The controversial Northeast-bound Independence Pipeline andMillennium Pipeline have won draft environmental acceptance at theFederal Energy Regulatory Commission. This was good news for bothpipelines, which have been beset by unprecedented landowneropposition and questions about the “need” for the projects.

Separate draft environmental impact statements (DEIS) saidconstruction of the Midwest-to-Northeast greenfield pipelines wouldhave “limited adverse environmental impact” if “appropriatemitigating measures” were placed in effect.

This was the first encouraging sign for the Columbia GasTransmission-sponsored Millennium project at the Commission. The417-mile line would extend from Lake Erie to Westchester County inNew York, bringing in gas from other regions of the U.S. and fromwestern Canada. FERC last month in unprecedented action refused togive Millennium and Independence (and associated expansions)preliminary determinations (PDs) on the non-environmental aspectsof the projects until the environmental reviews are completed.

With respect to Independence (and the associated Market Linkproject), FERC staff noted they issued a favorable draft decisionbecause 76% of the proposed pipeline routes would be adjacent to oroverlap existing pipeline and powerline rights-of-way; theapplicants have agreed to use mitigation procedures to reduce soiland water-related impact and have entered into an agreement withthe state of Ohio to further reduce impact on agricultural lands.These findings are key considering that the Independence projecthas generated more than 6,000 landowner complaints.

Independence would run about 400-miles from Defiance, OH, to thehub in Leidy, PA. Project sponsors are ANR Pipeline, National FuelGas Supply and Transcontinental Gas Pipe Line. From Leidy, Transco- the sole sponsor of Market Link – proposes to loop about 154miles of its exiting system in Pennsylvania and New Jersey.

FERC staff said it evaluated existing and planned systemalternatives to Independence and the associated Market Linkexpansion, including the proposed Vector, Tristate and Millenniumprojects, but none were found to be “both environmentallypreferable to the proposed facilities and able to meet the proposedprojects’ objectives.” Staff, however, did recommend that one majorroute alternative and six minor variations be incorporated into thepipeline routes.

Public comments on the Millennium and Independence projects aredue at the Commission on June 7th and June 4th, respectively. Tenscoping sessions on the proposed two new pipelines will be heldduring May.

Separately, in a letter last week, FERC asked Millennium for anupdate on the seven to nine shippers who had reserved the right toopt out of their precedent agreements by either late March ormid-April in the event either a PD was not issued for Millennium orthey failed to received corporate approval for their capacityagreements. “In view of the fact that all…deadlines have passedand no preliminary determination has been issued, please advise ifthe above-referenced agreements have been amended, or if anyshipper has notified Millennium of its election to terminate itsagreement,” wrote Kevin P. Madden, director of FERC’s Office ofPipeline Regulation, on April 13th.

He also asked Millennium if it had entered into an agreement tobuild a lateral connection with Southern Energy Bowline L.L.C toprovide up to 300,000 Dth/d of gas to the Bowline GeneratingStation, and – if so – whether this would require a modification tothe Millennium proposal. It further wanted to know whether adecision by New York City’s Department of Environmental Protectionto deny Millennium’s request to cross the Catskill Aqueduct wouldresult in any changes to the project.

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