Destin Pipeline Co. L.L.C. has beseeched FERC not to suspend itsPart 157 blanket certificate authority for six months, which woulddeny it access to the more streamlined certificate procedures forconstructing projects during that period. Without it, the pipelinewould have to seek Section 7 approval under the Natural Gas Act(NGA) for each project at the Commission.

In a July order, the Commission threatened to take this actionagainst Destin for failing to properly notify it of cost overrunsassociated with a lateral that it constructed in the fall of 1998.Destin built the facility to transport gas from two new productionplatforms in Main Pass Block 279 and Main Pass Block 281 toDestin’s mainline system at the Main Pass Block 260 platform forultimate delivery to downstream pipeline interconnections.

Last February, Destin sought a waiver of the cost limitation inits blanket certificate, but the request was made months after thepipeline first noticed that the total project cost for the lateralwould exceed “to some degree” the blanket-certificate costlimitation. In July, FERC rejected the requested waiver and orderedDestin to show cause why its blanket-certificate authority shouldnot be suspended for six months.

In its response to the show cause order, Destin last week saidit had a full plate when the cost overruns first started to appear,which led to its failure to timely notify FERC. “From Septemberthrough December 1998, Destin was a new interstate pipeline in astart-up operation mode, addressing the challenges of operating thepipeline prior to the start-up of the Pascagoula Processing Plantowned by Amoco Production Co. and Tejas Natural Gas Liquids L.L.C.,completing its mainline construction project, and constructingthe…..lateral during an onslaught of hurricanes and severeweather-all in an effort to meet the transportation needs of itsshippers,” it told FERC [CP98-238].

“At all times, Destin acted in good faith to comply with FERCregulations. [But] in hindsight, Destin should have notified theCommission earlier of the…..lateral’s cost overrun,” the pipelinesaid. It conceded it should have sought a waiver of the costlimitation as early as September 1998.

Destin said it has taken corrective measures to guard againstthis ever happening in the future. It has implemented a two-stepprogram, with the first being an educational initiative designed toinform personnel about the regulatory prerequisites forconstruction under FERC’s blanket procedures. Secondly, thepipeline has established strict internal cost control procedures tobe followed by engineering and construction management in futureblanket-certificate projects.

It asked the Commission to terminate the show-cause proceedingwithout suspending its Part 157 blanket-certificate authority inlight of the “mitigating circumstances” and the corrective actionsit has since taken.

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