FERC OKs 230 MMcf/d El Paso Project

The Federal Energy Regulatory Commission last week gave another speedy go-ahead to a natural gas pipeline expansion that will serve the capacity-strained California market, as well as southwestern region --- a 230 MMcf/d looping of El Paso Natural Gas' South System that's expected to be in operation by Aug. 31 of this year.

In a certificate issued last week, El Paso got the authorization to acquire and convert a 785-mile segment of an existing crude oil pipeline extending from McCamey, TX, to Ehrenberg, AZ, to natural gas transportation service. The converted line would loop and augment service on El Paso's low-pressure South System, which has been strained due to aging compressor facilities.

The Commission's action came less than two months after El Paso filed an amended proposal for the system expansion, and only weeks after FERC approved an emergency expansion of Kern River Gas Transmission's Wyoming-to-California system in record time (see NGI, April 9).

The segment to be converted is part of a 1,088-mile, 30-inch diameter crude oil pipeline that was purchased by El Paso's wholly-owned subsidiary, EPNG Pipeline Co., from Plains All American Pipeline L.P. El Paso says it is considering incorporating the remaining 303-mile California section of the crude oil line into its system also, which would increase its capacity by approximately another 230 MMcf/d. The company currently is holding open seasons for expansion capacity in-state California on the El Paso and Mojave pipelines.

El Paso originally had planned the converted looped line --- the so-called Line 2000 Project --- as a replacement for six aging compressor facilities on its South System. It was not intended to create any additional capacity on its system. But at the urging of FERC staff, El Paso decided to revise its original application and make the project an expansion (see NGI, Jan.22). It now plans to keep the compressor units in service and add the looping.

"The Commission finds that the benefits of El Paso's proposed Line 2000 Project sufficiently outweigh any of the minimal adverse impacts the project may cause. El Paso's proposed facilities will benefit its existing shippers by providing 230 MMcf/d of additional capacity into its South System, which will be used in the daily scheduling of gas and will serve to reduce daily allocations of capacity and provide greater flexibility for existing shippers," the certificate order said.

In addition, the expanded facilities "will help meet the demands for gas in the California market as well as in the markets east of California, where natural gas is used to generate power that is exported to California," it noted.

Significantly, the Commission approved the expansion without requiring a show of proof from El Paso of binding agreements for the capacity. El Paso said it didn't plan to negotiate new firm transportation service agreements for the capacity, but rather would use it as a "cushion" to meet the growing gas demands of the California and east-of-California markets.

However, El Paso noted that two recent open seasons --- one for 1.22 Bcf/d of capacity under a contract with El Paso Merchant Energy Co. (due to expire this month) and another to determine interest in additional expansions on its systems --- revealed a significant shipper appetite for more capacity. In the former open season, El Paso received bids for a total of 14.4 Bcf/d of capacity. While it hasn't furnished the results of the second open season, El Paso said they clearly indicate that shipper demand for fresh capacity is running high.

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