FERC last Monday gave Straight Creek Gathering LP, an affiliate of Dallas, TX-based Atmos Energy, the green light to build a 60-mile pipeline that would serve as the backbone of a new gathering system in eastern Kentucky. The project, which would include lateral and feeder lines, is designed to help ease the transportation constraint in the region that has led to the shut-in of natural gas production for much of the year.

Specifically, the Federal Energy Regulatory Commission issued a declaratory order that found that Straight Creek’s proposed facilities would primarily perform a gathering function exempt from the agency’s jurisdiction. In addition, FERC granted the company’s request for a limited-term, limited-jurisdiction certificate that would allow it to transport interstate gas from Columbia Gas Transmission’s PM-83 Line for two years until Straight Creek can build its own gathering lateral to access gas currently transported on Columbia’s pipeline.

In seeking the declaratory order, Straight Creek reported that currently more than 60,000 Dth/d of natural gas produced in eastern Kentucky is shut in for a significant part of the year. Based on 2004-2005 data, it said that 1,700 wells in eastern Kentucky were shut in and the producers in the region experienced 212 shut-in days. This resulted in a substantial reduction of gas production in eastern Kentucky, as well as the loss of hundreds of million of dollars in wellhead sales for producers, the company said.

Straight Creek proposes to build a line that would originate in Floyd County, KY, and extend north to interconnect with the Tennessee Gas Pipeline system in Carter County [CP06-369]. The 20-inch diameter system would be capable of initially moving up to 110,000 MMBtu/d of gas, with the ability to expand throughput to 225,000 MMBtu/d (see NGI, Aug. 28). It also plans to construct various four- to 12-inch diameter laterals or feeder lines off of the proposed backbone pipeline to production fields in Magoffin, Pike, Martin, Lawrence, Elliott and Johnson counties in eastern Kentucky.

The gas collected through the proposed system will be processed at the Straight Creek Processing Plant to be constructed at the northern terminus of the pipe system.

Straight Creek plans to construct the facilities in two phases. The initial phase will include the 60-mile backbone pipeline, having a capacity of 110,000 Dth/d, and the processing plant. The backbone pipeline will include 11 receipt points with existing laterals of various independent producers and interconnects with Jefferson Gas Gathering Co., Kentucky West Virginia Gas Gathering and Chesapeake Gathering Co.

Also as part of the first phase, Straight Creek plans to interconnect with Columbia’s 12-inch low pressure PM-83 line in the Warco/Maytown area, located at the upstream end of the proposed 60-mile line, to access several independent producers who currently have shut-in reserves because of constraints on Columbia’s system.

While the Columbia line is transmission, Straight Creek asked FERC to find that the connection with Columbia will either serve a non-jurisdictional gathering function or award the company a limited-term, limited-jurisdiction certificate to provide downstream service off of Columbia’s PM-83 line. The Commission decided upon the latter.

The second phase would include the construction of the four- to 12-inch diameter laterals to gather gas from existing and new production fields where active leasing and drilling are underway, as well as laterals to directly access gas that Straight Creek will initially receive from producers at the Columbia interconnect.

Straight Creek said it currently has commitments for approximately 70,000 to 88,000 Dth/d of gathering service. However, based on discussions with local producers, it noted that it may have commitments in excess of the project’s initial design capacity once the initial facility is constructed and is operational.

The company’s goal is to complete construction by April-May 2007 to meet the summer storage injection season. This deadline will benefit gas consumers served off of Tennessee’s interstate system along with the producing industry in eastern Kentucky, it said.

In a related development, FERC issued a favorable environmental review of Equitrans LP’s pipeline project that also seeks to relieve the transportation capacity constraint in eastern Kentucky (see NGI, Oct. 2).

Equitrans, a subsidiary of Equitable Resources in Pittsburgh, PA, proposes to build a 68-mile, 20-inch diameter pipeline and associated facilities that would extend from Equitable Resources’ Kentucky Hydrocarbon plant in Langley in eastern Kentucky to Tennessee’s Broad Run Lateral in Carter County. The so-called Big Sandy Pipeline project would provide 130 MDth/d of takeaway capacity for Kentucky producers to transport Appalachian gas to markets in the Mid-Atlantic and Northeast regions. The anticipated in-service date for the project is April 1, 2007 [CP06-275].

Currently, production gas flow from the Kentucky basin is limited due to the availability of only one pipeline, Columbia Gas Transmission, according to Equitrans. The company believes its proposed Big Sandy Pipeline would provide much needed relief from summer capacity constraints affecting the eastern Kentucky basin and would provide capacity for additional production growth.

Equitrans previously had accused Atmos Energy’s Straight Creek project of being the “functional equivalent” of its Big Sandy Pipeline project, but FERC disagreed. “We do not find that Straight Creek’s pipeline is the functional equivalent of Equitrans’ Big Sandy project. Although the two pipelines will be similar in length and diameter, Equitrans’ Big Sandy will operate at much higher pressures, up to 1,200 psig in contrast to operating pressures of up to 350 psig on Straight Creek’s pipeline,” FERC said in the Straight Creek order.

“Because it will operate at a higher pressure, the Big Sandy pipeline is incapable of accepting raw gas deliveries into its pipeline from low-pressure gathering lines as Straight Creek proposes to do. Moreover, Equitrans will be accepting and transporting gas that is processed to pipeline quality prior to entering the Big Sandy pipeline while Straight Creek will accept unprocessed gas.”

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