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New Jersey Tries to Derail Transco Project --- Again

New Jersey Tries to Derail Transco Project --- Again

In the latest of a yearlong effort to put the brakes to an unwelcome MarketLink project, the state of New Jersey and the state's Department of Law and Public Safety called on FERC last week to rescind and vacate the certificate approving construction of the controversial pipeline expansion through the northern part of the state, and to treat sponsor Transcontinental Gas Pipe Line Corp.'s recent request to amend the project as a new application.

In short, the state asked the Commission to require Transcontinental to start over from scratch with its MarketLink project, which originally was intended as a 700 MMcf/d, 154-mile loop expansion of Transco's existing system in Pennsylvania and northern New Jersey, but which has since been scaled back [CP98-540].

In seeking to vacate the certificate awarded to Transco last April, New Jersey --- at the urging of Gov. Christine Whitman --- asked FERC to immediately suspend Transco's ability to condemn property in the state for construction of the MarketLink project pending Commission action on the state's requests.

The Garden State contends the make-up of the original MarketLink project --- capacity requirements, targeted in-service date and customer identities --- has changed so radically in the past couple of months that it "makes a mockery of the Commission's whole pipeline certification process."

Transco now concedes its original proposal "has essentially fallen through," the state said. "Yet [it] seeks to retain the certificate it won through that process, even though the grounds on which it was issued have disappeared. The Commission should not permit this. The certificate should be rescinded."

"We're disappointed that they've elected to take this course of action," countered a Transco spokesman, but "we remain eager to work with New Jersey to address any concerns it may have."

In a companion protest also filed last Monday, New Jersey said Transco's amended proposal seeking to phase in construction of its MarketLink expansion calls for such a "completely different project" that "it should have been filed as, and should be evaluated as, a new request for a new certificate." According to the state, "the only feature that really remains of the original project is its name." Congressman Bill Pascrell Jr. (D-NJ) also lodged a protest at FERC to Transco's amended proposal on similar grounds.

In its September amendment, Williams' Transco proposed building a multi-stage project, with Phase I targeted for in-service by Nov. 1, 2001 and Phase II by Nov. 1, 2002, for a total of about 296 MMcf/d - "less than half [the capacity of] the original project" - at a cost of $242 million. The remainder of the project would be further phased in as shippers firm up agreements. Transco at the time said it expected the entire 700 MMcf/d to be in service by Nov. 1, 2004. The pipeline's initial application had called for the 700 MMcf/d to be in service by Nov. 1, 2001.

Phase I and Phase II projects would serve seven shippers. With the exception of Transco affiliate, Williams Energy Services Co., none of them are the original shippers, according to New Jersey. Even Williams Energy, the state noted, has cut its capacity commitment to less than half of the initial amount and pushed back its date for service to begin to Nov. 1, 2001. Several of the new shippers also have the "rights to delay or withdraw" from their agreements with Transco, which New Jersey believes makes the market need for the project questionable at best.

In the meantime, New Jersey has asked the U.S. Court of Appeals for the District of Columbia to "hold in abeyance" its challenge to the orders approving the MarketLink project until FERC rules on its requests. New Jersey and the state's Department of Law and Public Safety filed a joint appeal last June.

The state contends Transco's proposed amendment violates a number of conditions imposed by FERC in the MarketLink certificate, which it says prohibits phasing of the project, requires MarketLink to be 100% subscribed before construction can start, and sets April 26, 2002 as the deadline for the project to be completed and in service.

Assuming FERC should require MarketLink to begin all over again, New Jersey has indicated it will oppose a new application as vigorously as it did the original one. "The demand is simply too small in quantity and too shaky in quality to justify the project."

In the event of a new certificate proceeding, "the bar [for Transco] should be even higher than it was in the original certificate, not lower" for executed firm transportation agreements, the state believes. "In spite of its best efforts to ensure against them, the Commission has now experienced the disappearing firm commitments to the original project." Transco must be required to show "truly definite and binding" firm contracts for 100% of the capacity. Also, it said the April 26, 2002 deadline for MarketLink to be completed and in service should not be changed.

Moreover, New Jersey said the Commission should give Texas Eastern Transmission Corp.'s (Tetco) proposal for a system alternative to MarketLink a second glance. Tetco estimated it would have 300,000 Dth/d of available capacity for 2000 and additional capacity in future years, which it said --- when combined with minimal construction --- could meet the capacity needs of many MarketLink shippers. But FERC rejected the Tetco alternative in its environmental analysis of the MarketLink project, saying it was insufficient to meet the then-stated capacity goal of Transco (700,000 Dth/d) and the in-service date of Nov. 1, 2000.

Susan Parker

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