Fingers Crossed, Alliance, Vector Shoot for Dec. 1

Alliance Pipeline informed its shippers yesterday that all debris has been cleared from the pipe, all connections are up and running, and that commercial service will begin on Dec. 1. Commercial service originally was expected to begin on Oct. 1 but was delayed several times because of commissioning problems (see Daily GPI, Nov. 10).

"We've tested all of our connections and we've been flowing volumes [to Midwestern LDCs] up to about half [663 MMcf/d] of what the pipeline is capable of transporting," said Alliance spokesman Jack Crawford.

"We are asking our shippers today to provide forecasts to us of what they expect to do in the first month. The last time we did this the forecasts we got suggested that we'd be running at about 1.325 Bcf on the first day."

One of the key questions remaining is whether Alliance's main downstream supply outlet, the 270-mile Vector Pipeline project, will be ready to go as well on Dec. 1. Vector had construction problems because of wet weather and also was forced to delay its start-up from Nov. 1 (see Daily GPI, Oct. 4). The pipeline would transport 700 MMcf/d of gas initially from Joliet, IL, through Indiana and Michigan to Dawn, ON, but would be expanded to 1 Bcf/d next November.

"The last I heard they were expecting to make [the deadline]," said Crawford. "We actually tested our meter with them over the weekend and it's all up and running, but that might be a subsequent event if they have a problem. It's been a challenge for them to get going, but it looks like they are all ready to go."

A Vector spokesman confirmed that commissioning is going smoothly and operations appear to be on schedule for Dec. 1 start-up. "Right now everybody still feels that Dec. 1 is doable," he said. "You might want to touch base again next week and see how it looks, but right now it looks like we're getting things pretty well wrapped up.

"The last place where we've been completing work has been up in the Milford and Highland Townships in Oakland County, MI. That's the area just before we go in the portion of the pipeline that we're leasing from Michigan Consolidated Gas Co. As of last Friday, they still hadn't reached that area with linepack [gas]."

Crawford said the Aux Sable liquids plant also is up and running, and previous pipeline coordination difficulties have been ironed out. "They are still bringing it up to full scale. They are short both volume and heat content at the moment and that's by design. The pipeline is flowing at about half volume at the moment, and in addition to that we've been running lean test gas."

Farther upstream, Alliance still has one lateral, the Peace River Lateral, that will be delayed because of the impact of wet summer weather on construction. "It will be up and running perhaps not by Dec. 1 but in a week or two. It's an eight and 10-inch line. It's relatively small," he said.

Once the massive new pipeline is running smoothly, the next steps to be taken include potential connections with several proposed pipelines in and around Chicago, including potentially the Guardian, Horizon and Whitecap Energy projects.

"We also looked at a couple of other receipt connections on the upstream side," said Crawford. "We've obviously talked about a potential expansion in the future, but as we found out by talking to people it looks like the supply additions in the Western Canadian Sedimentary Basin have not been as brisk as we might have thought, probably because of the downturn in the oil price a couple of years ago. It's likely that an expansion would be delayed for a year or two or even three.

"The best that I've been able to ascertain from talking to people is that our supply deliverability really has not increased very much in the last two to three years, and as a consequence at least in the short run the gas on our system will end up coming out of other systems."

He also mentioned that TransCanada is planning to take some of its capacity out of service, including retiring some older compressors and rewheeling others, in order to reduce the amount of excess pipeline capacity in the Canadian gas market.

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