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

Many other major pipeline projects, including Alliance,Independence, and Millennium have made similar announcements overthe past year. Competitors and other observers have claimed forsome time that Vector’s schedule was overly optimistic,particularly given the delay of the 1.3 Bcf/d upstream Allianceproject. But Vector made no mention of supply or demand playing arole in its decision to delay the project. Vector told FERCdifficulties in right of way acquisition, equipment procurement andthe timing of regulatory approval in Canada and the U.S. promptedthe change in construction schedule.

Citing a recent appellate court decision concerning NorthernBorder Pipeline’s right of way (ROW) acquisition in Illinois forits Chicago extension project and Vector’s own troubles dealingwith ROW acquisition in the state, pipeline sponsors said theyexpect protracted condemnation litigation. A FERC certificate wouldgive the condemnation process some teeth, they noted, but FERC andthe 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 environmentalimpact statement and a supportive preliminary determination (PD) onall non-environmental matters from FERC. But the October PD wasissued two and a half months later than expected. That “pushedVector past the point in time when it could, without incurringsignificant acceleration charges, order both major equipment(60,000 hp of compression) and 270 miles of 42-inch diameter pipefor the November 1999 Chicago-to-Dawn in-service schedule.”

Vector sponsors do, however, plan to provide interimtransportation to the Dawn hub. Vector is considering phasing itsproject to provide short-term service prior to Oct. 1, 2000. Thefirst phase would consist of constructing the Belle River Mills,MI, to Dawn section in the summer of 1999. Commencing November1999, service would be available for shippers accessing the MichConsystem at Belle River Mills until the full system servicecapability is in place. Vector said it is currently in discussionswith parties to evaluate the market and is considering holding anopen season in the near future to solicit commitments.

Vector sponsors said their project still is ahead of thecompetition. “Based on the advanced state of the regulatoryprocesses, and on shipping commitments of over 800 MMcf/d, Vectoris clearly the most advanced project to meet increasing demand fornatural gas for markets east of Chicago,” said Vector VicePresident Juri Otsason. Vector filed firm transportation agreementswith four shippers for 82% of its proposed capacity. Two shippers,which signed up for 700 MMcf/d of capacity on the line, areaffiliated marketers.

The Vector project is a joint venture of Calgary-based EnbridgeInc. and Detroit-based MCN Energy Group Inc. It is designed totransport Western Canadian and U.S. sourced natural gas from therapidly expanding Chicago hub, where it will interconnect withNorthern Border Pipeline’s extension and the Alliance Pipeline, togrowing markets in eastern Canada and the midwestern andnortheastern regions of the United States.

Rocco Canonica

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