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CNYOG Urges Quick Action on Marcellus Pipe Project

Officials with Inergy subsidiary Central New York Oil & Gas Co. LLC (CNYOG) have called on FERC to quickly issue a certificate so the company can begin construction of its MARC Hub Line project in northeastern Pennsylvania, saying failure to do so "would have significant adverse commercial consequences for CNYOG and its shippers." The project would give northern markets greater access to Marcellus Shale gas.

In July "CNYOG believed, and accordingly advised the [Federal Energy Regulatory Commission], that a certificate order was needed by early August 2011 if CNYOG was to meet state-imposed deadlines for completion of in-stream construction activities on a limited number of identified streams, and federally imposed limitations on tree clearing under the Migratory Bird Treaty Act," wrote CNYOG Senior Vice President William R. Moler and CNYOG attorney William F. Demarest Jr. in separate letters to the Commission.

"CNYOG has become increasingly concerned that the Commission may be proceeding under the mistaken impression that once the deadline had passed for the issuance of a certificate...there was no longer any urgency for the Commission to act on the pending application. That is most certainly not the case," they told FERC.

"CNYOG has continued to pursue diligently all available means to achieve its commercial goals of placing the northern half of the MARC I Pipeline into service by the end of the 2011-12 winter, and commencement of service on the entire project by July 2012. The purpose of this communication is to advise you that those goals remain achievable for a very limited period of time.

"If a certificate order is issued in the very near future, CNYOG will immediately seek expedited approval from the Commission to commence limited, time-critical in-stream construction and related tree-clearing activities which, if completed before the onset of winter, will enable CNYOG to complete construction of the northern half of the MARC" by the end of the upcoming heating season and the entire project by mid-summer 2012.

"Even a short additional delay in issuance of a certificate for the MARC I project threatens to disproportionately delay completion of the project by months rather than days," said Moler and Demarest.

The project, which is estimated to cost $200 million, calls for the construction of a 39-mile, 30-inch diameter pipeline in three counties in northeastern Pennsylvania -- Bradford, Sullivan and Lycoming -- as well as installation of a 15,300 hp Northern Compressor Unit at CNYOG's NS2 Compressor Station in Bradford County, and a 16,360 hp Southern Compressor Unit at CNYOG's M1-S Compressor Station in Sullivan County (see Shale Daily, June 2). The project would have about 550,000 Dth/d of firm capacity [CP10-480].

The proposed MARC I Hub gas transmission line would connect to Tennessee Gas Pipeline's Line 300 and Transcontinental Gas Pipe Line's Leidy Line, as well as existing Stagecoach laterals that tie in with Millennium Pipeline. The project would clear the way for gas produced in the northeastern Pennsylvania counties to be stored at CNYOG's Stagecoach Gas Storage facility near Oswego, NY.

CNYOG's related North-South Project, which has been placed into interim service and is to be in full commercial operation on Nov. 1, will enable shippers to transport up to 325 MMcf/d of gas bidirectionally on a firm basis from Tennessee to Millennium and all points in between. The gas will be able to move into northeastern markets or backflow to Canadian markets, a CNYOG spokesman said.

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