NGI The Weekly Gas Market Report
Citing the need to accommodate increased Canadian gas suppliesflowing into the Midwest, the sponsors of Independence Pipeline andSupplyLink have urged FERC to promptly issue preliminarydeterminations (PDs) on the non-environmental aspects of theirpipeline projects.
The applications for the proposed Independence line and the ANRPipeline-sponsored SupplyLink project have been stalled at theCommission for nearly two years, while competing projects aremoving through the certificate process, the sponsors said. Theyfear that if FERC delays the preliminary rulings any longer theywon’t be able to meet their projected in-service dates – November1999 for SupplyLink and November 2000 for Independence – and willbe put at a “competitive disadvantage.”
The proposed Independence line, if approved by the Commission,would extend 400 miles from Defiance, OH, to the Leidy, PA, hub,where it would intersect with up to six different pipelines capableof delivering gas along the entire Eastern Seaboard. The $678million pipeline, which would have a winter capacity of about 1Bcf/d, would provide gas producers in Canada, the Rocky Mountainand Mid-Continent regions with a much-needed link to markets in theEast and Mid-Atlantic, according to the project’s partners. Theyare ANR, Williams’ Transcontinental Pipeline and National Fuel Gas.
SupplyLink, in contrast, would “reinforce” ANR’s existing systemupstream of the proposed Independence line, basically from Joliet,IL, to Defiance. It would add about 750 MMcf/d of capacity throughlooping and new compression.
ANR contends that quick action on SupplyLink’s PD is “clearlywarranted,” given that “all of the record materials necessary toaddress the non-environmental aspects of [its] proposal are nowbefore the Commission.” It believes the project is in the publicinterest in light of the growing gas supplies that now are cominginto the Joliet hub via the Northern Border Pipeline expansion, andwill be in even more demand when the Alliance Pipeline goes intoservice in November 2000.
A prompt PD further is needed to ensure that ANR “is placed onan equal regulatory footing with, and is thus able to competefairly and effectively with, other projects designed to providesimilar new transportation services emanating from the Joliet hub.”ANR pointed out that FERC issued a PD to a competing project,Vector Pipeline L.P., within 10 months of filing its application.”It is important that no competitor be placed at a competitivedisadvantage through regulatory delay.”
On a related issue, FERC staff indicated it has had problemsprocessing Independence’s application due to “certain terminationprovisions” in the proposed pipeline’s precedent agreements withEnron Capital & Trade Resources and Statoil Energy. But thesponsors of Independence contend that shouldn’t be a issueconsidering they have a binding precedent agreement with DirectLinkGas Marketing Co. for 500,000 Dth/d, which represents 55% of thepipeline’s capacity.
“…[I]n light of the DirectLink precedent agreement,Independence sees no reason why the contracts with Enron andStatoil should affect efforts to complete processing ofIndependence’s application, including the prompt issuance of apreliminary determination on non-environmental issues.”
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