A showdown that was brewing between FERC and New Jersey Gov.Christine Todd Whitman over the hotly contested MarketLinkexpansion was defused late last week when Chairman James Hoeckerblinked. On Thursday, Hoecker had said the Commission intended toproceed with a vote on MarketLink despite Whitman’s threat that thestate would sue if the project was approved. But he did a completeabout-face the following day by pulling the MarketLink,Independence Pipeline and SupplyLink projects from the agenda forTuesday’s pre-Thanksgiving meeting. A FERC statement simply saidthe orders wouldn’t be completed in time.

“It’s on the agenda, that’s all I can say. I don’t have anyplans to do anything but act on it,” Hoecker told NGI Thursday whenasked if he would pull MarketLink from the agenda in light of thethreatened lawsuit. “This is a very controversial project. I reallyshouldn’t comment any further since the Commission is going toconsider it [this] week.” But he sang a different tune a day later.

Whitman meanwhile was bracing for the worst. She had directedthe state’s attorney general “to be prepared to take legal actionin the event that the [Federal Energy Regulatory Commission] grantsa permit” for the MarketLink project, an expansion ofTranscontinental Gas Pipe Line’s existing system in Pennsylvaniaand New Jersey. Landowners and local officials in both states havetried to block the project.

Not to be outdone by New Jersey, Texas Eastern Transmission(Tetco) sprang into action within days of the Commission staffissuing a favorable final environmental impact statement (FEIS) forboth the proposed greenfield Independence Pipeline and MarketLinkexpansion, which virtually guarantees the projects’ approval by theFERC. Even landowners last week were making last-ditch appeals toFERC to dismiss the Independence pipeline. In the FEIS, theassociated SupplyLink project is absorbed into Independence.

Tetco, which sees its market threatened by the projects, calledon FERC last week to delay final action, citing legal andprocedural problems with the Commission staff’s FEIS. Also, theDuke Energy pipeline was astonished at how quickly FERC hadscheduled the projects for a final vote – within days of the FEISbeing issued.

Such a short span between the FEIS and a final vote was unheardof, It “would be inappropriate for the Commission to act upon theIndependence/MarketLink projects based upon the Nov. 12 FEIS,”Tetco told FERC [CP97-315, CP98-540]. The proper action “is to holdsubstantive Commission action on this matter in abeyance until asupplemental FEIS is prepared.”

Tetco called the study “fundamentally and fatally flawed,”because it rejected the pipeline’s proposed alternatives underwhich it sought to lease capacity to Independence and MarketLink inlieu of new construction. But Tetco wasn’t the only party to berebuffed. FERC staff discarded the system alternatives that wereproposed by CNG Transmission and Tennessee Gas Pipeline as well.The alternatives offered the use of turned-back capacity to partlyor completely replace the two projects.

Although staff acknowledged most of the proposed alternativeswere environmentally and financially superior to the two projects,it said they were based on “speculative” assumptions forturned-back capacity and, as a result, couldn’t serve assubstitutes for Independence and MarketlLink. It further notedseveral of the alternatives hadn’t been fully developed, nor hadthey been formally filed at the Commission.

The pipelines “arguing for turnback alternatives have not madetheir case to date and it is not staff’s responsibility to maketheir case for them.” In addition, the proponents of the systemalternatives “have a responsibility to file an application beforethe Commission for a certificate of public convenience andnecessity,” but none have done this so far.

Specifically, staff frowned on Tetco’s lease alternative underwhich it would provide 663,000 Dth/d of firm capacity toIndependence and MarketLink shippers by using existing and futureturnback capacity on its system.

Staff also shot down the so-called Atlantic Alliance Projectthat was proposed by CNG and Tennessee as system alternatives toboth Independence and Millennium Pipeline, which still is awaitinga FEIS. Under this proposal, the pipelines said they could provideup to 750,000 Dth/d of transportation capacity from the Chicagomarket to the Niagara Import point into eastern markets, and woulddo this primarily by using existing facilities.

Subsequently, CNG proposed a “combined alternative” that woulduse existing and projected turnback capacity, coupled with a smallexpansion of its system, to provide 1.6 Bcf/d of capacity toeastern markets. Staff rejected this outright too, saying “it hasnot been completely defined by CNG.” Some see these proposals as anattempt by CNG to remove Independence as a threat to its marketdominance in the Northeast.

Last July, Tetco came up with yet another alternative that wouldcombine turned-back capacity on Tennessee, CNG Transmission and itssystem to provide a total of 741,000 Dth/d for leasing toIndependence and MarketLink shippers. But, “staff does not agreethat this alternative is a total ‘no-cost, no new facilities’alternative. It would require some construction of a portion ofMarketLink but Texas Eastern did not specify the amount offacilities required on MarketLink. Also, no details were presentedas to how service/transportation/leases would work operationally.As with Texas Eastern’s other alternative, it would accommodateonly part (741,000 Dth/d) as opposed to the entire 1 Bcf/d proposedby Independence.” Moreover, the option is based on “speculative’turnback projections of the three pipelines, staff said.

The $678 million Independence project, as proposed, would runabout 400 miles from Defiance, OH, to the hub in Leidy, PA, whereit would intersect with up to six different pipelines capable ofdelivering gas to the entire Eastern Seaboard. Project sponsors areANR Pipeline, National Fuel Gas Supply and Transcontinental GasPipe Line. From Leidy, Transco — the sole sponsor of MarketLink— proposes to loop about 154 miles of its existing system tocarry the gas to Pennsylvania, New Jersey and other easternmarkets. The proposed ANR-sponsored SupplyLink project, which isassociated with Independence, would entail about 72 miles oflooping on ANR’s existing system between Joliet, IL, and Defiance.SupplyLink would supply Independence with Canadian gas that’s beingimported into the Chicago market by the expanded/extended NorthernBorder Pipeline, as well as gas that will be brought in by AlliancePipeline in the future.

With respect to Independence, the staff FEIS recommended analteration to the proposed route. It calls for Independence todeviate from its proposed route in Seneca County, OH, and to followthe existing right-of-way (ROW) of Sun Oil Pipeline east forseveral miles, and then turn southeast to continue along ColumbiaGas’ ROW for about 12 miles before rejoining its proposal routenear Attica, OH.

Susan Parker

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