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1 Bcf/d Vector Project Delays Full Service Until 2000

1 Bcf/d Vector Project Delays Full Service Until 2000

Vector Pipeline sponsors finally conceded last week their $471 million project will not be prepared to ship a proposed 1 Bcf/d of gas from Chicago to Dawn, ON, in November 1999 as planned. The project will be able to ship some gas along a short stretch of pipe at the downstream end between MichCon's system and the Dawn hub, but about 340 miles of the system will remain out of service until fall of 2000, sponsors told FERC.

Many other major pipeline projects, including Alliance, Independence, and Millennium have made similar announcements over the past year. Competitors and other observers have claimed for some time that Vector's schedule was overly optimistic, particularly given the delay of the 1.3 Bcf/d upstream Alliance project. But Vector made no mention of supply or demand playing a role in its decision to delay the project. Vector told FERC difficulties in right of way acquisition, equipment procurement and the timing of regulatory approval in Canada and the U.S. prompted the change in construction schedule.

Citing a recent appellate court decision concerning Northern Border Pipeline's right of way (ROW) acquisition in Illinois for its Chicago extension project and Vector's own troubles dealing with ROW acquisition in the state, pipeline sponsors said they expect protracted condemnation litigation. A FERC certificate would give the condemnation process some teeth, they noted, but FERC and the NEB aren't expected to issue final decisions until spring. That "raises the real specter of delay past November 1999."

Vector already has received a favorable draft environmental impact statement and a supportive preliminary determination (PD) on all non-environmental matters from FERC. But the October PD was issued two and a half months later than expected. That "pushed Vector past the point in time when it could, without incurring significant acceleration charges, order both major equipment (60,000 hp of compression) and 270 miles of 42-inch diameter pipe for the November 1999 Chicago-to-Dawn in-service schedule."

Vector sponsors do, however, plan to provide interim transportation to the Dawn hub. Vector is considering phasing its project to provide short-term service prior to Oct. 1, 2000. The first phase would consist of constructing the Belle River Mills, MI, to Dawn section in the summer of 1999. Commencing November 1999, service would be available for shippers accessing the MichCon system at Belle River Mills until the full system service capability is in place. Vector said it is currently in discussions with parties to evaluate the market and is considering holding an open season in the near future to solicit commitments.

Vector sponsors said their project still is ahead of the competition. "Based on the advanced state of the regulatory processes, and on shipping commitments of over 800 MMcf/d, Vector is clearly the most advanced project to meet increasing demand for natural gas for markets east of Chicago," said Vector Vice President Juri Otsason. Vector filed firm transportation agreements with four shippers for 82% of its proposed capacity. Two shippers, which signed up for 700 MMcf/d of capacity on the line, are affiliated marketers.

The Vector project is a joint venture of Calgary-based Enbridge Inc. and Detroit-based MCN Energy Group Inc. It is designed to transport Western Canadian and U.S. sourced natural gas from the rapidly expanding Chicago hub, where it will interconnect with Northern Border Pipeline's extension and the Alliance Pipeline, to growing markets in eastern Canada and the midwestern and northeastern regions of the United States.

Rocco Canonica

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ISSN © 2577-9877 | ISSN © 1532-1266
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