Koch Gateway Pipeline Co. has asked FERC to approve the sale ofan undivided interest in its Mobile Bay Lateral assets to FloridaGas Transmission (FGT) as part of the pipe’s Phase V expansion,giving FGT the right to half of the lateral’s capacity of 600MMcf/d.

In an application filed at FERC, Koch Gateway said the sale madesense, particularly in light of the new policy statement onpipeline construction, because it would “permit the surpluscapacity of one interstate pipeline [Koch] to be used to meet thegrowth in demand of another interstate pipeline [FGT] withoutconstruction of new facilities.”

The proposed sale “positively addresses the Commission’sconcerns about overbuilding of capacity, unnecessary disruption ofthe environment, and unneeded exercise of eminent domain. In lightof these concerns, the continued sole ownership [by Koch Gateway]is no longer justified.”

Koch Gateway estimated its primary firm obligations usingreceipt points on the Mobile Bay Lateral totaled 286,068 Dth/d asof Dec. 1. “However, on an average day in 1999, throughput underall services was only 124,847 Dth/d. Given these facts, KochGateway believes no existing customer will be affected by theabandonment of the FGT interest.”

It asked the Commission to approve the transfer of the interestin the 28-mile Mobil Bay Lateral to FGT by April 1, 2000, theproposed in-service date of FGT’s $400 million Phase V project. The300 MMcf/d of lateral capacity would provide upstream access toMobile Bay gas supplies for customers on FGT’s proposed expansion,which would add a total of 375-425 MMcf/d of firm capacity to thepipeline’s mainline. Koch Gateway noted that “only minor grounddisturbance” would be needed to interconnect the lateral with FGT’sPhase V facilities.

The lateral receives gas from a number of sources, including theMobil Oil Exploration and Producing Southeast Inc. processingplant, Shell Offshore Inc. “Yellowhammer” treating plant, ExxonCorp.’s treating plant, the Williams Field Service Inc. processingplant, the Mobil Bay Processing Partners’ processing plant, theMobile Area Gathering System facilities and Dauphin IslandGathering Partners’ facilities.

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