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Transco's SELA Connection Approved

Transco's SELA Connection Approved

Transcontinental Gas Pipe Line may construct its 53-mile Southeast Louisiana Crossover (SELA) offshore Louisiana, the Federal Energy Regulatory Commission said in an order voted out Wednesday, but it will be at risk to recover its costs.

By connecting Transco's Southeast Louisiana Gathering System with its Central Louisiana Gathering System the crossover, plus compression, will provide up to 264 MMcf/d in incremental capacity from offshore to Station 50 on its mainline at Eunice, LA. The Commission agreed Transco should be allowed to charge non-SFV rates in order to compete with other offshore pipelines with similar rates.

Transco has only one firm customer signed up at a discounted rate for 220 Bcf over ten years, which would average out to about 15% of capacity over time and guarantee the recovery of only $2 million of the $16.7 million annual cost of service. Under these circumstances Transco will have to bear the risk of failure to fill up the line.

FERC turned down interveners' requests to have the crossover declared non-jurisdictional, saying it already had denied attempts to have the two systems it connects classified as gathering since they were made up of extensive pipelines with significant diameters, indicating transmission. FERC approved negotiated rates proposed by Transco under three different rate schedules.

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