The issue of liquids in the gas stream, a high dollar topic currently being debated in several forums, has reached a high decibel level in a tariff filing by ANR Pipeline. But while various segments of the industry maneuver for position on the generic issue, ANR wants to limit the debate to standards for running its own pipeline in the here and now.

Producers, LDCs and industrials are split on ANR Pipeline’s latest tariff proposal to limit the gas liquids content on its pipeline, but the split does not follow industry segment lines. BP America Production last week lined up with Peoples Gas Light & Coke of Chicago in supporting ANR’s proposal, which has drawn hostile fire from numerous other producers, several LDCs and an end-user group. Some of the critics have requested additional hearings while others propose to await an industry-wide solution from the Natural Gas Council. (see NGI, March 29).

The amount of liquids left in the gas stream has become a hot issue since gas prices have risen to the point where a producers’ net revenue can be greater if natural gas liquids are left in the gas stream, rather than processed out and sold separately. Since the hydrocarbon dew point (HDP) of gas has a relationship with the thermal or Btu value, it also is coming to the fore as more Btu-rich regasified LNG enters the mix.

ANR offered a revised tariff filing in early August to set a systemwide hydrocarbon dewpoint limit of 15 degrees Fahrenheit which it would accept without proof of processing as long as the gas met its other specifications, saying it was not attempting to solve the overall HDP-Btu issue, but simply trying to set limits so it could operate its system without running into problems from liquids fall-out through condensation. The 15-degree limit for unprocessed gas amounts to a safe harbor window for gas to enter its system without being processed.

The revised tariff filing came after the Commission said ANR could not use repetitive emergency OFOs to set an HDP standard, which it had been doing on segments of its pipeline in order to keep processing plants in operation (see NGI, May 10). An earlier tariff filing was rejected as inadequate.

ANR’s proposed tariff would exempt inputs from meters flowing less than 500 Dth/d without access to processing plants, accept arrangements for processing after gas entered the pipeline, and provide for aggregation of gas streams to stay within the limit.

Peoples Gas acknowledged ANR’s aim, saying that while a broad industry debate should continue toward a more detailed solution that could be applied later, it supported the pipeline’s proposed operational standard.

But Dominion East Ohio worried that what it viewed as a high HDP level would also increase Btus, causing possible operational and safety issues for end users, problems with the distributor’s measurement and billing system, and cause it to lose revenues.

“With hotter gas, a customer will consume fewer volumes of gas, and Dominion East Ohio will forever lose the base rate revenue associated with the lost volumes.” The distributor told FERC that ANR had responded to questions at a technical conference to the effect that “assuming that processors have the capability to ‘dial in’ a chosen HDP value so that ANR’s Southeast leg gas is processed to 15 degrees F HDP, a citygate delivery point in Indiana would see an increase in the Btu value from 1,029 Btus per cubic foot to 1,100 Btus per cubic foot, a change of 7%.”

The Ohio distributor maintained that the historic standard for pipeline gas is about 1,030 Btus, saying it would either have to change its conversion factor or suffer increased lost and unaccounted for gas from customers receiving the higher Btu gas. Even with a change in conversion factor, Dominion East Ohio said it would suffer a billing determinant and revenue shortfall directly proportional to the percentage increase in heat value.

The Process Gas Consumers said fluctuations in gas quality, rapid changes in Btu content and liquids fallout have an impact on industrial plant operations. PGC is participating in the efforts of the Natural Gas Council to come up with industry standards — not necessarily one-size-fits-all — and believes individual tariff revisions should await the results of the all-industry effort.

But the way BP sees it, increasing the heating value increases the gas supply and that’s very much a right now problem. The producer pointed out that with the U.S. facing a supply shortfall and high prices, the increased Btu will make the gas go further, taking some of the pressure off of prices. This is an overall national energy policy issue which cannot be ignored, the producer said, in supporting immediate approval of ANR’s HDP standard. Also, accepting ANR’s 15 degree HDP now provides certainty at both ends of the pipe, BP said.

Other producers, both major and minor, however, argued against the limit. A Producers Coalition said the imposition of an HDP limit by ANR could have a cascading effect on other pipelines, and it would put the “burden of gas quality control on producers — often a limited class of producers — without consideration of systemwide solutions to gas quality issues, and the attendant distribution of costs to all shippers.”

The coalition called for an evidentiary hearing to examine the basis for ANR’s formulation of the 15 degree standard, including how it would allow aggregation to meet that standard and historical information on dewpoint, heat rate and pressure measurements at various points on ANR’s system.

Indicated Producers questioned why ANR had set the systemwide rate at 15 HDP when its previous OFO’s had set the limit at 20 HDP.

Responding to the various comments, ANR said the 20 HDP emergency limit had assumed some gas would be entering its system well below that number, serving to balance the liquids content. Allowing unprocessed gas systemwide “allows for the potential that all gas could enter the system at 15 degrees without that gas being processed. ANR has never operated its entire system under such conditions and cannot guarantee that an HDP safe harbor alone will be sufficient to protect the system or to maintain downstream deliveries at their current quality level.”

The pipeline’s analysis indicates the 15 degree limit should be adequate based on its expertise and experience, but it acknowledges “there is a certain amount of theoretical evaluation” involved. The pipeline said that hydrocarbon liquids fallout “must be addressed on a preventive rather than a reactionary basis,” because it could take months to return the system to normal if a significant problem occurs.

It believes it has left some margin and ANR proposes to retain flexibility through aggregation, accepting gas with a higher HDP than the posted limit if it is operationally feasible. To maximize throughput ANR could permit non-conforming gas to enter the system if it is matched with a balancing input from another source that will bring it into compliance.

ANR said it had some concerns as to whether its safe harbor level would be adequate for gas flows across interconnecting pipelines and had proposed in a technical conference adding a provision that would allow it to set an HDP standard below the safe harbor number where it was necessary to meet the standards of downstream interconnects. That proposal roused a lot of concern and ANR dropped it. However, if the Commission chose to add a provision similar to one in an NGPL case that allows for the establishment of an upper HDP limit to ensure that gas will be accepted into downstream interconnects, ANR would support it.

The pipeline noted it is active in the industry effort to establish standards for the pipeline grid, but in the meantime, the Commission “should allow the pipelines the discretion necessary to operate in the seamless manner they have for years prior to the producers’ and plants’ decisions to attempt to extract more money from the process.” ANR offered that if FERC wanted to postpone a decision, ANR would need to be able to go back to issuing emergency OFOs in the interim.

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