Producers’ economic decisions to shut down gas processing plants all along the Gulf Coast last year, leaving liquids in the gas stream, has led pipelines to place restrictions on the quality of the gas entering pipelines in order to protect their operations, the Interstate Natural Gas Assoc. of America (INGAA) said in a letter to FERC Chairman Pat Wood.

The pipeline association responded to a letter from the Natural Gas Supply Assoc. (NGSA) which had complained that pipelines were proposing or implementing new procedures or more restrictive interpretations under their tariffs for the acceptance or rejection of gas supply based on gas quality specifications.

“Producers are concerned about situations where pipelines may inadequately justify these procedures, inappropriately apply or misinterpret existing tariff provisions or simply change quality standards at their discretion with little or no Commission review.” The NGSA letter was filed in a Federal Energy Regulatory Commission case involving Natural Gas Pipeline Co. of America (RP01-503), which was seeking a tariff change to allow it to post on its electronic bulletin board limits on the dewpoint and Btu content of the gas it receives. NGSA said the NGPL case indicated a “burgeoning problem” afflicting gas transportation.

INGAA rejected producers’ arguments that pipelines are arbitrarily blocking gas from their pipes, and pointed to “a major change that did take place in the Gulf in December of 2000.” At that point INGAA said onshore straddle processing plants, largely owned by producer affiliates, “simply stopped operating.” Producers were apparently responding to the low prices for gas liquids, compared to higher prices for vaporized gas, in deciding to leave the liquids in the gas stream and collect on the higher Btu quality.

The problem, INGAA pointed out, is that “interstate pipelines were never constructed to be able to handle such a wealth of liquid and liquefiable hydrocarbons downstream of the processing plants….This sudden widespread decision by the producers and their processing affiliates left pipelines with an operational problem of severe magnitude, affecting reliability of service (freeze-offs), compliance with delivery tariffs (delivered-gas quality standards), and safety (contaminants and liquids potentially affecting corrosion).”

INGAA said the pipeline systems are simply not designed to work with such high liquids in the gas stream, and the tariff changes were simply meant to protect the integrity of the pipes.

The pipeline association disputed producers’ claim that they could have rectified the problem at minimal expense, saying that duplication of the processing plants that had been intentionally idled would entail massive costs.

INGAA pointed to the inter-relation of production, processing and transportation, saying the tariff changes are simply meant to ensure each performs its intended function.

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