FERC Friday gave Empire Pipeline Inc. the green light to place into service a major interconnection on its Tioga County Extension Project to transport Marcellus Shale production in Pennsylvania to the U.S.-Canadian border.

The Federal Energy Regulatory Commission (FERC) letter order clears the way for Empire Pipeline to begin service on the interconnection with Tennessee Gas Pipeline in Hopewell, NY, which is part of the Tioga County Extension Project.

Empire still is awaiting FERC approval to place into service the entire 15-mile Tioga County Extension and other components of the project, including a 1.36-mile lift-and-lay segment near Victor, NY, and the repiping at the Oakfield Compressor Station and the old and new Victor stations [CP10-493].

When originally built in the early 1990s Empire, a subsidiary of National Fuel Gas Co., consisted of a 24-inch diameter pipeline extending from an interconnection with TransCanada PipeLines Ltd. at the border between the United States and Canada near Chippawa, ON, eastward for 157 miles to its terminus near Syracuse, NY.

One Northeast gas marketer told NGI's Shale Daily that he doesn't think the new Empire connection with Tennessee will mean much to markets for the time being because facilities "are not yet built for the gas to enter Canada." He added that the setup at Chippawa is currently a one-way Canada-to-U.S. connection.

However, the new service "might make gas in Eastern Canada cheaper in the intermediate term by displacing supply that normally would have been exported southward into the United Sattes," he added.

In 2006 Empire got the FERC go-ahead to construct the 78-mile, 24-inch diameter Empire Connector pipeline from Victor (about 60 miles west of Syracuse) southward for 78 miles to an interconnection with Millennium Pipeline Co. LLC near Corning, NY, and a new Oakfield Compressor Station in the Town of Oakfield, NY. Although Empire started off as a Hinshaw pipeline, it is now a jurisdictional interstate pipeline transporting gas from the U.S.-Canadian border to customers along its original pipeline system and through the Empire Connector to Millennium.

The Tioga County Extension Project would allow Empire to reverse flow on its system and would permit it to receive up to 350,000 Dth/d of Marcellus Shale production in Tioga County, PA, and transport that gas to the facilities of TransCanada at Chippawa.

Empire said it has entered into precedent agreements for firm transportation service for the entire capacity of the project for an initial term of 10 years. The cost of the Tioga extension has been estimated at $46.7 million. FERC approved Empire's request for a predetermination that it may roll the costs of the expansion project into its existing Empire Connector rates in its next Section 4 rate proceeding.

Last week, northeast Pennsylvania Marcellus Shale producers got some relief from sagging prices and an outlet for their gas when El Paso Corp.'s Tennessee Gas Pipeline Co. placed its long-awaited 300 Line forward-haul expansion in service, increasing capacity on the Tennessee Gas Pipeline (TGP) system by 350 MMcf/d, a nearly 50% boost (see Shale Daily, Nov. 2).

The Tioga County Extension and other projects due to come online this month will provide the Marcellus with nearly 1.0 Bcf/d of increased takeaway capacity, and natural gas pipeline takeaway capacity will more than double its current level by 2013, according to Bentek Energy LLC.