Some speculated Alliance Pipeline might be hurt by FERC’s movenot to issue preliminary determinations (PDs) to the four projectsthat would provide takeaway capacity for Canadian gas from Chicagoto East Coast markets. But Alliance officials last week quicklydismissed that notion.

“First of all, we don’t need to get the gas from Chicago to theEast Coast,” said Dennis Cornelson, president and CEO of AlliancePipeline Ltd. Partnership. He and Alliance Vice President JackCrawford noted there was room enough for both Canadian gas and GulfCoast gas in the U.S. Midwest market. “The Midwest market relies toa very large degree on gas imported from the Gulf. Even with theadditional Canadian gas, it’s still a big net user of gas from theGulf. So it [Canadian gas] really doesn’t have to go anywhereelse.”

Even if none of the four projects – Independence, Millennium,SupplyLink and MarketLink – are built, Alliance could use thedisplacement capability of existing pipelines, such as MidwesternGas, to get gas to the East Coast markets, Crawford said. Suchpipelines would be able to significantly reverse their flows duringcertain times of the year. “So we’ve always said you don’t reallyneed [additional] pipeline capacity out of Chicago to handleAlliance,” Cornelson told NGI. But he is confident new lines willbe constructed. “The more I talk to people the more I believeChicago is not only a market hub where a lot of pipelines cometogether…but it’s also a future supply hub,” Cornelson said. “Ithink it’s only a matter of time before the market absorbs andfully understands the implications” of this. “Then I think at theright time there will be further pipeline expansions leavingChicago.”

FERC just wants the projects to be “further advanced” beforehanding out approvals. Even when Alliance, which recently beganconstruction, was going through the regulatory process, theCommission made “very clear to us” that it wasn’t going to rubberstamp every project. It told Alliance “don’t count on us givingeverybody in the world a PD so that everybody…can build apipeline,” Cornelson said.

“I think their general philosophy is ‘show us the money’.[They’re not going] to give you a blank check to go out and try tofind the money.” He believes the Commission still must “grapple”with the issue of “whether or not they’re [going] to allow pipelineplayers themselves to take risks” by holding capacity on theirprojects. Cornelson said he thinks FERC should permit this.

Susan Parker

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