing two possible solutions. One is to isolate the bulk of Cove Point's LNG volumes from the WGL distribution system. Specifically, WGL proposes that more volumes be shifted from Columbia Gas Transmission's 26-inch diameter line to its 30-inch diameter line, allowing the regasified LNG to bypass several of the affected areas on WGL's distribution line. Columbia is WGL's largest supplier of natural gas. The second option calls for regasified LNG to be blended with Gulf of Mexico gas on the Transcontinental Gas Pipe Line (Transco) that runs through WGL's distribution area.

Immediately following the conference, FERC's Office of Energy Projects issued a data request to Columbia Gas Transmission, asking it "what would be required" for the pipeline to flow LNG from the Cove Point terminal exclusively on Columbia's 30-inch diameter line, thus avoiding the delivery of regasified LNG into WGL's Dranesville (VA) and Rockville gate stations on Columbia's 26-inch diameter line

The Commission also asked Columbia about the status of any discussions it has had with WGL concerning arranging for additional non-LNG supplies to be delivered into the utility's system to minimize WGL's exposure to LNG. And Columbia was questioned about whether it has conducted any studies or engaged in discussions with WGL, Dominion Transmission and/or Transco on possible operational measures that they could implement to reduce WGL's exposure to unblended LNG. FERC staff posed the same questions to Transco.

With respect to WGL, agency staff asked the utility to "explain why it is appropriate for WGL to assume that it will experience a similar increase in leaks on the rest of its mechanically coupled system in Virginia and Maryland when it is exposed to LNG that has been treated with hexane, especially given that the Virginia Reintroduction area has been more exposed to unblended LNG prior to hexane injections than other parts of WGL's system in Virginia Maryland?"

In addition, FERC staff called on WGL to identify any discussions that it has had with interconnecting interstate pipelines (Columbia, Transco and Dominion Transmission) about operational modifications to the interstate systems to limit WGL's exposure to LNG. It also asked WGL to specify "what levels of unblended or minimally blended LNG over and above current levels can WGL safely have delivered into its system via Columbia's system at the Dranesville and Rockville gates, assuming that hexane injection is taking place at these gates."

FERC quizzed Dominion Cove Point on a number of issues as well, including the expected post expansion flow (maximum and average daily for winter and summer) of regasified LNG from its terminal to Columbia, and the daily sendout from the terminal for each day during WGL's "reintroduction" period in Virginia.

The Commission called the technical conference after the U.S. Court of Appeals for the District of Columbia Circuit last month vacated a FERC order approving Dominion Cove Point's LNG terminal expansion in Lusby, MD, ruling that the evidence did not support the agency's conclusion that WGL can fix widespread leaks on its system before the expansion goes into operation (see NGI, July 21).

Dominion Cove Point and Dominion Transmission Inc. immediately called on FERC to affirm and reissue all of the agency's authorizations for the $700 million expansion of their import terminal and associated pipeline facilities. The affiliates asked the Commission to issue a decision by Aug. 29 because petitions to challenge the appellate court ruling vacating FERC's authorizations for the expansion are due on Sept. 2, and the court's mandate in the case is expected to be issued on Sept. 9 (see NGI, Aug. 4).

"In other words, Dominion seeks to have the Commission pretend that the D.C. Circuit never issued the Washington Gas decision," the utility said of Dominion's request for expedited action. "Should the Commission grant Dominion's request and reauthorize operation of the LNG terminal facilities without examining the issue, Washington Gas will be forced to seek immediate redress from the D.C. Circuit," the utility said in a filing submitted last Tuesday.

In 2006 WGL petitioned the court for review of the FERC order approving the construction of the Cove Point LNG project, which would increase the sendout capacity of the terminal on the eastern shore of Maryland to 1.8 Bcf/d from 1 Bcf/d, and would boost storage capacity to 14.6 Bcf from 7.8 Bcf (see NGI, Aug. 28, 2006). The utility challenged the order on the grounds that an influx of LNG would aggravate leaks on its distribution system.

In 2005 Washington Gas said it discovered nearly 1,600 leaks concentrated in Prince George's County, MD, an area primarily supplied by vaporized LNG from Cove Point. The utility blamed the leaks on the chemical composition of the LNG from Cove Point and sought to block the terminal expansion (see NGI, July 11, 2005).

FERC in its original order found that the influx of blended LNG would not have adversely affected WGL's system in Prince George's County if a subset of the compression couplings had not been compromised during the installation process decades ago. The agency concluded that the leaks occurred because WGL applied hot tar to system couplings when they were installed.

The appellate court in July agreed with FERC's finding -- that "WGL's couplings were so damaged by the hot tar that its distribution system became susceptible to the confluence of multiple leak-inducing factors, such as LNG and cold weather." However, the court said FERC had failed to carry out its obligation of ensuring that WGL's leaks would be fixed before the Cove Point expansion went into operation. As a result, the court vacated the agency order approving the Cove Point expansion and remanded the case to FERC to address whether the expansion could go forward without causing unsafe leakage.

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