FERC on Monday gave Natural Gas Pipeline Co. of America (NGPL) the go-ahead to acquire and operate the 39-mile, 30-inch diameter Black Marlin pipeline system that crosses the Texas-Oklahoma border, and to construct minor facilities to tie the line to its system.
Kinder Morgan’s NGPL plans to purchase Black Marlin from Northern Natural Gas Co. for an estimated $1.5 million. Construction of the tie-in facilities would cost an additional $2 million, according to NGPL. The Commission also approved NGPL’s request to lease back 60,000 Dth/d of capacity to Northern Natural so it could continue to provide transportation service to a 1,000 MW power plant in Paris, TX, owned by Lamar Power Partners LP.
The Black Marlin pipeline stretches from Bryan County, OK, to Lamar County, TX, and runs parallel to a portion of NGPL’s 191-mile A/G Line, which connects NGPL’s Amarillo Mainline that extends from the Southwest region to Illinois with its Gulf Coast Mainline that extends from the offshore and onshore gas producing areas of South Louisiana and the Gulf of Mexico to Illinois.
NGPL said it plans to build tie-in facilities on its Arkoma Lateral in Bryan County and at its Compressor Station 802 on the A/G Line in Lamar County. Once acquired and constructed, the new facilities will increase the capacity of NGPL’s A/G Line by 38,000 Dth/d, while still allowing for Lamar Power’s contracted 60,000 Dth/d of capacity.
NGPL said during a recent open season the entire 38,000 Dth/d of capacity was fully subscribed at the maximum rate under signed precedent agreements with 10-year terms.
The Black Marlin pipeline, which Northern Natural acquired in 1999, has been “significantly underused” over the years, according to NGPL. Lamar Power has not used its firm service agreement with Northern Natural for more than 15 months, but it still maintains the 60,000 Dth/d of firm capacity on Black Marlin from an interconnection with Enogex Inc., an Oklahoma intrastate pipeline.
Lamar Power’s firm service agreement with Northern Natural expires on June 30, 2005, but it has the right of first refusal to extend its capacity for as long as it seeks the service, NGPL said. Upon termination of the lease, the capacity would be transferred to NGPL, and it would increase the capacity on the A/G Line by an additional 2,000 Dth/d.
Lamar Power, which currently receives transportation from both NGPL and Northern Natural, protested NGPL’s purchase of Black Marlin, saying that placing the control of all of its transportation options in the hands of a single pipeline would diminish its bargaining power in negotiating future transportation contracts. It asked FERC to convene a technical conference, but the agency rejected the request.
In approving the acquisition, the FERC order explained, “Integration of the Black Marlin facilities into Natural’s system will provide Natural with a second crossing under the Red River at the state boundary between Texas and Oklahoma. The multiple line crossings will provide operational flexibility and reliability to continue service if one of the lines is taken out of service for maintenance or repair. In addition, the increase in A/G Line capacity will help Natural respond to the increasing shipper demand for west-to-east transportation capacity.”
The order further said NGPL could roll the costs associated with acquiring the Black Marlin pipeline and constructing the tie-in facilities into its systemwide cost of service at its next Section 4 rate proceeding.
©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |