FERC on Friday rejected ANR Pipeline’s proposed tariff revisions that sought to establish a low hydrocarbon dewpoint (HDP) quality specification and merchantability standard for natural gas accepted into its system.

In taking this action, the Federal Energy Regulatory Commission said the El Paso Corp.-owned pipeline failed to provide “detailed documentation” to support the requested changes to its tariff. The agency further noted the proposed revisions were counter to FERC regulations.

ANR proposed the tariff changes after the Commission in late December granted a producer complaint accusing ANR of violating the Natural Gas Act (NGA) by making permanent changes to gas quality standards through the posting of operational flow orders (OFOs) on its web site without first seeking FERC approval (see Daily GPI, Jan. 5).

The Commission ordered ANR to “cease and desist” from the practice of using OFOs to enforce long-term gas quality standards, and directed the pipeline to address its concerns about potential liquids fallout on its system in a tariff filing.

ANR responded by seeking to set an HDP safe-harbor limit of 15 degrees Fahrenheit for gas accepted into its system. Specifically, the pipeline proposed “that, from time to time, as operationally necessary, ANR may establish and post on its Internet site a limit on HDP for receipts…The HDP limit will be on specified segments or other specified locations on ANR’s system. The purposes of the HDP limit are to prevent hydrocarbon fallout and to assure that gas will be accepted for delivery into interconnects, including with interstate or intrastate pipelines, end-users, local distribution companies [LDCs] and others,” the FERC order said.

It further noted that ANR would attempt to provide notices at least 10 days prior to the effective date of the HDP limitation, with each notice including the duration of the HDP limit.

The rising hydrocarbon content of domestic gas entering pipelines has become a pressing issue, causing industry members, particularly pipelines and LDCs, to urge FERC to approve tighter restrictions on domestic gas quality. Pipes contend that hydrocarbon-rich gas leads to liquids fallout that causes operational problems on their systems.

A growing number of U.S. producers are tending not to strip out hydrocarbons from their gas due to high gas prices and tight supply. Producers are able to fetch a better price for their gas if they leave the hydrocarbons in.

On top of the proposed HDP limit, ANR Pipeline sought to require all natural gas delivered into its system to be of merchantable quality.

But FERC told ANR that it fell short of justifying both proposals. “ANR failed to provide any documentation to show how it derived its proposed HDP of 15 degrees Fahrenheit and why that figure is appropriate for the safe operation of its system under various operating conditions…The filing includes no engineering studies or exhibits of any kind to support ANR’s assertion,” the order said [RP04-216].

“Nor does ANR provide any standards by which it will decide when and where it will accept gas with a higher HDP, or how those standards were derived,” it noted.

If ANR makes a future filing on an HDP safe-harbor level, the Commission advised it to submit accompanying documentation that includes an “identification of historical levels of liquids by pipeline segment, month, operating conditions and associated documented liquid-related operational problems, if any.” In addition, “it should include an analysis of seasonal operating conditions that would establish parameters for establishing an HDP level for specified segments of its system.”

FERC also said that ANR’s proposal requiring all gas entering its system to be of merchant quality lacked details. “ANR does not define what it means by this term, what criteria it intends to use, how it intends to monitor the gas stream for merchantability, what penalties or actions it intends to impose for violations, or to whom it would assess the penalties or who would be subject to its actions,” the order said.

The Commission signaled in the order that it would prefer an industry solution to many of the gas quality issues facing the industry now, particularly as Btu-enriched liquefied natural gas is expected to play a greater role in the domestic gas market. Both a Natural Gas Council-established industry coalition and the North American Energy Standards Board currently are seeking to establish industry-wide gas quality specifications and practices.

“If the industry cannot achieve a consensus on some or all of the gas merchantability and interchangeability issues on the delivery end of the pipeline, the Commission will have to use other means to address the issues,” the order said.

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