NGI The Weekly Gas Market Report
FERC last week vacated its August order certificating El PasoNatural Gas Co.’s planned expansion of its 33-mile Bondad system, amove that the pipeline says puts the troubled project in anuncertain status.
“We don’t know what we’re going to do. We’re looking at theorder and are considering” the various options, said Jerry Strange,El Paso’s director of transportation and marketing. He was unableto say when the pipeline would decide the fate of the project.
The Commission said it based its action on Enron Capital &Trade Corp.’s decision to terminate its service agreement for100,000 Mcf/d of the expansion’s capacity, which left the projectonly 14% subscribed. Two other shipper-producers, Conoco Inc. andElm Ridge, remain committed to the project, Strange said.
“Enron’s withdrawal…is a material change in the circumstancesrelied on by the Commission in making its public convenience andnecessity determination” last August, the order said, adding thatthe Bondad expansion as a result no longer meets FERC’smarket-demand requirement (25% subscribed) for new projects. TheCommission, however, left open the possibility for El Paso tore-file in the event it can re-market the Enron capacity.
The project called for the replacement of compression at ElPaso’s Bondad station, upping the horsepower such that 116,000Mcf/d of capacity would be added between its interconnect at SanIgnacio with Northwest Pipeline and Blanco in New Mexico.
FERC had further bad news last week for the future of theproject. Although vacating the certificate also mooted El Paso’srehearing request, the Commission decided to offer its “guidance”on the rehearing issues raised by the pipeline. It reasoned thatthe outcome of the issues could affect “whether and under whatconditions” El Paso would re-file its application. El Paso struckout on all counts.
The Commission reaffirmed its previous decision rejecting thepipeline’s request for incremental service for the Bondad projectshippers. Because the project would provide system-wide benefits,the Commission continued to hold that El Paso’s existing FT-1 rateschedule was sufficient. El Paso’s proposal for incremental service”would create, without any justification, a preferred class of firmshippers enjoying rate and capacity benefits…[that are] notavailable to current firm shippers,” the order said [CP98-149-001].It also reaffirmed its decision to reject El Paso’scapacity-allocation plan that would, according to FERC, give Bondadproject customers “preferential access” to capacity through the useof a separate service.
In a separate case, FERC gave El Paso the go-ahead to abandonthree segments, totaling 49 miles, of its El Paso-Douglas Line inDona Ana and Luna Counties, NM. “El Paso no longer needs Line 1005for the operation of its interstate transmission system. Further,our review of the record indicates that the proposed abandonmentwill not adversely affect any of El Paso’s customers,” theCommission order said [CP98-717].
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