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Northern Border Extension Project Gets Green Light

Northern Border Extension Project Gets Green Light

The Federal Energy Regulatory Commission last week awarded Northern Border Pipeline a certificate to build its Project 2000 extension into northern Indiana, which would provide the state's customers access to Canadian gas supplies for the first time.

The project would extend Northern Border's pipeline from Manhattan, IL, to North Hayden, IN, where it would interconnect with Northern Indiana Public Service Co. (NIPSCO), and would augment compression on two segments of its existing system. It would raise the design capacity between Ventura, IA, and Harper to 1.48 Bcf/d, and the design capacity between Harper and Manhattan to 844 MMcf/d

When the 34-mile extension is completed, Northern Border's system will span from the U.S.-Canadian border in Montana to NIPSCO, a major Midwest LDC which has large industrial load requirements and annual deliveries in excess of 300 Bcf.

"The benefits of the project include, among others, the.....demonstration of a market demand, the introduction of Canadian supplies into the northern Indiana market, the integration of the Chicago and northern Indiana markets, and opportunities for existing shippers to enter a new market," FERC said [CP-21].

"This project strategically positions us to move natural gas east of Chicago, and continues our planned growth into new and diversified markets, including the growing power generation markets," said Larry L. DeRoin, chairman of Northern Border Partners L.P., which owns a 70% interest in the pipeline.

The extension will have a capacity of 544 MMcf/d, and would serve five shippers under 10-year contracts, including El Paso Energy Marketing, Bethlehem Steel., NIPSCO, Peoples Energy Services and Peoples Gas Light and Coke.

Northern Border has twice amended the project, which it filed with FERC in October 1998. The existing proposal reduces the diameter of the pipeline from 36 inches to 30 inches and eliminates some cooling equipment, cutting the cost of the project from $189 million, to $94 million.

Natural Gas Pipeline Co. of America and ANR Pipeline have hotly contested Northern Border's Project 2000, saying that it didn't comply with the Commission's policy statement on benefits vs. adverse effects.

Both Natural and ANR insisted Northern Border's existing shippers would be forced to subsidize part of Project 2000. But the Commission said "no shipper would be harmed," and, in fact, system-wide rates would decrease once the costs of the project are rolled in. Northern Border has more than justified the need for the project by submitting precedent agreements for all of the new capacity to be created, it noted.

Susan Parker

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