Gas Industry, FERC Gripped by 'Expansion Fever'
The natural gas industry and FERC have been afflicted with "Expansion Fever," as last week saw a series of significant pipeline and storage expansions either announced or approved for the energy-hungry West and East Coast markets. Most noteworthy, if only for its sheer size, was Transcontinental Gas Pipe Line's announcement of plans to expand its system from Louisiana to Virginia (Momentum Expansion project) in order to serve the ever-growing power generation load in the Southeast. This would be "one of the largest mainline expansion projects constructed in Transco's 50-plus year history."
Although details of the Momentum expansion remained sketchy last week, Williams Transco said it had binding commitments for 526,000 Dth/d of firm capacity already. It noted it expects to file an application at the Federal Energy Regulatory Commission during the second quarter of this year (see stories on the individual projects in this issue).
For the New England region, FERC last week gave a preliminary okay to Maritimes & Northeast Pipeline and Algonquin Gas Transmission to build their companion extensions to supply gas-starved markets there. The planned projects will give Maritimes' existing shippers greater access to northeastern markets via Algonquin, as well as will open the door for new and existing Algonquin customers to a new supply source -- Atlantic Canadian gas -- on Maritimes. The two projects are on schedule to be in service by November 2002.
Maritimes' so-called Phase III extension would make 360,000 Dth/d of new firm capacity available to its customers to serve markets on the east end of Algonquin's system, and Algonquin's HubLine project would provide 300,500 Dth of delivery capacity on a year-round basis.
FERC last week also handed down a certificate to Texas Eastern Transmission Corp. to build a lateral in western Pennsylvania to provide direct natural gas service to a new generation plant that, when completed, will serve the power needs of 250,000 customers in the heavily-populated Mid-Atlantic region.
Tetco, a subsidiary of Duke Energy, said it plans to start construction on the 84,000 Dth/d lateral and associated metering facilities this month and complete the project in September. The lateral, which has a projected cost of $21.5 million, will connect Tetco's existing Philadelphia Lateral to the $300 million, 568 MW gas-fired generation plant that Liberty Electric Power LLC is building in Delaware County, PA. The plant is targeted for operation in early 2002. Liberty Electric, which is owned by Orion Power Holdings Inc. in Baltimore, will own and operate the generation facility, while PG&E Energy Trading L.P. will purchase the plant's electric output.
Even the long-stalled Canada-to-New York Millennium Pipeline project got a shot in the arm last week when its highly contested route alternative in Westchester County, NY, won the support of the new York State Public Service Commission (PSC), local citizens, elected officials and the pipeline's planners.
The parties reached an agreement on a portion of the project's route near New York City. The routing in Westchester County has been a major sticking point since the start. The PSC and Consolidated Edison of New York first objected to the pipe running in dangerous proximity to major power lines, but then landowners fought against the route alternatives that were proposed.
But before construction can begin on the Millennium pipeline, it still must pass environmental muster at FERC. If ever built, the 442-mile line would bring 714 MMcf/d of gas to New York City from connections with the Canadian pipeline grid under Lake Erie.
For gas-hungry West Coast markets, Questar Pipeline Co. announced last week that it's a go for its Southern Trails Pipeline project after it completed a lucrative deal with Duke Energy for the entire 80,000 Dth/d of firm transportation capacity on the eastern segment (east of California) of the 705-mile pipeline, a converted oil line which runs from Blanco, NM, to Long Beach, CA.
"This contract moves us one very large step to making the Southern Trails Pipeline a reality," declared Questar Pipeline CEO D,N. Rose. "We now expect to be in a position to start construction in the near future."
Still, the pipeline faces a significant stumbling block --- the 120,000 Dth/d of firm capacity on the western segment of Southern Trails will remain unsubscribed until a revision is made to Southern California Gas's tariff, which provides a strong financial disincentive to existing SoCalGas customers not to switch to competing suppliers. The utility's tariff requires any existing SoCalGas customer that uses an alternative pipeline to also pay SoCalGas for transportation.
Tuscarora Gas Transmission jumped on the bandwagon as well, filing an application at the Commission last week to extend its 229-mile pipeline system from Malin, OR, to capture a growing Nevada market. It seeks to add three compressor stations and a 14-mile pipeline extension to nearly double its existing capacity to 220 MMcf/d, up from its current 124 MMcf/d. The targeted in-service date for the project is late 2002.
Tuscarora plans to use the expanded capacity to serve two new power generation facilities that are planned for construction by Duke Energy and Morgan Stanley in the Nevada market. It also would supplement the growing gas distribution needs of Sierra Pacific Power Co. and Southwest Gas Corp., which together distribute natural gas to all of northern Nevada and portions of northern California.
On the storage front, Alberta Energy's Wild Goose Storage subsidiary in California said it was considering an expansion to nearly triple the capacity of its natural gas storage facility in Butte County, near Gridley, CA. The company already has launched an open season for customer sign-ups that will run until May 22.
Depending on the response, Wild Goose said it may very well expand the working gas capacity of the Butte facility from 14 Bcf to as much as 38 Bcf, with a withdrawal capability rising from 200 MMcf/d to as much as 650 MMcf/d. The company said it plans to file an expansion application with the California Public Utilities Commission this spring, which would enable the new facilities to be online by April 1, 2004, assuming normal regulatory process time.
Natural Gas Pipeline Company of America also said it was looking to expand a portion of its existing system capacity in southeastern New Mexico to boost deliveries to California. Specifically, Natural proposes to add new compression on a leased basis to its Indian Basin Lateral and other facilities to make deliveries of up to 42,000 Dth/d by the fourth quarter of this year through Transwestern Pipeline in Eddy County, NM.
Natural's proposal is in response to a recent order in which FERC asked gas pipelines to examine their systems closely to find ways to squeak out more capacity to California and western markets [EL01-47]. The pipeline already has initiated an open season for the additional capacity. It will close at 5 p.m. Central time on April 19.
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