FERC Thursday approved a contested settlement that establishes a cricondentherm hydrocarbon dewpoint (CHDP) safe harbor level of 15 degrees Fahrenheit on Tennessee Gas Pipeline to prevent operational problems that are caused by hydrocarbon liquids fallout.

The Federal Energy Regulatory Commission “finds there is substantial evidence to support Tennessee’s 15 degrees Fahrenheit CHDP safe harbor and that the objections of the opposing parties are unsupported,” the order said [RP04-99-003]. The agency “finds further that the provisions of the settlement are just and reasonable and approves the settlement,” with some exceptions.

Under the settlement, Tennessee may not refuse to accept delivery of natural gas with an hydrocarbon dewpoint (HDP) equal to or less than 15 degrees Fahrenheit, provided that the gas satisfies all other applicable provisions of its tariff. The settlement specifies that Tennessee will post HDP limits only to “prevent or cure” a problem, and that the restrictions will remain in effect no longer than necessary.

Tennessee may impose an HDP limit below the safe harbor level by issuing an operational flow order at a receipt point or monitoring point if the pipeline determines that such action is necessary to avoid an event that threatens the operational integrity of its system, according to the agreement.

Excessive HDP became a problem on Tennessee in the winter of 2000-2001 when producers on its system stopped processing their gas on a continual basis. This continued for the next two years, and as a result, Tennessee experienced a series of operational problems on its system with regard to hydrocarbon liquids fallout. Tennessee was forced to post notices to shippers, saying it would not accept gas with a dewpoint above 20 degrees Fahrenheit.

In December 2003, a group of shippers filed a complaint against the pipeline, asking FERC to issue an order requiring Tennessee to cease and desist from enforcing the Btu and HDP limits. FERC ruled that Tennessee’s actions did not violate its tariff.

Parties opposed to the settlement included Piedmont Natural Gas Co., Atmos Energy Corp., National Fuel Gas Distribution Corp., Central New York Oil and Gas Co. LLC, Wyckoff Gas Storage Co. LLC, National Fuel Gas Supply Corp. and Walter Oil & Gas Corp.

Among those supporting or not opposing the settlement were Consolidated Edison and Orange and Rockland Utilities Inc., KeySpan Delivery Companies, PSEG Energy Resources & Trade LLC, New Jersey Natural Gas Co., the Producer Coalition, Duke Energy Trading and Marketing LLC, Duke Energy Marketing America LLC and Indicated Shippers.

In another case, FERC noted that the publication of its Gas Quality Policy Statement (PL04-03) “was not a pretext for pipelines to completely revamp the gas quality and interchangeability standards in their tariffs,” and rejected an attempt by Northern Natural Gas to make major changes in its quality standards specifications and in the manner those standards are applied or waived.

Northern Natural provoked a firestorm of protest after its May 1 proposal to set new gas quality specifications for oxygen, carbon dioxide, heating value, gas temperature, cricondentherm hydrocarbon dew point (CHDP) Butanes and heavier hydrocarbons, total inerts, the Wobbe Index and hazardous substances. The pipeline also proposed including tariff provisions allowing it to waive the quality specs when it believed it was necessary to avoid negative impacts on its facilities.

Producers, shippers and customers protested the new standards and the uncertainty regarding their applicability, saying they would substantially curtail the supply of gas that could flow through the Northern Natural system. For instance, Virginia Power Energy Marketing Inc. said it would create a barrier between eastern and midwestern markets and the new gas supplies from the Rockies that would enter Northern’s system through market area receipt points.

Following a technical conference the Federal Energy Regulatory Commission issued an order [RP07-425] earlier this month, rejecting one-by-one Northern’s proposed specification changes, saying in most cases that the pipeline had failed to show how the existing standards had already or could in the future adversely affect its operations.

“The Commission’s Policy Statement does not mandate use of the Interchangeability White Paper Interim Guidelines (see NGI, June 19, 2006). Rather, the Commission strongly encourages pipelines and their customers to use [the guidelines] as a common scientific reference point for resolving gas quality and interchangeability issues,” FERC said. Refusing to change the heavier hydrocarbons standard as requested by Northern Natural, FERC said the pipeline “failed to identify any past, current or future problems with butanes and heavier hydrocarbons” on its system.

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