FERC Thursday approved Gulf Crossing Pipeline Co. LLC’s proposal to build and operate lateral facilities that would provide firm transportation services to a natural gas-fueled, combined cycle power plant that is under construction in Sherman, TX, which is 60 miles north of Dallas and near the Barnett Shale.

Gulf Crossing, a wholly owned subsidiary of Boardwalk Pipeline Partners LP, is seeking to build a 16.5-mile lateral and associated facilities from its Sherman Compressor Station near Sherman to an interconnection with the 758-MW Panda Sherman Power Plant I, which is expected to be completed by year-end 2014, according to the company (see Daily GPI, April 5).

The lateral, when completed, would be capable of supplying up to 278,000 Dth/d of firm transportation service. Gulf Crossing said it has entered into a transportation agreement with Panda Sherman for up to 125,000 Dth/d of firm service to the power plant over a period of 20 years.

The power plant will serve approximately 750,000 residential customers in the north-central and northeast regions of Texas, according to Gulf Crossing.

The pipeline asked the Federal Energy Regulatory Commission to make a predetermination that would allow it to roll the costs of the lateral project into its existing Part 284 transportation rates in a future Natural Gas Act (NGA) Section 4 general rate proceeding, but FERC denied the request.

“Gulf Crossing’s application projects that the firm transportation revenues resulting from Panda Sherman’s 125,000 Dth/d contracted-for maximum daily quantity and the negotiated demand/commodity rates will equal $3,704,750 during each of the first three years of service. This projected annual revenue is less than the annual cost of service in each of the first three years of operation. Therefore, we find if the project costs were to be rolled into Gulf Crossing’s systemwide rates in its next NGA general Section 4 general rate proceeding, existing customers might be required to subsidize the project. Accordingly, we will deny Gulf Crossing’s request for a predetermination” to roll in the project costs, the order said [CP13-64].

Gulf Crossing is a 354-mile, 42-inch diameter pipeline that provides takeaway capacity from the Barnett Shale in Texas and the Caney/Woodford Shale in Oklahoma. It begins in Sherman and extends to the Perryville, LA, area.