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Trans-Union Can't Build Single-Use Line, FERC Says

Trans-Union Can't Build Single-Use Line, FERC Says

FERC handed the proposed Trans-Union Interstate Pipeline something of a doubled-edged sword last week. While it issued a certificate for the 42-mile, 430,000 Dth/d pipeline project, it denied its request to operate it as a single-use line.

Responding to a "limited protest" filed by Lion Oil Co. to open up the pipeline to third-party shippers, the Commission held that "in light of [its] current policy not to issue case-specific, Part 157 transportation certificates and consistent with recent Commission decisions, any certificate issued to Trans-Union to construct and operate its proposed pipeline will be conditioned on Trans-Union's filing with the Commission, within 120 days..., an application for a Part 284 blanket transportation certificate, along with an open-access tariff and Part 284 rates."

Trans-Union proposed the line with only one customer in mind --- a gas-fired 2,700 MW power generation plant to be constructed by affiliate Union Power Partners near El Dorado, AR. When completed, it would be one of the largest generation plants in the nation. The proposed line would connect with the facilities of Texas Gas Transmission at the Sharon Compressor Station in Claiborne Parish, LA. Union Power has committed itself to most of the capacity under a 30-year contract.

Dallas-based Panda Energy, parent of Trans-Union and Union Power, said it decided to build the line only after it considered and rejected several gas transportation proposals that were submitted by Reliant Energy Gas Transmission. Panda Energy said the existing pipelines were too small to handle the necessary volumes.

Lion Oil, which operates a refinery in El Dorado, protested Trans-Union's proposal to build the pipeline as a single-use line, saying that it wanted capacity since the new line would be a cheaper alternative to Reliant. The refiner historically has received up to 12,500 MMBtu/d of firm service from Reliant, but its contract demand was cut back to 9,500 MMBtu/d last April.

The Commission said it wouldn't require Trans-Union to hold an open season for capacity on the line "since it appears that Lion is the only third-party shipper potentially interested in service at this time." Nor does it think it's necessary for Trans-Union to revise its application to increase capacity on the line.

Given that Union Power has indicated it will only need 340,000 MMBtu/d of the planned 430,000 MMBtu/d of capacity during the first phase of its operation, "it appears that there would be capacity available on Trans-Union to provide a firm service for Lion at least in the short term," the order said [CP00-47].

Susan Parker

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