Carrying out its new policy on liquefied natural gas (LNG) projects, FERC on Wednesday dismissed a request by Weaver’s Cove Energy, a proposed Massachusetts’ LNG terminal, for a preliminary determination (PD), saying essentially that it was an unnecessary step for the project and others like it.

The ruling doesn’t mean the Commission has rejected the LNG project; it’s a clarification on the type of new regulatory process followed by FERC for LNG terminals. The agency in effect signaled that “a new policy [was being] applied to all applications for certificates for proprietary LNG terminals, and PDs would no longer be necessary in light of the Hackberry [or Cameron LNG] decision” in December 2002, said Weaver’s Cove spokesman Jim Grasso.

The Commission also turned down a PD request of Weaver’s Cove affiliate Mill River Pipeline LLC to build two laterals to connect the proposed LNG facility to the Algonquin Gas Transmission system. Weaver’s Cove and Mill River are subsidiaries of New York-based Potens and Partners.

FERC said it rejected the PD for the LNG project because the “type of issues typically addressed in PDs, such as rates, terms and conditions, service and other non-environmental matters are not present in Weaver’s…proposal.” As a result, “there’s no need to issue a PD.”

The company “is proposing to use a business model that is consistent with the one approved in [FERC’s] Hackberry decision,” FERC staff said. In that ruling, the agency said that in the future it would treat LNG facilities as the functional equivalent of natural gas production facilities, over which it has no open-access jurisdiction, and would allow them to charge market-based rates for terminal services.

The Weaver’s Cove terminal would be built in Fall River, MA, just south of Boston. It is one of the first major LNG projects to come before FERC since the policy shift was announced. With this ruling, the Commission is telling other proposed LNG facilities that they do not need to seek PDs if they have filed under Section 3 of the Natural Gas Act.

The proposed terminal still remains a viable project at the Commission, with agency staff reporting that the draft environmental impact statement (DEIS) is under preparation. “The Commission staff indicated that the DEIS would be issued soon, and that any issues which would have been covered in the PD would be addressed in the final order expected later this year,” Grasso said.

In rejecting a PD for the Mill River laterals, staff said that while the proposed laterals are an integral part of the overall LNG terminal project, “it finds that they’re not the kind of facilities at issue in major construction projects that would benefit from the PD process.”

FERC said “all of the issues related to the laterals will be addressed when the Commission issues its [final] order in the Weaver’s Cove proceeding.”

The Commission also rejected a request by Falls River Mayor Edward Lambert to hold a hearing to explore the timing of the agency’s environmental review of the LNG project.

Chairman Pat Wood, however, assured Lambert and Falls River residents, who strongly oppose the proposed terminal, that the agency “will not rush” through its review of the environmental and security aspects of the project.

The $250 terminal facility, which would be sited in an industrial area that was previously a petroleum import terminal, would have a vaporization capacity of 400,000 Mcf/d on an average day, and up to 800,000 Mcf/d on a peak day, and the ability to supply up to 100,000 Mcf/d by truck to local and regional markets.

Weaver’s Cove Energy plans to begin construction later this year, with in-service targeted for November 2007.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.