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Scaled-Down Millennium Sought by Potential Competitors

Scaled-Down Millennium Sought by Potential Competitors

National Fuel Gas Supply Corp. and ANR Pipeline, sponsors of the proposed Independence Pipeline, are espousing a system alternative that essentially would result in a considerably scaled-down project for the competing Millennium Pipeline project.

Instead of bringing western Canadian gas into the U.S. across Lake Erie, as the Columbia Gas Transmission's Millennium project envisions, National Fuel and ANR seek a "one-corridor alternative" by which the 650 MMcf/d Millennium volumes would be shipped over expanded SupplyLink and Independence lines to the Leidy, PA, hub, and then transported by displacement or backhaul to National Fuel's station in Ellisburg, PA. From there, the scenario calls for construction of a 19-mile pipeline connecting Ellisburg to Columbia's existing A-5 Line, which extends to just north of New York City.

Under this alternative, Millennium would essentially be swallowed up by the related SupplyLink and Independence projects, which would span from Joliet, IL, to the Leidy hub. The entire Millennium project, which was conceived as a 417-mile line, would be reduced to nothing more than a replacement and possible upgrade of Columbia's 12-inch A-5 Line to either 24 or 36 inches. "My suggestion is that's all they need" to bring expanded volumes to the East Coast market, said National Fuel President Richard Hare.

This alternative-dubbed the Leidy Interconnection System Alternative-was reviewed and rejected by FERC staff in its draft environmental impact statement (DEIS) on Millennium, which was issued in April [CP98-150]. Staff dismissed the alternative saying it would have "greater environmental impact.....since it would be about 88.5 miles longer and would require more compression....."

But Hare, responding to the DEIS, contends FERC staff erred in its conclusion by assuming the Leidy Alternative would require the construction of a 50-mile pipeline from the Leidy hub to its Ellisburg station, plus an additional 8,000 hp of compression. He says National Fuel is "certain" it can transport the Millennium volumes from Leidy to Ellisburg by displacement and/or backhaul. No additional compression would be needed at Ellisburg, Hare noted, and the only construction required would be a 19-mile, 36-inch line connecting Ellisburg to Columbia's A-5 Line. This would cost about $31 million, he estimated.

The scenario espoused by National Fuel and ANR also would require an additional 168 miles of looping of 36-inch pipe and an added 14,000 hp of compression on the SupplyLink project, increasing the projected cost from $125 million to about $395 million, he said. Also, an additional 90,000 hp at six compressor stations would be needed for the Independence project, increasing the cost from $678 million to $765 million, according to Hare. He said these changes would boost the design capacity of both SupplyLink and Independence to about 1.4 Bcf/d, enabling them to meet both the needs of Millennium and Transcontinental Gas Pipe Line's proposed MarketLink project.

All told, the additional facilities needed to carry out the Leidy alternative would total $388 million, which he estimated was about $78 million less than what it would cost to build the western portion (Lake Erie crossing) of Millennium and the associated Canadian facilities, such as TransCanada Pipeline's proposed St. Clair pipeline, that would be required.

"This one-corridor alternative would be environmentally superior because it would eliminate 254 miles of pipeline in the U.S. and Canada and, most importantly, [would] eliminate the need to cross Lake Erie. It would also be an economically superior alternative because the cost of the facilities eliminated would substantially exceed the cost of the required expansions to SupplyLink, Independence and the National system," Hare told FERC.

Moreover, the alternative could result in further cost savings by reducing the size of the proposed Chicago-to-Dawn pipelines, he noted. For example, he believes the Vector Pipeline could be downsized because-under the Leidy option-there would no longer be any need for it to supply 650 MMcf/d of gas to Millennium. It still, however, would "serve the needs in eastern Canada of Consumers Gas and Union Gas, who are the two major sponsors of the Vector Pipeline." Vector, however, already has received final FERC approval.

Columbia understandably isn't interested in exploring the Leidy alternative. "I've visited with them several times, and they were not receptive to my suggestions. I suggested this alternative, plus other enhancements to Millennium, but they chose to stay with their project," Hare told NGI. Karl Brack, a spokesman for Columbia, said the company remains "confident" that Millennium is the "right choice for our customers." He indicated Columbia, which has a 47.5% interest in Millennium, will respond to the National Fuel/ANR proposal when it files its DEIS comments later this month. Other sponsors of Millennium are TransCanada, Westcoast Energy and MCN Energy.

Hare urged FERC staff to give "serious consideration" to the Leidy Alternative. In the DEIS, the staff endorsed the Niagara Spur System Alternative for Millennium, which also would eliminate the project's Lake Erie crossing. Under this scenario, the Millennium volumes would be shipped from Dawn, ON, over the systems of Union Gas and TransCanada, and picked up by Tennessee Pipeline at the Niagara import point on its Niagara Spur-which loops the city of Buffalo-and transported to an interconnect with National Fuel and then onto Millennium in Allegany County, NY.

Hare conceded the Niagara Spur Alternative was "doable," and added that National Fuel would "cooperate" if it turns out to be the "chosen route." However, he contends it won't meet the scheduled in-service dates that "everyone on the East Coast needs," would require Millennium to make a new project filing, has a longer route and would be costlier.

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