Vector Pipeline management was all smiles last week asconstruction on the pipeline kicked into high gear and one of itsmain competitors, CMS Gas Transmission & Storage Co.’s TriStatePipeline, halted efforts to pursue its application forconstruction. While TriState foundered, the Vector project, whichwould make 1 Bcf/d of transport available from western Canada toChicago, is on schedule to start service in October.

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

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

“This is a major milestone for Vector,” said Juri Otsason,Vector vice president. “We’re pleased to see the first constructionactivity begin following the challenging extensive marketing,planning and regulatory effort that has taken place over the lasttwo years.”

Milestones were few and far between for TriState Pipeline, whichsent a letter to FERC last week stating its intentions to halt itsefforts to build the pipeline. TriState would have followed asimilar path to Vector, but hoped to use a part of ConsumerEnergy’s system as a cost-saving measure.

“TriState and its owner, CMS Gas Transmission & Storage Co.continue to believe that the TriState project represents anefficient project to transport natural gas from the Chicago Hub tothe Dawn Hub, via a structure that minimizes environmentalimpacts…Nevertheless, upon review and analysis of the currentstate of the project and the marketplace, TriState has concludedthat it will not continue to pursue its application [to build thepipeline],” said George Hass, project manager for TriStatePipeline, in the letter to FERC.

The withdrawal request, however, was made without the prejudiceof TriState refiling. “TriState and CMS also continue to have aninterest in providing transportation service between the ChicagoHub and the Dawn Hub,” Hass also said in the letter.

“We are keeping our options open,” said John Barnett, a CMSspokesman. “But we don’t have any plans right now to refileanything…After re-evaluating the situation over the past coupleof months, we came to the realization that this was not the time tofile this particular project.”

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

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

While TriState struggled, Vector flourished. Last November, FERCdenied requests for further rehearings and also granted Vector’srequest to amend its certificate to allow relocation of theMichigan compressor station from Milford Township to nearbyHighland Township, MI. These decisions allowed Vector to commenceconstruction on a timely basis. The $447 million Vector project wonfinal FERC approval in May of last year (see NGI, May 31).

However, a new entrant to the game is already setting up tochallenge Vector. The Coastal Corp.’s ANR Pipeline, Great Lakes GasTransmission and TransCanada PipeLines announced availability ofcapacity on their systems for hub-to-hub transportation betweenChicago and Dawn, ON. The collaboration was formed earlier thismonth (see NGI, Jan. 10) and if their capacity offeringgenerates enough interest among shippers, the three could make theoffering every winter, creating a competitor to Vector.

The Vector Pipeline is a joint venture of Calgary-based EnbridgeInc., lead sponsor for the project, Detroit-based MCN Energy GroupInc. 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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