String of Pipeline Projects Wins Clearance at FERC

FERC cleaned house last week at its final regular meeting before its August hiatus, voting out a number of certificates, preliminary determinations and a Section 3 authorization for pipeline projects of Florida Gas Transmission (FGT), PG&E Transmission Northwest Corp., Colorado Interstate Gas Co. (CIG), Algonquin Gas Transmission/Texas Eastern Transmission (Tetco) and Otay Mesa Generating Co. LLC.

FGT received a certificate to incrementally expand its existing 1.7 Bcf/d natural gas delivery system to 2.1 Bcf/d. The Commission ruled that FGT's proposed $452 million Phase V expansion, which the pipeline estimates will provide an additional 428 MMcf/d to an expanding power generation market in the Sunshine State, is in the "public convenience and necessity." But it attached a series of environmental and mitigation measures with which FGT must comply.

FERC estimated the project will entail the construction of 166 miles of 16-inch to 36-inch diameter mainline looping and laterals, additional compression totaling 132,615 horsepower and various other facilities in Mississippi, Alabama and Florida. The order requires the expansion to be completed and in service within two years [CP00-40].

In related action, the Commission also said Gulf South Pipeline Co. L.P. (formerly Koch Gateway Pipeline Co.) could sell an undivided interest in its Mobile Bay Lateral assets to FGT. The lateral will offer FGT shippers upstream access to 300 MMcf/d of additional capacity, as well as access to all existing receipt and delivery points on the line. FGT plans to build a 30-inch line to connect the lateral to its system.

The expansion is fully subscribed with seven shippers, and is targeted for completion in April of 2002, according to Enron Corp., which owns FGT jointly with El Paso Corp. The company completed its $268 million Phase IV pipeline expansion, which added 200 MMcf/d to its system, in May.

PG&E Gas Transmission got the go-ahead last week for a 210,800 Dth/d expansion to import more Canadian gas for power generators on the West Coast. It plans to construct 20.7 miles of 42-inch diameter pipe parallel to its existing mainlines, which extend from Kingsgate, BC, southward 612 miles to Malin, OR. It also intends to add 97,500 horsepower at five existing compressor stations.

The expansion "should permit additional Western Canada Sedimentary Basin gas reserves to reach markets in California and the Pacific Northwest, markets which presently evidence a need for additional energy supplies," the Commission said in approving PG&E Transmission's certificate [CP01-141].

The proposed capacity has been entirely subscribed by two shippers under long-term contracts. The shippers include New Port Northwest LLC for 175,000 Dth/d of annual capacity under a 52-year agreement; and Calpine Energy Services for 35,800 Dth/d of annual capacity and 20,380 Dth/d of winter-only capacity under a 40-year agreement.

"These service agreements are with customers that intend to use [the] expansion gas volumes to fuel electric generation facilities, which should make additional megawatts available to regions where electric demand cannot be reliably fulfilled by the existing sources of electric supply," the order noted. FERC gave PG&E Gas Transmission the okay to roll in the costs of its $121 million expansion, which the pipeline estimates will increase its cost of service by $20.5 million.

CIG was handed a preliminary determination on non-environmental issues for a proposed 282,000 Dth/d expansion of its system to serve electric generators and local distribution companies (LDCs) along the eastern slope of the Rocky Mountain Front Range in Colorado, where "explosive" population growth is occurring.

The expanded capacity primarily would be earmarked for two companies: Colorado Springs Utilities and Public Service Company of Colorado. Colorado Springs has joined with Coastal Power Co. to form a new partnership, Front Range Power Co., which currently is building a 492 MW plant addition at Colorado Springs' existing Nixon Power Plant in El Paso Country, CO. With the exception of a 4,000 Dth/d precedent agreement with Utilicorp United Inc., the entire capacity of the proposed CIG expansion has been subscribed by Colorado Springs, Public Service and Front Range Power.

Algonquin last week got clearance for additional compression that is designed to help affiliate Tetco increase its delivery capabilities on a constrained part of its system in New York and New Jersey. Over the past few winters, Tetco has faced increasing constraints on its system east of Lambertville, NJ. It set an all-time delivery record there in winter 1999-2000 and had to issue operational flow orders to control the flow of gas. This joint project between the two pipelines is designed to help relieve the constrained area.

Algonquin received authorization to upgrade two compressors at its Hanover Compressor Station in Hanover, NJ, at a cost of $6.7 million. The change will allow Tetco to shift 200,000 Dth/d of deliveries from the Hanover station to Algonquin's Lambertville interconnect. It also will give Tetco another 135,000 Dth/d of additional capacity from the Lambertville point 44 miles to the terminus of its system in Richmond County, NY.

If the additional capacity isn't required by Tetco's customers, Algonquin can take the 200,000 Dth/d of deliveries at its Hanover point. Tetco has agreed to reimburse Algonquin for the cost of the project and plans to file for rolled-in rate treatment in its next Section 4 rate proceeding.

Tetco didn't conduct an open season for the additional capacity and had no market agreements for the additional capacity, but it did submit statistical evidence that shows demand continues to grow in the region.

Lastly, Otay Mesa Generating, which is owned by PG&E Corp., was issued a Section 3 authorization and presidential permit to build a 16-inch line at the U.S./Mexico border to import up to 110 MMcf/d for its proposed 510 MW generation facility in San Diego County, CA.

The Commission conditioned construction of Otay Mesa's proposed border-crossing facilities on the U.S. segment of the North Baja Pipeline receiving certificate authorization [CP01-145]. The North Baja line would be involved in transporting Otay Mesa's gas to the border.

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