Companion Projects of Maritimes, Algonquin Get FERC Nod

Maritimes & Northeast Pipeline and Algonquin Gas Transmission last week were awarded preliminary determinations (PD) on non-environmental issues by FERC to build their companion pipeline extensions that will provide Maritimes' shippers greater access to northeastern markets via Algonguin, as well as will give new and existing Algonquin customers access to a new supply source-Atlantic Canadian gas-on Maritimes.

The combined projects call for Maritimes to build an extension in a southeasterly direction through several Massachusetts counties to the East Coast where the Algonquin line would connect and extend offshore down the coast through Boston Bay to Weymouth on the south side of Boston Harbor. The two projects, which are designed to supply gas-starved New England, are targeted for in-service by November 2002.

The so-called Phase III extension of 600-mile Maritimes pipeline, which imports Atlantic Canadian gas to the Northeast from the Sable Offshore Energy Project offshore Nova Scotia, will include 24 miles of 30-inch diameter pipeline and one mile of 24-inch diameter pipeline, extending from Methuen, MA, through a number of counties to a connection with Algonquin's proposed extension in Beverly, MA. The project, which has an estimated price-tag of $133.9 million, would have the capacity to provide 360,000 Dth/d of firm transportation service to serve growing markets on the east end of Algonquin's system.

Maritimes said its project is geared to provide benefits to existing mainline shippers at the same rate they are currently paying ($0.715/Dth). It does not expect to execute contracts or precedent agreements with shippers on the related Algonquin HubLine project. Rather, it said HubLine shippers either will buy gas from Maritimes' shippers at the Beverly interconnection or they will take title to gas upstream of that point and ship it under a capacity-release arrangement.

Algonquin's HubLine project, which has a projected cost of $159 million, will include about 29.4 miles of 24-inch diameter pipeline, extending offshore from an interconnection near Beverly with Maritimes' proposed Phase III project to an interconnection with Algonquin's existing I-9 lateral in Weymouth. Algonquin also plans to build a 5.4 mile, 16-inch diameter lateral from the proposed pipeline to a wastewater treatment plant owned by Massachusetts Water Resources Authority (MWRA) on Deer Island. The project would be capable of delivering about 300,500 Dth/d on a year-round basis.

"We find that the Phase III project and the Hubline project can proceed without subsidies from or degradation in service to Maritimes' and Algonquin's existing shippers, and will provide benefits that outweigh any adverse impacts arising from the lack of negotiated easements," FERC said in its Wednesday order [CP01-4, CP01-5].

"Notably, we find that the projects will increase the reliability and flexibility of the interstate pipeline grid by offering more direct access to supply sources and increased availability to gas and electric generation markets. This will also result in more price competition, hopefully lowering natural gas prices in the New England region as well as the price of competing fuels, such as home heating oil. Therefore...we find approval of Maritimes and Algonquin's proposals to be in the public convenience and necessity," it said.

Any future certificate that is awarded will require Maritimes and Algonquin to complete the construction of their projects within two years of a final order, and will require Algonquin to execute a firm service contract with the MWRA for a projected demand of 5,000 Dth/d, according to the PD order. The MWRA has signed only a letter of intent for capacity, while four other potential shippers --- Southern Connecticut Gas, Providence Gas, Southern Energy Kendall LLC and Sithe Power Marketing LP --- have executed long-term precedent agreements for a combined 195,500 Dth/d on Algonquin's HubLine.

Given that the projects, particularly the Phase III extension, raise a number of environmental, safety and routing issues, the next stage of the FERC process --- the environmental review --- could be the most difficult for Maritimes and Algonquin.

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