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MD Agency Seeks Broad FERC Review of LNG Impact on Distribution Systems

Washington Gas Light (WGL), which serves metropolitan Washington, DC, is not the only natural gas utility to have experienced leaks on its distribution system possibly from high-Btu content liquefied natural gas (LNG), contends a Maryland agency that represents regulated utility ratepayers.

"There is also evidence that at least one other utility, LILCO [Long Island Lighting Co.], experienced mechanical coupling failures related to imported LNG supplies" that did not meet the standards for pipeline-quality gas , the Maryland Office of the People's Counsel (OPC) told FERC in a motion filed Wednesday.

LILCO, a provider of natural gas and electric service to Long Island, ceased to exist as a stand-alone company in 1998. Its gas distribution assets are now owned by KeySpan Energy. In fact, KeySpan was created by the merger of Brooklyn Union with LILCO's gas distribution operations. LILCO's electric transmission and distribution operations were transferred to Long Island Power Authority.

In the LILCO case, which dates back to 1993, the New York Department of Public Service staff identified problems on LILCO's gas distribution system that involved gaskets absorbing heavy hydrocarbons, which then caused them to expand and leak, said Theresa V. Czarski, deputy counsel for the OPC. The leaks could have been caused by LNG, high-Btu content traditional gas, deteriorating pipelines or gaskets, she noted.

"That's why we need to have a FERC hearing -- to get to the bottom of what's causing the leaks" on distribution systems, Czarski told NGI.

The disclosure of apparent failures on the former LILCO gas distribution facilities may explain in part why KeySpan earlier this month backed WGL's request for FERC to consider gas quality and interchangeability issues in the same proceeding in which the agency is addressing Dominion's proposed expansion of its Cove Point LNG terminal and associated pipeline project [CP05-130, 131, 132]. WGL, which suffered a series of leaks on its gas system this year, claimed they were caused by the LNG supplied by Dominion Cove Point. KeySpan urged the Federal Energy Regulatory Commission not to "brush aside" the concerns associated with LNG (see Daily GPI, Dec. 15).

In a motion submitted to the Commission, the Maryland OPC joined WGL, KeySpan and the Maryland Public Service Commission (PSC) in asking FERC to conduct an evidentiary hearing to address WGL's protest and claim that the proposed expansion of the Cove Point LNG terminal would cause further damage to the Washington-area utility's gas distribution infrastructure. Richmond, VA-based Dominion has called on FERC to consider the gas quality/interchangeability issues in a separate proceeding from its expansion project.

"The potential for grave consequences to WGL's residential ratepayers is clear if the Cove Point application for expansion is approved without consideration of relevant safety and gas quality issues," the Maryland agency said, adding that its motion to intervene in the case should be granted so that the interests of WGL's customers are properly represented before FERC.

"People's Counsel, as a participant in this case, seeks to look not just at the engineering claims of the parties, but at somewhat broader concerns with long-term relevance to residential customers in Maryland and in other distribution systems which may be served directly by LNG facilities," the OPC said.

Based on the technical information provided so far, the OPC conceded its consultants have been unable to make a final conclusion as to whether unblended LNG was the source of the problems on WGL's distribution system. It noted that it also is unclear why there has been a less pronounced effect on other distributions that are receiving LNG. These issues need to be explored in an evidentiary hearing, the Maryland agency said.

"The appropriate forum for resolution of the broader issues of safety and also of the underlying causes(s) of the system leaks [on WGL] should rest with FERC, not the Maryland PSC, the OPC noted.

Last month, WGL called on FERC to condition any certificate granted to the Dominion Cove Point expansion on the adoption of appropriate measures that would ensure the LNG-sourced gas delivered by the Cove Point terminal is interchangeable with traditional gas and will not negatively impact the utility's system. It asked the Commission to reject the proposed Cove Point expansion until it can be demonstrated at a evidentiary hearing that imported LNG is fully interchangeable with traditional gas supplies (see Daily GPI, Nov. 4).

WGL's request followed claims earlier this year that vaporized LNG from the Cove Point terminal was to blame for widespread leaks on its distribution system in Prince Georges County, MD. WGL commissioned a study that determined that LNG was the key factor contributing to the deterioration of rubber seals in mechanical couplings that join sections of distribution mains to service lines on the WGL gas distribution system (see Daily GPI, July 8). Dominion refuted the findings, claiming instead that the age of the WGL distribution lines was at fault. The utility said it paid $144 million to repair the leaks, which affected about 10% of its system.

Prince Georges County is the most populous county served directly off the Cove Point Pipeline, which carries regasified LNG from the Cove Point terminal in eastern Maryland.

WGL contends that the proposed Cove Point terminal expansion, which would increase sendout capacity to 1.8 Bcf/d and storage capacity to 14.5 Bcf, would potentially cause even more problems on its system. The expansion project also entails the construction of 161 miles of pipeline in Maryland and Pennsylvania. FERC issued a favorable environmental review of the project in late October (see Daily GPI, Oct. 31).

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