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Tetco Proposes Substitute for Independence Project

Tetco Proposes Substitute for Independence Project

The battle over who will get to build new pipeline capacity to the prized Northeast gas market has reached a feverish pitch, with sponsors dreaming up ways to knock out their competitors' projects. ANR Pipeline and National Fuel Gas Supply Corp., sponsors of the proposed Independence Pipeline, recently suggested a plan that would wipe out a large part of Columbia Gas Transmission's Millennium Pipeline project. And Texas Eastern Transmission (Tetco) has joined the ranks, devising a proposal that could obviate the need for the controversial Independence line altogether and part of an associated project.

Tetco claims it has enough existing and projected turned-back capacity on its system that, when combined with "certain additional construction," would satisfy the customer needs of Independence and a portion of the MarketLink project. It put the proposal on the table earlier this month, pointing out that it was overlooked by FERC staff as a possible alternative to Independence in the draft environmental impact statement (DEIS) on the pipeline project. Tetco was evaluated as a possible substitute for the MarketLink project in the DEIS, the pipeline said, but the availability of its turned-back capacity was not factored into the equation. The Commission staff subsequently asked Tetco to provide it with "supplemental comments" on the alternative, which it did last week.

In its comments, the Duke Energy pipeline said that legal precedent and the National Environmental Policy Act (NEPA) require FERC to take a "hard look" at available turned-back capacity as an alternative to proposed new construction [CP97-315]. Although it concedes that some new pipeline construction will be needed into the Northeast in the years ahead, Tetco urged the Commission to "adopt policies that will make it easier for existing available pipeline capacity to be used as alternatives to new construction, where feasible."

It believes such policies will be critical given the high amount of contracted capacity that's expected to be turned back to Northeast pipes during the next few years, and the fact that much of the pipe capacity that's being proposed is to satisfy higher gas demand for new electric generating load - which will be heavily weighted to off-peak periods.

With respect to its surrogate proposal, Tetco said it could satisfy market demand of 663,000 Dth/d from an interconnection with ANR Pipeline at Muncie, IN, to Linden, NJ - a demand level that is "commensurate" with the existing subscriptions for MarketLink (663,000 Dth/d) and 34,000 Dth/d more than the current subscribed level for Independence (629,000 Dth/d). It contends it can do this by using existing and projected turned-back capacity, combined with construction of about 75 miles of pipeline looping, a replacement line and some additional compression. The capacity, Tetco said, could either be provided directly to Independence and to part of the MarketLink project through a lease arrangement, or to their shippers.

All told, Tetco said its alternative would entail 193 miles of pipeline and 43,900 horsepower of compression at a cost of $194 million. This compares to 624 miles of new pipeline and 137,400 horsepower of compression for the $678 million Independence project, which when combined with ANR's associated SupplyLink line would extend from Joliet, IL, to the hub near Leidy, PA. Sponsors of Independence are ANR, National Fuel and Transcontinental Gas Pipe Line. Transco is the sponsor of MarketLink, which would loop the pipeline's existing system eastward from Leidy.

As another possible choice, Tetco estimated that - without building any new facilities - it still could transport 300,000 Dth/d on a firm, year-round basis over the Muncie-to-Linden route by using existing and projected turned-back capacity. It said the capital cost savings associated with this alternative would be about $745 million, and $801 million for the scenario requiring new facilities.

In separate comments, Consolidated Edison Co. of New York last week also questioned the need for the Independence and MarketLink projects. It called on FERC staff to do a "more serious need analysis" of the two projects in its final environmental impact statement (FEIS), considering "no action" as an alternative. "...[I]t must be recognized that no one takes the position that no new capacity is or will be required in the Northeast. Rather, what is being questioned is the need for major new projects like Independence and MarketLink, which are far in excess of forecasted near-term increases in demand. And given the obvious environmental impacts inherent in the construction of...624 miles of new pipeline, this question of market need is one that must be addressed as part of the EIS consideration of the 'no-action' alternative."

Likewise, Rep. J. Pascrell Jr (D-NJ), who represents the 8th District in northern New Jersey through which MarketLink would run, believes the Transco looping project has flunked the 'need' test. "I believe that Transco has failed to demonstrate a need for the proposed pipeline." Also, "I have grave concerns about the safety and environmental impact of the proposed pipeline project, which will bisect six towns that I represent. I strongly disagree with the FERC staff conclusion that the project would 'have a limited adverse environmental impact.'"

Susan Parker

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ISSN © 2577-9877 | ISSN © 1532-1266
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