A major pipeline group last week said there was “much to like”in the notice of proposed rulemaking (NOPR) that would, among otherthings, expand the blanket construction and abandonment authorityfor pipelines under FERC’s Part 157 regulations, but it also had”several major concerns.”

On the plus side, the gas industry’s goal of a 30 Tcf marketwould be “enhanced” by the NOPR because a greater number ofso-called “routine” pipeline projects that now are being treated asmajor Section 7 (c) applications (subject to a lengthycertification process) could, under the proposed rule, be initiatedat the pipeline’s own risk and expense without having to seek priorFERC approval for construction, according to the Interstate NaturalGas Association of America (INGAA).

But the interstate pipeline group insists the list ofpipeline-related facilities that would qualify for blanketconstruction authority still has come up short. It contends blanketauthority, which under the NOPR would be extended to meterstations, certain replacement projects and modifications tocompressor engines that don’t increase capacity, also should applyto interconnections, delivery laterals and other constructionactivities that would promote a “seamless national pipeline grid.”

INGAA argues that “excluding the construction ofinterconnecting pipeline segments from the blanket certificateunnecessarily restricts open-access service.” It called on theCommission to reverse its policy decision reached earlier this yearin a case involving KN Interstate Gas Transmission, which deniedblank construction authority to interconnections [RM98-9].

At a minimum, FERC should include the installation ofcompression in interconnection projects as being eligible forblanket certificate authority, INGAA said. “It is common forprevailing pressures of interconnecting pipelines to differ. Thisrequires one of the pipelines to install compression. Includingthese as eligible facilities will facilitate the free flow of gas.”

Other eligible facilities, the pipeline group says, should bemainline extensions. Although FERC declared these as ineligible forconstruction under the blanket certificate in a 1995 case, INGAAargued that “these lines are similar to [eligible] supply lateralsand will continue the Commission’s efforts to promote aninterconnected and seamless national pipeline grid.”

It was unclear in the NOPR whether construction of “storageinjection/withdrawal wells and the associated storage lines” wouldbe subject to blanket certificate authority “when such a projectdoes not change the capacity of the field,” noted INGAA. It askedthe Commission for clarification on this point. In a separatefiling, Michigan Gas Storage also asked FERC “to make it clearerthat the ‘eligible facilities’ [for blanket certificate authority]include storage facilities as well as transportation facilities.”

With respect to the storage issue, Petal Gas Storage, asubsidiary of Crystal Oil Co., called on FERC to add theconstruction and operation of new salt dome storage caverns to itslist of facilities eligible for blanket certificate authority.Asan alternative proposal, Petal Gas asked that it be allowed toconstruct a cavern (e.g. drilling and leaching) and install relatedfacilities (e.g. flow lines) under Part 157 authority, with theunderstanding that it could not begin operation of any additionalstorage capacity and storage services until it received Section 7(c) certificate authority from FERC.

In the NOPR, FERC also proposed the expansion of a pipeline’sauthority for abandoning receipt and delivery points, as well as”eligible” facilities. Specifically, the proposed rulemaking wouldpermit pipes to abandon a receipt or delivery point, or a relatedsupply or delivery lateral, if the point has not been used toprovide interruptible or firm transportation service for one yearprior to the effective date of the proposed abandonment. Or apipeline could abandon an “eligible” facility if it receiveswritten consent from customers that have been served in the past12-month period.

The latter part of the proposal – obtaining written consent -raised a red flag with INGAA. “Depending on the situation, e.g. theabandonment of a tie-over on a mainline or some facilities at aninterconnect with another pipeline, this could be very burdensomebecause of the sheer number of customers that could be affected.”Instead, the pipeline group proposed that abandonment be permittedin cases where it would not “terminate or degrade” service toexisting customers.

INGAA especially took issue with the provisions in the NOPR thatwould require pipeline replacement facilities to be located withinthe existing right-of-way or on the same site as the originalfacilities being replaced. In addition, the provisions wouldrequire pipelines to use the same temporary workspace that was usedin constructing the original facility.

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