FERC Friday approved Columbia Gas Transmission’s proposal to expand its pipeline system in West Virginia to bring more locally produced Appalachian natural gas to market.

The NiSource pipeline subsidiary proposes to expand the high-pressure side of its existing Appalachian pipeline system by constructing a new 9,470 hp compressor station and associated facilities on property located 11 miles outside of Hamlin in southwestern West Virginia.

The proposed compressor station would connect to Columbia Gas Transmission’s existing 16-inch diameter pipeline in the area. The $40 million project, known as the Appalachian Basin On-System Expansion Project (APX), would benefit the area by significantly reducing current constraints to bring an additional 100,000 Dth/d of Appalachian gas to market, according to the Columbia pipeline.

Following an open season in June-July, CNX Gas Co. LLC, Equitable Production Co. and Chesapeake Appalachia LLC (collectively the APX customers) negotiated agreements for the entire 100,000 Dth/d with a primary term of 15 years. Columbia said customers are seeking an in-service date of Nov. 1, 2009 for the compression project.

The Federal Energy Regulatory Commission approved Columbia’s request to roll in the currently effective commodity rate for firm transportation service. The APX project’s actual commodity charge, which is based on project costs and billing determinants, is slightly less than Columbia’s current firm transportation tariff rate, the FERC order said. Thus, rolling in the project’s commodity costs and determinants will benefit Columbia’s existing customers, it noted [CP08-85].

The agency also granted Columbia’s request for rolled-in rate treatment with respect to the recovery of charges through its retainage adjustment mechanism of company use, lost and unaccounted for quantities, as well as recovery through its electric power cost adjustment of electric costs; and its transportation cost recovery adjustment for third-party transportation costs.

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