FERC Friday issued a favorable environmental assessment to Millennium Pipeline Co. LLC for a natural gas compressor station project in Minisink, NY, to boost firm deliveries of Marcellus Shale gas to its interconnection with Algonquin Gas Transmission LLC at Ramapo, NY, to approximately 675,000 Dth/d to serve the Northeast and New England markets.

This brings the compression expansion project one step closer to receiving a certificate, although later than what the sponsors sought. The pipeline and its shipper had asked the Federal Energy Regulatory Commission to issue a certificate by January-February.

"The proposed project, with appropriate mitigation, would not constitute a major federal action significantly affecting the quality of the human environment," the Commission said of the project [CP11-515].

Millennium, which filed its application in July, has proposed building two 6,130 hp gas-fired compressor units, a 36-inch diameter suction and discharge pipelines and associated facilities in the Town of Minisink in Orange County, NY, to increase firm deliveries to its interconnection with Algonquin Gas Transmission. The project also will permit bidirectional gas flow on Millennium's system between its existing compressor station at Corning, NY, and the proposed Minisink station.

Millennium estimated that the project will cost $43.6 million. It said the project is fully supported by precedent agreements for long-term firm transportation, at negotiated rates, with two anchor shippers and one additional shipper.

Southwestern Energy Services Co. (SESC), an anchor shipper, had urged FERC to approve the mostly compression expansion of Millennium by Feb. 1 so it can be in operation by Nov. 1 (see NGI's Shale Daily, Jan. 5).

"The 2012 in-service date is essential to keep pace with the continuing development of SESC's affiliated natural gas production and was a critical component of SESC's negotiations with Millennium," said SESC, which markets the production of affiliate Southwestern Energy Production Co., a developer of significant reserves in the Marcellus Shale.

However, Commission staff in December requested comments on an alternative compressor station site -- the Wagoner/Neversink Alternative, which would involve the construction of a smaller 5,100 hp compressor station at a site adjacent to Millennium's existing Wagoner Meter Station facility in Sparrowbush, NY, and would require the replacement of pipeline facilities. FERC staff requested landowner comments by Jan. 23 to assist it with its environmental analysis of the alternative.

SESC is concerned that the new project alternative may throw a wrench into the certificate proceedings at FERC.

Southwestern has contracted 25,000 Dth of firm transport capacity on the pipeline, according to Millennium Pipeline's index of customers. KeySpan (200,000 Dth), ConEd of New York (180,000 Dth) and WPX Energy Marketing (140,000 Dth) hold the largest capacity contracts on the pipeline, which has more than 790,000 Dth of firm transport capacity contracted.