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Appalachia Pooling, Storage Flexibility Proposed

December 3, 2012
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National Fuel Gas Supply Corp. in separate filings has asked FERC for permission to create new pooling points on its Appalachian system and has asked to enhance natural gas storage service by decoupling injection and withdrawal rights from storage capacity rights.

Under a new Market Pooling Point Aggregation Service rate schedule, the company wants to allow parties to establish pools at certain physical midstream locations on its system. "National Fuel submits that this additional pooling mechanism has the potential to enhance liquidity on its system and would not adversely impact any of its existing services," the company told the Federal Energy Regulatory Commission (FERC) [RP13-298].

Market pooling points (MPP) would be established at New Castle, PA, south of Tennessee Gas Pipeline Mercer on Line N-M50; Oswayo, PA, west of Ellisburg on Line Y-M2; Ridgway, PA, south of Lamont on Line K; and Aurora, NY, west of the East Aurora station on Line X.

"A pool aggregator would have a number of options to aggregate quantities to its pool: shipping gas to the MPP under its own transportation contract(s); purchasing gas from another shipper that uses its own transportation contract(s); or purchasing gas from another pool aggregator or other party at the MPP," National Fuel said. The proposal would retain the company's existing pooling mechanisms for gas delivered into its system at Appalachian production receipt points and pipeline interconnections with some adjustment.

"...National Fuel proposes to limit this form of pooling to receipt points with a design capacity under 5 MMcf/d," the company said. "This mechanism was intended to permit the aggregation of gas from many small production receipt points, not larger receipt points with greater impact on system operations and more sophisticated measurement, communication and control equipment.

"With the growth of Marcellus production on its system, it has become necessary to specify a maximum design capacity for Appalachian production receipt points eligible for this form of pooling. Receipt points designed for capacity of 5 MMcf/d or greater are large enough to have a significant impact on line pressure and therefore day-to-day operation of the system."

The development also requires a new pooling zone to be created, the East System, which along with national Fuel's central Pennsylvania zone "both experiencing substantial increases in the local production receipts, and the existence of pools containing meters from both of these areas is limiting National Fuel's ability to direct scheduling restrictions to the appropriate receipt points."

Separately, National Fuel proposes to allow a firm storage customer under rate schedules ESS or FSS to relation a portion of its maximum storage quantity (MSQ) with withdrawal and/or injection rights that represent a different percentage of its MSQ than the corresponding percentage under the releasing customer's service agreement [RP13-299]. The company said such flexibility has been requested by a number of its customers.

"National Fuel expects that the additional flexibility associated with decoupled releases will result in an increase in firm storage customer injection and withdrawal activity since the replacement shippers contracting for proportionately greater injection or withdrawal rights would presumably plan to make use of them," it said. "Since it has not provided decoupled releases in the past, their impact on system operations -- particularly their impact on National Fuel's operational flexibility in providing firm no-notice transportation service, which requires extensive utilization of its storage service -- is not yet known."

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