The Federal Energy Regulatory Commission on Wednesday handed out certificates for a pipeline expansion in the Mid-Atlantic region and a new Gulf Coast storage project, and issued a preliminary determination (PD) on non-environmental grounds for an expansion at El Paso’s Elba Island liquefied natural gas (LNG) import terminal in Georgia. All of the projects are designed to serve growing gas demand, primarily from gas-fired power generation, in the Southeast region.

The Commission attached numerous strings to the certificate it awarded East Tennessee Natural Gas Co. for its Patriot extension-expansion project in Tennessee, Virginia and North Carolina. More than 69 “stringent” environmental conditions were imposed on the project, which will serve four distribution companies and three power plants in the three-state area.

The $298 million extension-expansion, which was the target of considerable landowner opposition, is expected to boost East Tennessee’s existing design capacity of 700,000 Dth/d to more than 1.2 Bcf/d. The pipeline has proposed adding the capacity in three phases, with the initial in-service date scheduled for May 2003. East Tennessee previously estimated that 87% of the 510,000 Dth/d of capacity to be created by the Patriot project has been subscribed under long-term agreements.

The modified Patriot project, which would supply the gas needs of power generators in the region, entails an expansion of East Tennessee’s existing mainline system in Tennessee and southwestern Virginia, and an extension running from central Virginia to an interconnection with Transcontinental Gas Pipe Line’s mainline in Rockingham County, NC. The extension is sized at 93 miles of 24-inch diameter pipeline, while the expansion consists of 85 miles of looping. In connection with the project, a salt cavern storage facility is being developed by parent Duke Energy Gas Transmission and NUI Corp. in Saltville, VA, to bring added value and options to shippers subscribing to the extended transportation services.

In approving the Patriot project, the Commission said projected deliveries of gas to the South Atlantic region are expected to increase by 50% by 2010, which it estimated will require a 1 Tcf boost in annual Southeast pipeline capacity. “Thus, we find that the Patriot project has a justifiable market need,” the agency said.

El Paso Corp. subsidiary Southern LNG was awarded a PD to expand by 80% the storage capacity and design send-out rate of its Elba Island LNG receiving terminal near Savannah, GA.

The expansion of the Elba Island facility, which was reactivated nearly a year ago, would add 3.3 Bcf of storage capacity and boost the design send-out rate of the terminal by 360 MMcf/d, bringing total storage capacity to 7.3 Bcf and the send-out rate to approximately 800 MMcf/d, according to Southern LNG. The $148 million project has been targeted for completion in September 2005, subject to the required regulatory approvals.

Shell Gas & Power, which was one of four bidders in an open season late last year, has entered into a binding precedent agreement with Southern LNG to acquire all of the expansion capacity for a 30-year term. Shell has indicated it plans to use the LNG to serve key markets in Georgia, Florida and South Carolina.

El Paso first announced its plans to expand the Elba Island terminal even before it reactivated the LNG facility, which had been mothballed since 1982.

FERC also Wednesday gave Gulf South Pipeline a certificate to proceed with its proposed Magnolia Gas Storage project, which will be located near Napoleonville, LA. This is one of several new storage projects planned in Mississippi and Louisiana to serve strong power generation and traditional demand growth in the Southeast and other regions.

The high-deliverability field, which is expected to be in service in October 2003, will have an initial working capacity of 4.1 Bcf, expandable to 6.5 Bcf, and a deliverability of 400,000 Dth/d into Gulf South, which interconnects with multiple other lines servicing the Gulf Coast, Southeast, Midwest and Northeast markets.

The new storage capacity will complement Gulf South’s existing storage at Bistineau and Jackson, providing increased reliability for customers and opportunities for Gulf South to enhance gas flows across its system, the pipeline said.

At least four other new salt domes are being planned and four more are being expanded in Mississippi and Louisiana. Dominion Transmission is planning the 12 Bcf Hackberry salt dome in Cameron Parish, LA, and AEP, Market Hub Partners (MHP) and Bridgeline are expanding their existing salt domes in the state. In Mississippi, MHP, NUI and SG Resources are planning three new salt dome storage plants that will add 29 Bcf of working capacity. Several existing high-deliverability facilities also are being expanded, including Petal Gas Storage and Hattiesburg Gas.

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