The controversial Northeast-bound Independence Pipeline andMillennium Pipeline have won draft environmental acceptance at theFederal Energy Regulatory Commission, giving both the first bit ofencouraging news since the project applications were first filed.But the projects may not turn out as originally designed.

The draft environmental impact statements (DEIS) concluded thatconstruction of the Midwest-to-Northeast greenfield pipelines wouldhave “limited adverse environmental impact” if “appropriate andreasonable” mitigating measures are used. The favorable decisions,according to FERC staff, were owing in part to the proposed routingof Millennium and Independence mostly along existing pipeline andpowerline rights-of-ways (ROWs) – 90% and 67%, respectively.

In evaluating Millennium, however, staff recommended a systemalternative – the Niagara Spur System Alternative – that wouldentail the project bypassing Lake Erie entirely. On the U.S. side,the draft alternative calls for the transportation of 700,000 Dth/dof gas over Tennessee Pipeline’s system (starting at its Niagaraimport point) to its intersection with National Fuel Gas Supply inErie County, NY. National Fuel would deliver 8,000 Dth/d of the gasto a Millennium shipper in Erie County, and then would transportthe remaining 692,000 Dth/d to Millennium in Allegany County, NY,according to the DEIS.

FERC staff estimated the alternative would replace 144 miles ofthe proposed Millennium project in the U.S. But the actual mileagewould be reduced by only 53 given the alternative would requireabout 90 miles of looping on Tennessee and National Fuel. Staffprojects total cost of the alternative system (both U.S. andCanadian sides) would be about $223 million – or $12 million lessthan Millennium’s proposal.

In Canada, the proposed 46-mile St. Clair pipeline and otherfacilities to span the Canadian waters of Lake Erie that were to beconstructed by TransCanada Pipeline Ltd. would no longer be neededunder the draft alternative, the DEIS said. However, the proposedalternative would require up to 164 miles of alternative pipelinerouting and possibly additional compression between Dawn, ON, andthe Niagara import point.

Staff has sought comments from Tennessee, National Fuel andMillennium on the “feasibility of expansion of these systems” toaccommodate the alternative plan. It further is seeking commentsfrom TransCanada Pipelines. In eyeing major route alternatives, ithas asked Millennium and Algonquin Gas Transmission to also commenton the “feasibility of using the existing Algonquin pipelines totransport Millennium’s proposed volumes across the Hudson River.”

As currently proposed, the Columbia Gas Transmission-sponsoredMillennium project would extend 417 miles from Lake Erie toWestchester County in New York, bringing in gas from other regionsof the U.S. and from western Canada.

With respect to Independence, FERC staff also recommended analternative to the proposed route. It calls for Independence todeviate from its proposed route in Seneca County, OH, and to followthe existing ROW of Sun Oil Pipeline east for several miles, andthen turn southeast to continue along Columbia Gas’s ROW for 12miles before rejoining its proposed route near Attica, OH.Moreover, the DEIS – the scope of which covered Independence andtwo associated projects (MarketLink and SupplyLink) – recommended acouple of minor variations to the three-part project.

Independence, as currently proposed, would run about 400-milesfrom Defiance, OH, to the hub in Leidy, PA. Project sponsors areANR Pipeline, National Fuel and Transcontinental Gas Pipe Line.From Leidy, Transco – the sole sponsor of MarketLink – proposes toloop about 154 miles of its existing system to carry the gas toPennsylvania, New Jersey and other eastern markets. The proposedANR-sponsored SupplyLink project would entail about 72 miles oflooping of ANR’s existing system between Joliet, IL, and Defiance.

FERC staff said it evaluated existing and planned systemalternatives to Independence and the associated expansions,including the proposed Vector, Tristate and Millennium projects,but none were found to be “both environmentally preferable to theproposed facilities and able to meet the proposed projects’objectives.”

The Commission last month in unprecedented action refused togive Millennium and Independence (and associated expansions)preliminary determinations (PDs) on the non-environmental aspectsof the projects until the environmental reviews are completed. FERCtook this action in response to the large landowner oppositionand/or questions about the “need” for the projects.

Public comments on draft environmental statements for Millenniumand Independence are due at the Commission on June 7th and June4th, respectively.

In related action, FERC asked Millennium for an update on theseven to nine shippers who had reserved the right to opt out oftheir precedent agreements by either late March or mid-April in theevent either a PD was not issued for Millennium or they failed toreceived corporate approval for their capacity agreements. “In viewof the fact that all…deadlines have passed and no preliminarydetermination has been issued, please advise if theabove-referenced agreements have been amended, or if any shipperhas notified Millennium of its election to terminate itsagreement,” wrote Kevin P. Madden, director of FERC’s Office ofPipeline Regulation, on April 13th.

He also asked Millennium if it had entered into an agreement tobuild a lateral connection with Southern Energy Bowline L.L.C toprovide up to 300,000 Dth/d of gas to the Bowline GeneratingStation, and – if so – whether this would require a modification tothe Millennium proposal. Additionally, Madden wanted to knowwhether a decision by New York City’s Department of EnvironmentalProtection to deny Millennium’s request to cross the CatskillAqueduct would result in any changes to the project.

Susan Parker

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