Independence and MarketLink pipeline sponsors were forced to runthe gauntlet last week at a special FERC conference. The event drewbuses filed with t-shirted crowds of pipeline supporters and anopposing army of congressmen, state representatives, localpoliticians and landowner advocates, the likes of which hasn’t beenseen at the Commission since the Iroquois Pipeline project wasproposed in the early 1990s.

Speakers unloaded an arsenal of criticism at the $1.3 billionplan, which includes several sections of pipe ultimately stretchingfrom Chicago to New York City. The project, which would transportup to 1 Bcf/d, has been the most contested project in FERC history,prompting more than 7,400 letters to be sent to the Commission.That was the main reason for calling the additional publicconference, i.e., to provide supplemental information that will beconsidered by FERC in its final decision on the new pipelines.

In an unprecedented action in March, the Commission refused togive Independence (and the associated upstream SupplyLink anddownstream MarketLink expansions) and the competing Millenniumpipeline project preliminary determinations (PDs) on thenon-environmental aspects of the projects until the environmentalreviews are completed. FERC took the action in response to thelarge landowner opposition and questions about market need.

Independence and Millennium, however, did win draftenvironmental acceptance from FERC staff in April but withsignificant requested route changes. MarketLink proposes to loopabout 154 miles of existing Transcontinental Gas Pipeline to carrygas from Leidy, PA, through Pennsylvania, New Jersey to New YorkCity. The proposed ANR Pipeline-sponsored SupplyLink project wouldentail about 72 miles of looping of ANR’s existing system betweenJoliet, IL, and Defiance, OH. Independence, as currently proposed,would run about 400-miles from Defiance to the hub in Leidy.

New Jersey Opposition Unanimous

At the conference last week, the projects, which FERC considersone system, were criticized for everything from lack of marketdemand to documented cases of landowner intimidation by thesponsors, which are subsidiaries of Coastal Corp., The WilliamsCompanies, and National Fuel Gas.

“I can’t find one single elected official at any level thatsupports this project in my state to the best of my knowledge…,not one.” said Rep. Bill Pascrell Jr. (D-NJ), who requested FERChold the special conference. “That speaks volumes.”

Part of the reason may be the method by which project sponsorshave negotiated with landowners. A fuming Wood County, NJ,Commissioner, Timothy J. Brown, blasted the “devious, underhanded,snake-oil-salesman methods [Williams unit Transcontinental Gas PipeLine] is using” to obtain the private property required to buildthe project. “Intimidation is the name of the game,” he said.

“The tactics being used to coerce and scare the public arerepugnant. These tactics must be investigated and haltedimmediately… All it takes for evil to triumph is for good peopleto do nothing.”

Wood County landowner Jodie Stearns said the sponsors currentlyare telling landowners that the project has already been approvedin an effort to scare them into giving up their property for farless than it’s worth. She said many landowners also are pursuingtrespassing actions in the local courts against the pipeline. “Wehave been lied to. You have been lied to,” she told FERC.

“We do not want this project. We do not want these badneighbors,” said Stearns.

Pascrell said the pipeline sponsors are attempting to misleadthe entire state of New Jersey by publicizing the results of aself-serving poll taken recently by Transco. “These questions inthis poll are the biggest insult that I have ever seen, and I’vebeen in public life for about 15 years.. It is written to get theright response. Every question is like this.

“If we’re going to allow this [project], we collectively betterbe darn sure it is in the public interest and it is truly demandedby the market.”

If We Build It…..

Pascrell’s main argument against the project focused on thenon-binding agreements with affiliates that were used to justifymarket need. “If all that is required for a company [to show marketdemand for a pipeline project is] to go out and find a way to meeta capacity percentage, then companies will do as Independence andTransco have done; they will enter into precedent agreements withaffiliates, such as Engage, such as Westcoast, for two-thirds ofthe capacity or close to it and then claim that as evidence of truedemand,” he said. “If you can’t say where the market is, then youcan’t say exactly what facilities you need to build…

“I’m not the first to make this argument,” he added. “Where didI first find it? In the Commission’s [new] policy statement issuedjust two weeks ago in a section called ‘drawbacks on currentpolicy.’ While there is some dispute as to whether this policystatement officially applies to the consideration of thisapplication, what you have stated is none-the-less critical to ourdiscussion today. Your words signal that you believe we cannot lookat these applications in a vacuum and I agree.” He cited a passagein the policy statement in which the Commission acknowledged thedifficulty in justifying taking private property to build apipeline based simply on non-binding written agreements. “I urgeyou to listen to your own words because you’re right. Market demandcannot be created only by papering together a certain percentage ofcapacity in agreements. It takes more than that.”

Pascrell, Rep. Ralph Gilmore (R-OH) and others stressed the needto further consider alternatives to the project. Many speakerspointed out the potential for a significant amount of pipelinedecontracting in the next couple of years.

“It appears that turned-back capacity on the Texas Eastern,Tennessee Gas and the CNG pipelines along with some minormodifications could add more transmission capacity than thatproposed by the Independence Pipeline,” said Gilmore. “TheMillennium pipeline project [sponsored by Columbia Energy, MCN,Westcoast and others] would transport new natural gas suppliesusing existing rights of way for nearly 90% of its route. Thisalternative would result in far less disruption to people and theirproperties than Independence [and at a] lower cost.”

In later testimony, Tetco’s Gregory Rizzo agreed turned backcapacity could provide the majority of space needed over the nextfew years, saying his company expects 500 MMcf/d of capacity to beturned back by Nov. 1, 2000, the proposed in-service date ofIndependence/MarketLink. Rizzo presented an alternative project,which has not yet been filed but was included in the draftenvironmental review of Independence. The alternative would use the500 MMcf/d of turned-back capacity and add a few new facilities onTetco for a total cost of about $370 million compared toIndependence/MarketLink’s $1.3 billion. Tetco’s project would use60% less horsepower, 75% less pipeline, and would require no newconstruction in New Jersey, the state in which there appears to besignificant opposition to MarketLink.

Williams Shows Courage

Williams Executive Vice President Cuba Wadlington showed couragein testifying last. He said he would take immediate action againstany acts of landowner intimidation by Williams employees.

“I do not have any snake oil on my body,” he said. “And whileI’m 64 inches tall and weigh 230 pounds and I’m black, I do notthink I’m intimidating. I have a very friendly face. Since I’m nota politician or a spinster, I will not attempt to put the polishand wax that some have put on these issues prior to my opportunity[to speak],” he said.

Wadlington attacked his attackers, saying all those who are inopposition are doing so for “their own special interests, whetherrunning for office or to make their own living. Less than 5% of theopposition comes from landowners,” he claimed, noting that 33% ofthe right of way already has been acquired by Transco.

Regarding market demand for the project, Wadlington saidMarketLink now is 100% subscribed. “As recently as last night wehad the last piece signed up for,” he said. And on the issue ofpotential turned-back capacity, he said, “those who are raising itare being disingenuous and are misleading the Commission… It hasnothing to do with physical flow because that continues to grow.”There is contract turnover and requests for shorter contracts anddifferent terms, but all the existing capacity will be utilized andexpansions are needed, he said.

Rocco Canonica

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