North Baja Pipeline and Coral Energy Resources LP separately have asked FERC to deny the South Coast Air Quality Management District’s request for a limited stay of the agency’s order approving a proposed expansion of North Baja’s system to import regasified liquefied natural gas (LNG).
On Nov. 14, South Coast filed an emergency motion for a stay — pending rehearing and judicial review — of the expansion order to prevent North Baja Pipeline from transporting LNG to local distribution companies in the South Coast Air Basin. It claims that nitrogen oxide emissions resulting from the deliveries of regasified LNG on the expansion project “will lead to immediate public health injury by damaging the air inhaled by people and animals.”
The expansion, which FERC approved in early October, calls for North Baja Pipeline to expand and modify the U.S. leg of its U.S.-Mexico pipeline system to import 2.9 Bcf/d of natural gas from planned LNG facilities on the Baja California coast to California and Arizona markets (see Daily GPI, Oct. 4).The North Baja project is expected to be constructed in three phases, with the parts of the project targeted for completion by 2009 and others in 2010.
In order to grant a stay, the Commission must find that the party seeking the stay will suffer “irreparable injury” without a stay; that a stay will not substantially harm other parties; and that a stay is in the public interest. South Coast has not met any of these standards, North Baja Pipeline and Coral Energy told FERC [CP06-61].
“The Commission’s policy disfavoring stays of its orders is so strong that…South Coast is unable to cite a single case in which the Commission has granted a stay of a certificate order. In fact, North Baja does not believe the Commission has [ever] done so and certainly should not grant a stay here,” the pipeline said.
As for the claim of “irreparable harm” absent a stay, “South Coast makes no attempt to accurately quantify the amount of [expansion project] gas to be delivered to end-users in the basin. Without an indication of amount, bare allegations as to the extent of harm cannot support a finding of great harm,” said Houston-based Coral Energy, which is the trading arm of Shell. North Baja said South Coast’s allegations amount to “speculation of theoretical harm” to the public.
“South Coast predicates its harm argument on the assumption that end-users in the basin will be burning higher Wobbe Index gas. Yet, the actual Wobbe Index of any new regasified LNG supplies will not be known until the gas is delivered from overseas supply sources. [And] such gas will form only part of the aggregate supply pool because the [expansion project] gas will be mixed with the supplies from other sources, including domestic U.S. sources,” Coral Energy noted.
Moreover, “North Baja is required — by both its precedent agreements and by the order to amend its tariff — to supply gas on the expansion facilities that meets the strictest gas quality and interchangeability standards of the interconnecting pipeline systems…Finally, regardless of the actual quantity of [expansion project] gas to be delivered in the basin, and even if the Wobbe Index of the [expansion project] gas were higher, South Coast has not quantified or qualified the damages that are likely to be suffered.”
As for the second prong of the test, whether granting a stay would be detrimental to others, “South Coast has provided no argument — let alone evidence — that a delay in authorizing a portion of the expansion project will not substantially harm either the expansion project itself or the parties located in southern California that are relying on receiving the benefit of the timely completion of the expansion project,” Coral Energy said.
North Baja Pipeline contends that South Coast also failed to satisfy the requirement that a stay would be in the public interest. “South Coast has not offered any evidence to refute the Commission’s findings that North Baja’s project will benefit consumers and is thus in the public interest,” the pipeline said.
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