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Maine Markets Stall, Force Maritimes To Defer Laterals

January 25, 1999
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Maine Markets Stall, Force Maritimes To Defer Laterals

Unable to complete final agreements with many of its U.S. markets, Maritimes &amp Northeast Pipeline is expected to file an amended certificate application for Phase II of its pipeline project with FERC this month that will defer construction of nearly all of its previously planned pipeline laterals in the U.S. It also is expected to show an increase in rates because of new calculations of construction costs.

The pipeline is expected to defer constructing about 147 miles of Maine laterals, which initially were expected to be in service with the Phase II mainline in November. The laterals being shelved include Millinocket, Skowheagan, Bucksport and Woodlands, all of which would have served Maine paper mills. Another line to the Wyman Station power plant, which was expected to be converted to burn gas, is not being built because Central Maine Power and FPL are litigating the sale of the plant.

"Because of the economy, some of the other plants and paper mills in Maine will not need laterals," said Maritimes spokesman Brian Prenda. "We had 440 MMcf/d, now we have 360 MMcf/d.

"We are still working with Champion Paper on their Bucksport lateral, but it would not work for them in 1999," he said. "They've already been approved to build their dual-cycle power plant up there, and they are going to need natural gas to fire that. We are also working with CMP [Natural Gas] on local distribution and with Bangor Gas. As you know there are several other power plants being planned in Maine. We have the Veazie power plant and Gorham power plant for about 270 MMcf/d scheduled." In the long run, all of the laterals will be built, he said. In the meantime, there is ever-growing interest among Atlantic Canada gas markets in Sable Island gas production and Maritimes pipeline capacity (please see related story).

And despite the short-term set back in the U.S., FERC already has given the pipeline the green light to begin initial construction on Phase II, which is expected to begin service in November. Earlier this month over the protests of several intervenors, the Commission concluded the pipeline's remaining contracts were a sufficient showing of market support for it to allow construction to begin. Maritimes still has contracts with four shippers, including Boston Gas (43,200 Dth/d), Mobil Natural Gas (185,335 Dth/d), Salmon Resources (100,000 Dth/d) and another company (30,240 Dth/d), which total nearly 360,000 Dth/d, or 82% of the expected full capacity. It also has a backstop agreement with Mobil for an additional 174,665 Dth/d.

Maritimes is owned by affiliates of Duke Energy (37.5%), Westcoast Energy (37.5%) and Mobil (25%). Duke, through its affiliates, is responsible for the overall development of the $1 billion project and directly responsible for the U.S. portion. Maritimes Phase II includes two compressor stations and 198 miles of 24-inch diameter and 2.2 miles of 30-inch diameter mainline pipeline from Baileyville, ME, to Westbrook, ME. It will be designed to transport 440 MMcf/d of gas. Phase I, the jointly owned project with Portland Natural Gas Transmission System, includes 101 miles of 30-inch diameter mainline pipeline from Dracut, MA, to Westbrook, ME. PNGTS is expected to begin service utilizing Phase I in February.

Rocco Canonica

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