FERC on Wednesday granted a request by Tuscarora Gas Transmission to cancel the second phase of a planned pipeline expansion that was intended to serve a power generation plant proposed by Duke Energy. The pipeline asked the Commission to vacate the certificate order for this phase of the project after Duke Energy North America LLC placed on indefinite hold its plans for a 540 MW Washoe generating facility near Reno, NV.

In separate orders, the Federal Energy Regulatory Commission also declared the Gulf of Mexico pipeline facilities of Jupiter Energy Corp. to be transportation and subject to agency regulation, and ordered Saltville Gas Storage Co. LLC to justify FERC’s prior granting of Hinshaw status for a pipeline that is being constructed as part of an natural gas storage project in Virginia.

Phase two of the Tuscarora expansion called for the construction of a 3.7-mile lateral to transport 40,000 Dth/d to the proposed Duke generation plant. The Washoe plant was one of several that Duke has put on hold and one of many that have been delayed because of lower power prices, poor spark spreads and tight margins in the power generation business [CP01-153].

In April 2002, the Commission approved splitting the Tuscarora expansion into two phases, with the second phase set to enter service in the spring of 2004. FERC gave the first phase, a 10-mile pipeline, a green light last November. That phase, which was completed in December 2002, was designed to serve all of Tuscarora’s expansion shippers, with the exception of the Washoe generating plant in Nevada.

The first phase delivers 55,912 Dth/d of additional firm transportation service to Sierra Pacific Power Co., Southwest Gas Corp., and Morgan Stanley Capital Group for delivery in California and Nevada.

The 229-mile Tuscarora pipeline, a partnership of subsidiaries of Sierra Pacific Resources and TransCanada PipeLines Ltd., transports gas from the Oregon-California border to northern Nevada.

The Commission rejected Jupiter Energy’s request to have its offshore system declared gathering in nature, which would have exempted it from FERC jurisdiction [CP03-11]. Jupiter claimed that it essentially functioned as part of the gathering system of its parent company, Unocal, and that Unocal planned to integrate the Jupiter facilities into its gathering system if FERC approved Jupiter’s request.

Jupiter further noted that Unocal has been the sole shipper on its system since 1992. Jupiter Energy’s offshore system includes an 8.5-mile line and a 10.2-mile pipeline, as well as an interconnect with Transcontinental Gas Pipe Line.

Referring to the Jupiter Energy order, Chairman Pat Wood told reporters he had a “lingering sense of concern” about the offshore gathering policy that emerged from the landmark Sea Robin Pipeline case. He indicated the Commission would hold an open forum in the future to address the definition of offshore gathering.

Lastly, FERC directed Saltville, a joint venture of Duke Energy and NUI Corp., to submit information to justify the agency’s prior decision declaring it to be a Hinshaw pipeline, exempt from Commission jurisdiction [CP02-430]. The Hinshaw amendment, which was approved by Congress in 1954, excludes a pipeline from federal oversight if it receives gas within the boundary of the same state in which the gas is ultimately consumed.

However, the Saltville pipeline, which is part of a storage project planned in Virginia, would provide firm and interruptible storage services to customers whose gas supplies ultimately would be transported out of Virginia.

In January, FERC awarded a limited jurisdiction blanket certificate to Saltville Storage to build a seven mile, 24-inch diameter pipeline originating in Saltville, VA, and terminating in Chilhowie, VA, with interconnections to Duke’s East Tennessee Natural Gas pipeline and NUI subsidiary Virginia Gas Pipeline Co.

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