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FERC OKs Marcellus Pipeline Expansions

FERC Thursday approved Tennessee Gas Pipeline's and Dominion Transmission Inc.'s proposed system expansions to deliver gas from the Marcellus Shale/Appalachian Basin to existing markets in New England and to the Niagara Falls area of New York.

Tennessee's Northeast Supply Diversification (NSD) project would provide up to 250,000 Dth/d of incremental firm capacity from the Marcellus Shale region along its 300 Line system to serve existing markets in New England and the Niagara Falls area of New York [CP11-30]. The NSD project is the El Paso Corp. pipeline's third expansion in as many years out of the Appalachian/Marcellus area.

The project entails the construction of approximately seven miles of 30-inch diameter pipeline looping in Bradford and Tioga counties, PA -- west of the pipeline's Station 317 compressor station -- and other associated modifications in Niagara and Erie counties, NY. The company has targeted the proposed $56 million facilities for in-service by Nov. 1, 2012.

To accommodate shippers' requested transportation paths from Marcellus receipt points to markets in New England and at Niagara Falls, the NSD project combines two Tennessee projects: the original NSD project, which will provide transportation service to New England; and the Marcellus-to-Leidy and Niagara project, which will provide transportation service to Niagara Falls.

Tennessee said it has executed binding 15-year term agreements with Cabot Oil & Gas Corp.; Anadarko Energy Services Co., a subsidiary of Anadarko Petroleum Corp.; and Seneca Resources Corp., a subsidiary of National Fuel Gas Co., for the entire NSD capacity (see Shale Daily, July 1).

"Tennessee's proposed NSD project...will benefit the public because it will provide an important new outlet to the interstate market for natural gas from historic supply areas currently experiencing increases in production. Also, Tennessee has executed precedent agreements for the proposed capacity," the Federal Energy Regulatory Commission (FERC) order said.

Tennessee has inked a 10-year lease agreement for capacity on Dominion Transmission's Ellisburg-to-Craigs expansion, which would move up to 150,000 Dth/d from Tennessee's 300 Line in northern Pennsylvania to its 200 Line in upstate New York [CP11-41]. Dominion plans to have its project's in-service date coincide with the in-service date of Tennessee's NSD project: Nov. 1, 2012.

The project is to include additional compression facilities and a new measurement and regulating station at the Craigs interconnect with Tennessee in New York. Dominion said it will also add regulating facilities on its system in northern Pennsylvania.

"Dominion's proposed project...meets the threshold test that its existing customers not subsidize the project and also minimizes any adverse effects upon new and existing customers. The proposed project generates incremental capacity, all of which will be leased to Tennessee, and the proposed lease payments will fully support the cost of the proposed facilities during the term of the [capacity release] arrangement" with Tennessee, the order said.

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