A former FERC commissioner and new head of a major natural gas pipeline group has called on Energy Secretary Spencer Abraham to do “whatever is in your power” to clear away the obstacles at the state and federal levels that are holding up two Northeast projects, Millennium Pipeline and Islander East Pipeline.

Both projects have undergone comprehensive reviews by federal and state agencies, and have received certificates from the Federal Energy Regulatory Commission. Still they wait, said Don Santa Jr., the new president of the Interstate Natural Gas Association of America (INGAA), in a letter to Abraham. He indicated that a third pipeline project, which he declined to identify, is slated to face a similar fate.

The in-service date for the Connecticut-to-Long Island Islander East pipeline “already [has] been delayed a full year by the [Army] Corps of Engineers and other regulatory processes,” Santa said. “Unless DOE completes its review of Islander East quickly, the project’s in-service date may well slip again, to the serious detriment of the energy distributors and generators who have contracted for capacity on the pipeline and the region as a whole,” he told Abraham.

The proposed Millennium Pipeline, which would run from Lake Erie to the New York metropolitan area, also is confronted with “overlapping and inconsistent” regulatory processes, according to Santa (see NGI, Aug. 4). “It is currently stalled in proceedings before the U.S. Department of Commerce, which is considering Millennium’s appeal of a New York Department of State ruling regarding the project’s consistency with the New York coastal management program.”

FERC’s “speed and efficiency” in processing applications for pipeline certificates has been “eroded” by the “increasing delays and costs associated with the regulatory processes of other federal agencies and, in many cases, state agencies acting pursuant to delegated federal authority,” he said. These costly delays could have a “chilling effect on other companies who otherwise stand ready to make additional, critically needed investments in energy infrastructure projects.”

A key challenge is “how do you somehow find a way either through persuasion or leverage to get the state agencies that are proving to be the problem involved in the process” at FERC and other agencies, Santa noted. He doesn’t think the Commission is to blame. “FERC goes to great lengths to accommodate stakeholders” during the certification process, he said during a press briefing with reporters Tuesday.

The 442-mile, 700 MMcf/d Millennium line was approved by FERC in late 2001, after pending at the agency for nearly four years. The Commission issued a certificate for the Islander East project, sponsored by Duke Energy Gas Transmission and KeySpan Energy, in September 2002. The proposed pipe would carry over 260 MMcf/d at first and ultimately more than 400 MMcf/d from Connecticut under Long Island Sound to connect with KeySpan’s Long Island line.

Asked about the prospects for building more pipelines in the Rocky Mountains, Santa said it “comes [down] to the question of who’s going to sign up for the pipeline capacity,” now that marketers and other traders, once the biggest customers of pipelines, have grown scarce.

The interstate natural gas pipeline business is not a “Field of Dreams business,” where a pipeline builds new facilities and customers just materialize, he noted. Very few pipes are built on “speculation,” given the high capital costs and the regulated nature of the business.

“What we’re seeing increasingly there [Rocky Mountains] is interest on the part of producers signing up for capacity,” Santa said. “Historically, probably but for the offshore, producers have not signed up for capacity.” Instead, they have been “price takers for whatever they can get,” he noted. Distributors could follow suit.

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