FERC has ordered a technical conference to be held to explore a proposed tariff filing in which Northern Natural Gas pipeline seeks to set more restrictive specifications on the quality and content of natural gas entering its system.

Northern Natural, a pipeline subsidiary of MidAmerican Energy Holdings, has asked the Federal Energy Regulatory Commission to allow it to cut the carbon dioxide tolerance level of gas coming into its system to “less than or equal to 1% by volume” from its existing level of 2% by volume, and to scale back the oxygen tolerance level to “less than or equal to 0.02% by volume” from its current level of 0.2%.

Noting that protesters had raised a number of issues that warranted further investigation, the Commission directed staff to convene a technical conference on Northern Natural’s proposal and report back within 120 days.

Omaha, NE-based Northern Natural, which accesses supplies in the Midcontinent and Rocky Mountain regions, said it proposed the tariff changes to “minimize pipeline corrosion in response to industry research and an advisory issued by the [Department of Transportation’s] Office of Pipeline Safety,” according to the order that was issued Friday [RP03-398]. It noted that several gas pipelines — Natural Gas Pipeline Co. of America, Colorado Interstate Gas, Trailblazer and Kinder Morgan Energy — have an even more stringent oxygen threshold level than what it proposes.

Producers, local distribution companies (LDCs) and industrials assailed the pipeline’s request, saying that Northern Natural had failed to show corrosion was a problem on its system, that current gas quality standards were adversely affecting pipeline safety, and how its proposal would affect shippers and interconnecting pipelines.

A coalition of large LDC shippers argued that implementing more restrictive gas specs on Northern Natural would curtail competition and reduce the ability of LDCs and other purchasers to obtain gas at the best possible price. Western Gas Resources Inc. foresees the proposal, if approved by FERC, negatively affecting the development of coalbed methane gas in the Rocky Mountains.

Western Gas identified 72 jurisdictional pipeline companies that either have: 1) a minimum carbon dioxide standard of 2% or more; 2) a limit on the quantity of inert gases that effectively allows carbon dioxide content of 2% of more; or 3) no specification on carbon dioxide content, the order said. It noted that 10 of these pipelines interconnect with Northern Natural’s system.

The issue involving the content or quality of natural gas has become a front-burner item in the industry and at FERC for two reasons. First, there has been a noticeable rise in the hydrocarbon content of U.S.-sourced gas entering pipelines, as a growing number of domestic producers are opting not to strip out hydrocarbons from their gas due to high processing costs. This has prompted a cry by some industry members, notably pipelines, for tighter gas quality specifications.

Secondly, as the market focus turns to liquefied natural gas (LNG), pipelines, LDCs and industrial customers are concerned about how Btu-enriched regasified gas will impact the integrity of their facilities, as well as the safety of the fuel for end-use customers.

FERC held a technical conference in late February to address this high-profile issue, and industry has formed a broad coalition in an attempt to reach a consensus on gas content standards.

Commissioner Suedeen Kelly said last week that the Commission was likely to initiate a generic rulemaking to address gas quality/content standards if industry fails to achieve a consensus on the issue (see Daily GPI, Feb. 25).

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