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Tennessee Files Scaled-Down Eastern Express Project

Tennessee Files Scaled-Down Eastern Express Project

Tennessee Gas Pipeline's Eastern Express Project 2000 is a much different expansion today-mainly much smaller-as it arrives at FERC than when it was announced more than a year ago. Last winter, the company said there was market interest in more than 4 Bcf/d of firm capacity along nearly every stretch of its system, from the Gulf of Mexico north, from Chicago and Niagara east and from New Hampshire south. But Tennessee filed an application yesterday with FERC to add only 168 MMcf/d of capacity along the northernmost part of its pipeline at connections with PNGTS and Maritimes.

"[It's] still a decent sized project, nothing huge by any means," said Mike Stokdyk. "We're not disappointed in the results. It would be nice if it were larger but between some of the power plants moving a little slower than what they had anticipated and what they were telling us and just general uncertainty in the marketplace with LDC unbundling and so forth, it's just not a time when it's easy to get people to make firm commitments," he said.

Eastern Express was whittled down to what most would consider a relatively minor capacity addition for a number of reasons, not least of which is the anticipation that many of Tennessee's long-term contracts will expire in 2000. "That will be an opportunity for people to shift around their requirements," said Stokdyk, but he didn't think it was "the driving issue" behind market decisions. Much more important was the fact that the basis between markets and most supply regions simply didn't justify an expansion.

"If you look at it on a pure basis spread from Chicago to New York for example, you have a basis spread that's about 30 cents and a lot of these projects [including Eastern Express] are proposing 70 cents to get it there. If you're not an end consumer, then none of these projects looks that attractive because you don't have that arbitrage opportunity," he conceded. It's tough to compete these days with the release values and IT values on the existing pipelines. The new markets are picking up some firm but also are choosing to play the capacity release and the IT markets.

Eastern Express Project 2000 is scheduled to provide firm transportation service commencing November 2000 from the interconnect at Haverhill, MA, and the planned interconnect at Dracut, MA, with the Joint Facilities of Portland Natural Gas Transmission System and Maritimes & Northeast Pipeline to delivery points in New England. Two shippers have executed binding firm transportation agreements for 173,000 Dth/d of capacity. American National Power has signed up for 34,000 Dth/d for its 550 MW gas-fired Blackstone Power plant in Massachusetts, which currently is under construction, and El Paso Gas Services, a pipeline affiliate, has signed up for the remaining 139,000 Dth/d of firm capacity primarily to serve four power plants of Project Development Corp. (PDC). The PDC plants include the 276 MW Berkshire, MA, plant and the 540 MW Milford, CT, power plant, both of which are under construction, and the Meriden, CT, and Summit, MA, power plants (up to 1,000 MW) which currently are proposed.

Tennessee is expanding its system by using existing pipe and right-of-way and installing 13,320 hp of compression at two existing compressor stations. Total capital is estimated to be $28 million.

The pipeline also is expecting to file additional expansion projects to serve other proposed power generation in New England and New York over the next couple years said TGP President John Somerhalder. Tennessee believes the majority of any additional pipeline capacity will be required in 2002, but the pipeline said it would be glad to work with shippers that have earlier capacity needs.

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