FERC Tuesday approved Equitrans LP’s request to abandon by sale its Sunrise Pipeline facilities that are currently under construction to a newly created affiliate, Sunrise Pipeline LLC, which was formed by Equitrans owner EQT Corp.

“Under Equitrans’ abandonment proposal, it will transfer passive ownership of the Sunrise facilities to its affiliate, Sunrise, while retaining authorization and obligation to continue operation of the facilities both under its certificate and under the terms of [a] lease agreement,” said the Federal Energy Regulation Commission (FERC) order [CP12-32]. The Commission found that Equitrans’ proposed abandonment of the Sunshine facilities is permitted by the “public convenience and necessity.”

FERC approved the Pittsburgh-based company’s Sunrise Project in July 2011 (see NGI’s Shale Daily, July 28, 2011). When completed, the $272 million project would supply the northeastern and Mid-Atlantic states with up to 313,560 Dth/d of Marcellus Shale gas. Equitrans has begun but not yet completed construction of the facilities, the order said. Equitrans had said it expected to complete the Sunrise Project and place it into service during the third quarter of this year.

The project includes:

The Commission approved Equitrans’ request to lease the Sunrise facilities from Sunrise. The lease agreement, spelling out the leasing terms, will go into effect on the day in which Equitrans transfers the facilities to Sunrise Pipeline. Under the agreement, Equitrans states that it will pay Sunrise monthly rent for the use of the Sunrise facilities. And during the term of the lease agreement (15 years or more) Equitrans will operate and maintain the Sunrise facilities.

FERC also granted the Pittsburgh company’s request for pregranted abandonment and amended certificate authority to terminate the lease agreement when it ends and to permit Equitrans to “reacquire ownership in fee of the Sunrise facilities.” The lease termination date is 15 years, but Equitrans said this could occur earlier or later if mutually agreed upon by Sunrise and Equitrans.

“Equitrans’ proposal to sell legal title to the Sunrise facilities to Sunrise and leaseback the facilities from Sunrise does not disturb our finding in the July 21 order [approving the project] that Equitrans’ existing customers will not subsidize the project,” the FERC order said.

“In addition, approving this arrangement does not disturb our findings that Equitrans’ existing customers should not experience any degradation in service and that there will be no adverse impacts on existing pipelines in the market or to their captive customers. Finally, the proposal has no effect on Equitrans’ actual construction of the Sunrise Project facilities.”