After spending more than C$60 million (US$41 million) and threeyears of preliminary work, the sponsors of the upstream portion ofthe Millennium Pipeline Project have decided to put the regulatoryreview process in Canada on indefinite hold.

Acting on a petition by the sponsors, the Joint Review Panel forthe Canadian Millennium Pipeline Project has adjourned indefinitelya public hearing for two applications to construct and operatenatural gas pipelines in southwestern Ontario. Canada’s NationalEnergy Board is due to rule soon on the request by sponsors of theCanadian Millennium Pipeline for an indefinite suspension ofproceedings.

“Considerable delays have been experienced” in the U.S. beforeFERC, the NEB was told by Canadian Millennium sponsors. The latestone follows a change in the eastern end of the project’s routethrough Westchester County in New York State to avoid safetyconcerns related to a major power transmission line and to avoidconflicts with wealthy landowners by using establishedtransportation corridors. The NEB has been told the switch involvesonly 23 miles or 5% of the 422-mile route to New York City, but ithas prompted FERC to request much additional information and holdmore consultations with intervenors in the case.

TransCanada acknowledges that the landowner tangle is only oneamong multiple issues that have tripped up Millennium. “Thenumerous delays have ranged from other route deviation reviews, aswell as awaiting U.S. state agencies’ permits and certificatesprior to issuing a Final Environmental Impact Statement. The mostnotable regulatory developments in the project have been the FERC’sdecisions not to issue a Preliminary Determination, to hold atechnical conference to hear submissions as to the strength and thetiming of market growth in the U.S. Northeast and to request theU.S. Army Corps of Engineers’ review of the Lake Erie Crossingprior to issuing an FEIS.” The Corps’ review took until June 1,requiring only a slight increase in the depth of an underwaterpipeline trench that Millennium says it can do with only a”negligible” effect on costs.

Unveiled in the spring of 1997 by a consortium includingTransCanada PipeLines Ltd., Westcoast Energy Inc., Columbia GasTransmission Co. and MCN Energy Inc., the US$700 million plan callsfor deliveries of 700 MMcf/d along a route stretching from the Dawntrading hub in southern Ontario across Lake Erie and New York Stateto Long Island, starting in late 2001. TransCanada holds thetransportation-service contract for all the space on the Canadianpart of the proposed route. In turn, Millennium says nineprospective shippers have booked 97% of the project’s capacity.

The Millennium partners say they still have “total commitment”to the international project. TransCanada says suspending theCanadian share in the regulatory review could create flexibilityfor accelerating the project as well as holding it up to match thepace in the U.S.

The Westcoast subsidiary participating in the partnership, St.Clair Pipelines Ltd., says “changes occasioned by these delays donot invalidate the project. Quite the contrary, recent marketdevelopments strongly corroborate the project need. The one-yearforward curve [in gas commodity-futures trading] for basisdifferentials [price differences] between Dawn and New York isapproximately US$.075 per MMBtu. This exceeds the cost oftransportation between Dawn and New York. This is a significantincrease in the historical basis differential and is but oneexample of the increasing market support and need for the project.”

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