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TriState Falls as Vector Picks Up the Pace

TriState Falls as Vector Picks Up the Pace

Vector Pipeline management was all smiles last week as construction on the pipeline kicked into high gear and one of its main competitors, CMS Gas Transmission & Storage Co.'s TriState Pipeline, halted efforts to pursue its application for construction. While TriState foundered, the Vector project, which would make 1 Bcf/d of transport available from western Canada to Chicago, is on schedule to start service in October.

Work began on the horizontal directional drilling under Deep River in Lake County, IN, along with preparations to complete construction of a segment though an adjacent golf course earlier this week. Construction contracts for completion of the Deep River and St. Clair River directional drills, in addition to the golf course pre-build near Deep River were awarded to Murphy Bros. Inc. of East Moline, IL.

The partners said that by the beginning of February, directional drill activity would begin at the St. Clair River where Vector crosses into Canada towards its final destination at Dawn, Ontario. Requests for bids for remaining mainline construction were issued on Jan. 17 with a decision on the successful contractors expected in April 2000. Construction on the mainline pipe is targeted to begin in early May.

"This is a major milestone for Vector," said Juri Otsason, Vector vice president. "We're pleased to see the first construction activity begin following the challenging extensive marketing, planning and regulatory effort that has taken place over the last two years."

Milestones were few and far between for TriState Pipeline, which sent a letter to FERC last week stating its intentions to halt its efforts to build the pipeline. TriState would have followed a similar path to Vector, but hoped to use a part of Consumer Energy's system as a cost-saving measure.

"TriState and its owner, CMS Gas Transmission & Storage Co. continue to believe that the TriState project represents an efficient project to transport natural gas from the Chicago Hub to the Dawn Hub, via a structure that minimizes environmental impacts...Nevertheless, upon review and analysis of the current state of the project and the marketplace, TriState has concluded that it will not continue to pursue its application [to build the pipeline]," said George Hass, project manager for TriState Pipeline, in the letter to FERC.

The withdrawal request, however, was made without the prejudice of TriState refiling. "TriState and CMS also continue to have an interest in providing transportation service between the Chicago Hub and the Dawn Hub," Hass also said in the letter.

"We are keeping our options open," said John Barnett, a CMS spokesman. "But we don't have any plans right now to refile anything...After re-evaluating the situation over the past couple of months, we came to the realization that this was not the time to file this particular project."

Ever since it was first announced in November of 1998, the $400 million TriState project hit an abundance of regulatory and internal problems. While Vector easily jumped hurdles at FERC, TriState experienced jurisdictional disputes and a delayed preliminary decision on the non-environmental aspects.

The final nail in the coffin may have come last September, when Westcoast Energy, which had held a 33% interest in TriState, pulled out of the venture and turned around and purchased a 30% stake in the competing Vector Pipeline project, (see NGI, Sept. 27).

While TriState struggled, Vector flourished. Last November, FERC denied requests for further rehearings and also granted Vector's request to amend its certificate to allow relocation of the Michigan compressor station from Milford Township to nearby Highland Township, MI. These decisions allowed Vector to commence construction on a timely basis. The $447 million Vector project won final FERC approval in May of last year (see NGI, May 31).

However, a new entrant to the game is already setting up to challenge Vector. The Coastal Corp.'s ANR Pipeline, Great Lakes Gas Transmission and TransCanada PipeLines announced availability of capacity on their systems for hub-to-hub transportation between Chicago and Dawn, ON. The collaboration was formed earlier this month (see NGI, Jan. 10) and if their capacity offering generates enough interest among shippers, the three could make the offering every winter, creating a competitor to Vector.

The Vector Pipeline is a joint venture of Calgary-based Enbridge Inc., lead sponsor for the project, Detroit-based MCN Energy Group Inc. and Westcoast Energy Inc. of Vancouver, British Columbia. Pipeline capacity can be cost-effectively expanded to 1.5 Bcf/d.

John Norris

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