The abundance of gas coming out of the Marcellus Shale is contributing to a situation on Columbia Gas Transmission that is pinching the pipeline’s storage operations in northern Ohio and creating oversupply on the western portion of its system, according to a recent rate adjustment filing at FERC.
On July 1 Columbia filed for a periodic transportation costs rate adjustment (TCRA) to recover costs of third-party capacity intended to relieve the undersupply situation in northern Ohio and relieve an oversupply situation at Leach, KY.
“In particular, increased supply into Columbia’s system from both Marcellus and other sources of production are displacing supply from ANR Pipeline Co. for Columbia’s northeastern markets,” the filing [RP11-2253] at the Federal Energy Regulatory Commission said. “The reduction in receipts is adversely impacting Columbia’s ability to fill its northern Ohio storage fields and serve northern Ohio markets.”
While the pipeline has asked shippers on multiple occasions to deliver more gas into northern Ohio, it has not seen significant changes in receipts, it said. Without “swift action,” the pipeline’s ability to meet firm storage withdrawal obligations could be impacted this winter, it said. “Additionally, if the reduction of receipts continues through the winter, then firm transportation markets would also be adversely impacted.”
Because it expects the situation to be ongoing, Columbia said its option of imposing stringent operating conditions on shippers was not attractive as an operational flow order “could be in effect for the entire summer injection season.” Rather, it has opted to contract for third-party capacity on multiple pipelines to move gas south from Kentucky to Louisiana and then back north to Ohio.
“First, Columbia will deliver gas into Columbia Gulf Transmission Co. (Columbia Gulf) at Leach, KY. Columbia Gulf will transport that gas as a firm backhaul from Leach to its interconnection with Regency Intrastate Gas (Regency),” the filing said. “Regency will transport that gas on an interruptible basis to its interconnection with ANR. Finally, ANR will transport the gas on a firm basis to its interconnection with Columbia at Monclova, OH.”
The pipeline’s filing describes three alternatives that also were considered. These involved Texas Eastern Transmission, Tennessee Gas Pipeline and Rockies Express Pipeline.
“However, contracting for firm backhaul service on Columbia Gulf represented the best value out of the available options because it would be reliable and available throughout the summer,” the pipeline said. “In addition, during the summer season discounts on other pipelines are generally higher for shippers willing to contract for firm service.”
Additionally, Columbia said in its filing that third-party service will be necessary to alleviate the impacts of upcoming construction on its system (Line 1278 and Line P).
In its initial 2011 TCRA filing [RP11-1822] Columbia projected that it would incur costs for transmission and compression of gas by others (Account No. 858 costs) of about $37.87 million for the period April 1, 2011 through March 31, 2012. However, because of the over-/undersupply issue and planned construction, those costs are now projected to be more than $47.75 million. Because of this, “Columbia has determined that the currently effective TCRA rates should be revised, effective Aug. 1, 2011,” it said.
Among those moving to intervene at FERC are UGI Distribution Companies, Virginia Power Energy Marketing, Virginia Power Energy Services Corp. Inc., Duke Energy Corp. National Fuel Gas Distribution Corp., Baltimore Gas and Electric Co. and Stand Energy Corp.
In a recent operational notice Columbia told shippers that it has tentatively planned a meeting in Washington, DC, for Aug. 30 to discuss “long-term solutions” for the issue of declining receipts in northern Ohio.
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