While the sheer number of pending and projected natural gaspipeline projects may be staggering, that’s not what sets themapart from projects that preceded them. Rather, the distinguishingfactor is that they’re coming at a time when the “complexity andvolume” of environmental issues and the level of landowneranti-project sentiment have reached unparalleled heights, says atop FERC official.

In a nutshell, FERC has authorized about 13 Bcf/d, or just over4,000 miles, of new pipeline capacity during the past three years.Still pending at the Commission is another 8 Bcf/d, or 4,000 miles,of new pipeline projects. And in the next year or so, it expectsthe industry to file projects totaling more than 7 Bcf/d, whichrepresents about 1,200 additional miles of pipe facilities, saidRandolph E. Mathura, director of the Division of PipelineCertificates for FERC’s Office of Energy Projects, at GasMart/Power2000 in Denver last week.

If you add all of the projects that were certificated in thepast three years, as well as those pending and anticipated, to theEnergy Information Administration’s estimate for current pipelinecapacity (123 Bcf/d), “you can see that’s an increase of systemcapacity [of] about 23% in just a few years time,” he noted.

For the longer term, the Interstate Natural Gas Association ofAmerica (INGAA) projects an average of 1,500 to 3,000 miles of pipewill have to be built each year between now and 2010 to reach that”magic 30 Tcf” demand number, Mathura said. That’s an additional16,000 miles of new pipeline, which would be an 180% increase overthe construction activity of the past five years. At the same time,the National Petroleum Council anticipates an estimated 30,000miles of new and replacement pipelines must be built by 2015 tomeet projected requirements of 150 Bcf/d.

“Now historically speaking, I would agree that this expectedlevel of activity is not unprecedented. But what is significantabout it is the increasing complexity and volume of environmentalissues we’re dealing with. Moreover, these issues are beingchampioned by more different types of parties than you’ve ever seenat FERC proceedings,” Mathura said.

FERC at one time thought the Kern River and Iroquois pipelineprojects were “highly controversial,” but that’s nothing comparedto “what we see in the ANR Independence [and] Transco cases.” TheIndependence Pipeline project elicited more than 6,000 letters ofopposition last year, mostly from landowners.

The majority of the new intervenors at the Commission areprivate landowners. “Not only are the issues that they’re raisingdifficult and complex, but the folks are emotional and intenseabout these issues, and are willing to do whatever it takes topursue them,” Mathura told the energy executives at the conference.

The landowners also are becoming more organized and aren’tafraid to ask their political leaders for help, he said.”…..[W]e’re seeing more and more citizen groups being formed andactively participating. We’re seeing a lot of involvement in ourcases by local, state and U.S. congressional representatives.”

The landowners, Mathura noted, “are demanding recognition oftheir private property rights. They want some assurance that it[the taking of their property] is really in the greater publicinterest of the nation. And they want to see hard evidence of thisin our cases…..”

Jamie Craddock of Williams Gas Pipeline-Transco, sole sponsor ofthe proposed MarketLink expansion and co-sponsor of Independence,knows first-hand about landowner opposition. Both projects are inlimbo at the Commission, awaiting rehearing ofDecember’s interimorder and/or final certificates, due in large part to the risingmettle of private landowners.

In the interim order, FERC conditionally approved theinterrelated, multi-state SupplyLink, Independence Pipeline andMarketLink projects, but withheld certificates until further marketshowing for the projects could be furnished. Craddock saidMarketLink already has enough market support to justify itsproject, and is awaiting Independence and SupplyLink, which Mathurasaid haven’t provided any information to FERC yet.

“We have to date not separated our MarketLink” project fromSupplyLink and Independence, said the manager of projectdevelopment for Transco. “We were really kind of invited to do soin the Commission’s interim order. But we’ve been holding, waitingto see what [will happen on] rehearing.”

In the event “we don’t get some relief in rehearing on some ofthe conditions” imposed by FERC on MarketLink, “we will have to do[just] that” – sever MarketLink from the other two projects.”MarketLink on its own can provide service without some of theupstream pieces,” Craddock noted. While the SupplyLink andIndependence projects “complement” MarketLink, they “[are] notfully necessary” to MarketLink’s survival.

As initially proposed, the SupplyLink expansion and greenfieldIndependence projects were supposed to transport competitiveCanadian gas supplies from the Chicago market to MarketLink tosatisfy the growing demand on the East Coast.

Even if MarketLink would be severed, the opposition to theproject still runs high. Landowners in Pennsylvania and New Jersey,where the MarketLink expansion of Transco’s existing system wouldoccur, don’t want any part of it and the New Jersey governor hasthreatened to go to court to stop MarketLink if FERC approves it.

But Craddock and Williams remain convinced of the need forMarketLink in the Northeast market. Even during summer Transco isallocating its Northeast capacity for firm and non-firm service,she said. “It used to be if you needed non-firm capacity in thesummertime [it was] no big deal,” but that has changed over thepast two summers.

The situation is much worse in the winter. “By no means was thisyear a record winter. We had [only] 18 days where it acted likewinter.” Still, delivered prices in the Northeast during this pastJanuary and February were 106% higher than a year ago, she said. Inthe New York market, delivered prices shot up to the $17 range onTransco’s system. Such prices show there’s a “deliveryinfrastructure problem” in the Northeast region.

Craddock also let it be known that she’s not too happy withFERC’s new policy statement on pipeline construction, which shesaid requires project sponsors to “balance” the disparate interestsof landowners, their existing shippers and pipeline competitors inorder to obtain certificates for their proposed projects.

“I feel it stands to delay the needed pipeline infrastructure,takes away customer choice, removes incentives for existingpipelines to find efficiency and it’s going to increase pipelinerisk and potentially project costs,” she said.

Susan Parker, Denver

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