FERC has approved Transwestern Pipeline Co. LLC's application to abandon by sale to affiliate Lone Star NGL Pipeline LP a nearly 60-mile segment of its system in West Texas.

Transwestern, a subsidiary of Dallas-based Energy Transfer Partners LP, proposed to abandon by sale to Lone Star an approximately 59.5-mile long segment of 24-inch diameter pipe that extends from Monument Junction to Halley Junction in Winkler County in West Texas.

Transwestern said the pipeline segment to be abandoned, which is part of its West Texas Lateral, is looped for its entire length by a 30-inch diameter pipeline, which Transwestern will retain, according to the Federal Energy Regulatory Commission order [CP12-94]. Lone Star, a nonjurisdictional pipeline, is a joint venture of Energy Transfer and Dallas-based Regency Energy Partners LP.

The existing capacity of the West Texas lateral is 585 MMcf/d for northbound flows and 550 MMcf/d for southbound flows. After the proposed abandonment, Transwestern anticipates that the capacity for northbound flows on the lateral would drop to about 500 MMcf/d and capacity for southbound flows would decrease to 480 MMcf/d. Lone Star plans to use the pipeline facilities to transport natural gas liquids in the Permian Basin area, the order said.

Transwestern told FERC the sale of the facilities to Lone Star NGL would not affect its ability to service existing shippers. It said firm customers presently have subscribed for only 250 MMcf/d of capacity on the West Texas Lateral, all of which can be served from the 30-inch diameter loop line.

Transwestern acknowledged that there are receipt and delivery points on the 24-inch diameter line to be abandoned that have been used within the past year by some of its existing shippers. To ensure continuity of service, it plans to relocate the receipt and delivery points to the 30-inch diameter loop, at no cost to the customers.

Transwestern further said there are numerous other pipelines within a 20-mile radius of the West Texas Lateral that could provide area shippers with alternate natural gas transportation capacity if needed.

DCP Midstream LP and DCP Midstream Marketing LLC were the only ones to protest the abandonment, saying the facilities would be needed in the future for the transport of gas from the Permian Basin. Transwestern countered that it held open seasons for capacity on the West Texas Lateral in July and October 2011 and from March 29 through April 30 of this year. It said it received only one bid for a small amount of firm capacity at an "unacceptably low discounted rate" in response to the July 2011 open season, and that no shipper, including DCP, submitted a bid for firm capacity in response to either the October 2011 open season or the open season this year.

"The results of Transwestern's open season demonstrate that there presently is little or no demand for additional firm service [for natural gas] on Transwestern's West Texas Lateral. Moreover, the West Texas Lateral's 30-inch diameter loop line that Transwestern will retain has capacity significantly in excess of Transwestern's current firm service obligations," FERC said in the order.

"No party other than DCP protests the proposed abandonment, and its protest is based on its assertion that the 24-inch diameter pipeline segment will be needed for the transportation of gas if production in the Permian Basin increases in the future, not that the capacity is needed now. The Commission will not require a pipeline to retain unused transmission capacity in reserve, awaiting the arrival of potential firm demand that may not materialize."

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