FERC last week found that CNG Transmission Corp. has beenconstructing, converting and interconnecting gas storage wells atits Tioga complex in Pennsylvania without prior Commissionauthorization.

The Commission referred the violations to its Office of GeneralCounsel’s Enforcement Section to investigate the appropriateremedies for CNG Transmission, which FERC said conducted work onfive jurisdictional storage wells without its authorization.

The Commission’s decision was in response to a complaint filedin December 1998 by New Hub Partners L.P., which accused CNGTransmission of drilling one storage well (TW-605) in the Tiogacomplex without the necessary approvals. But FERC said “recordevidence” showed that not only didn’t CNG Transmission get itspermission to drill TW-605, but that it performed unauthorized workon four other wells.

CNG Transmission operates two-thirds of the Tioga storagecomplex and is a competitor of New Hub Partners. Based on a 1987certificate, CNG received authority to be sole operator of both theEast End and West End pools of the storage complex and to increasethe pools’ storage capacity to 36 Bcf. As the pools’ operator, itinjects and stores natural gas in the Oriskany sandstone formation.In 1998, FERC gave NE Hub the go-ahead to build and operate a saltcavern storage facility beneath the Oriskany formation, making thetwo companies neighbors and fierce competitors.

In response to NE Hub’s complaint, CNG Transmission claimed thewell it drilled was an observation well, not requiring FERCapproval. But the Commission disagreed. “The drilling of TW-605 inthe middle of the East End pool and CNG’s fracturing the well inthe Oriskany sandstone formations are indicative of a gas storagewell,” the order said [CP99-106]. As such, “CNG should have securedCommission authorization before drilling TW-605 in 1998. NE Hub’scomplaint will be granted on this issue.”

NE Hub had asked FERC to order CNG Transmission to “cease anddesist” its unauthorized activities, but the Commission denied itsrequest. “A cease and desist order is not an appropriate remedybecause it would prevent CNG from achieving certificated levels ofdeliverability and reduce storage flexibility,” it said.

Susan Parker

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