FERC Yanks Certificate to Build Phase III of MarketLink

FERC last week yanked Transcontinental Gas Pipe Line's certificate authority to proceed with the construction of Phase III of its MarketLink expansion in Pennsylvania and New Jersey due to the failure of the pipeline to subscribe the entire 404,000 Dth/d of capacity in the final phase by the April 13 deadline.

Transco had executed binding, firm transportation contracts with five shippers for 210,000 Dth/d of the Phase III capacity, and requested that it be allowed to build facilities to serve those customers. But FERC issued a flat rejection, pulled the pipeline's certificate authority to build Phase III, and told Transco that it would have to apply again at the Commission if it wanted to build a scaled-down Phase III project to serve the five shippers.

Williams, parent of Transco, indicated that it plans to do just that -- apply to build a smaller Phase III project at this point. "While we are disappointed that the Commission did not grant our request..., this is a procedural issue that we will resolve by filing the firm contracts that we have with the market in a separate application," said Gary Lauderdale, senior vice president and general manager of Transco. "We look forward to completing the construction of all phases of MarketLink on schedule."

Last December, the Commission put Transco on notice that its certificate authority to build the Phase III portion of its expansion would expire on April 13 if it didn't get binding contracts for the entire capacity. At the time, FERC also authorized the construction of the Phase I (166,000 Dth/d) portion of the project, which has an in-service date of Nov. 1, 2001, and the Phase II (130,000 Dth/d) section. Phase II, which would only serve two customers, is targeted for in-service on Nov. 1, 2002.

"Now, almost three years after Transco filed its application, one year after we certificated the project, and four months after giving Transco more time to obtain contracts, Transco still does not have a market fully subscribing Phase III," the order noted [CP98-540-005].

The Commission's action last week assuredly brought some smiles to the faces of landowners in western Pennsylvania and northern New Jersey, who have been opposed to the construction of the MarketLink project.

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