In light of expanding markets being served by El Paso NaturalGas’ South Mainline, East-of-California (EOC) shippers haveexpressed concern with the pipeline’s “Line 2000 Project” in whichit seeks to abandon six aging compressor facilities and replacethem with nearly 785 miles of converted line that would loop muchof its existing system. The rub is that the proposed project wouldnot create any new capacity.

El Paso “has failed to demonstrate that abandonment of the sixexisting compressor facilities on the South System is in the publicconvenience and necessity. Indeed, recent developments in themarketplace suggest there may be a need for both the Line 2000Project as well as replacement/maintenance of these existingcompressor facilities,” the EOC shippers told FERC [CP00-422].

Keeping the six compressor facilities, several of which arelocated in the vicinity of the Wilcox Compressor Station in serviceis especially important because of the uncertainty over when thedisabled Line 1103 will return to service, market observers said.Some fear the 30-inch line, which ruptured and caused the deadlyexplosion on El Paso’s South Mainline on Aug. 19, could be out foran extended period.

“I don’t know how long before that could be repaired. And so ifit runs into the first quarter of next year, when the Line 2000Project is supposed to go on line, that could create problems,”said an attorney for one of the EOC shippers. “El Paso’s SouthernSystem has been full a good number of days this past summer, whichis a major change. We went from two-thirds empty to full……So ifyou start looking at all these changes on the system, coupled with1103 being out, it just makes you [wonder whether] El Paso ought tobe at least considering whether there is a use for thatcompression.”

Given that El Paso would expects to serve “directly orindirectly” a 10,000 MW gas-fired generation facility thatcurrently is under construction or in development, the EOC shippersbelieve the pipeline’s proposal to spend $153 million to acquireand convert a crude oil that won’t add any new capacity doesn’tmake sense.

The EOC shippers noted they would be the ones footing the billfor the converted line since El Paso proposes to recover the costsin its next rate case.

Indicated Shippers said they had a lot of unanswered questionsabout El Paso’s project. “It is…questionable, to say the least,that placing a 785-mile, 30-inch pipeline in service will notresult in additional capacity, notwithstanding El Paso’s claims tothe contrary,” the producer group said. Moreover, it pointed out ElPaso plans to re-evaluate its need for the aging compressorfacilities one year after it abandons them. The group urged theCommission to schedule a technical conference for El Paso to”explain and quantify the benefits and impacts” of its proposedproject.

The EOC shippers did not protest El Paso’s proposal, but theyasked FERC to order the pipeline to provide the cost estimates oftwo alternatives it considered and rejected: 1) replacing largeamounts of existing compressor horsepower with the construction ofadditional pipeline looping; and 2) either spending significantoperation and maintenance dollars to maintain the existingcompressors, which are between 47 and 54 years old, or replace themwith new units. Specifically, the shippers want to know if thecosts for the rejected alternatives exceeded $153 million.

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