NGI The Weekly Gas Market Report
Unable to complete final agreements with many of its U.S.markets, Maritimes & Northeast Pipeline is expected to file anamended certificate application for Phase II of its pipelineproject with FERC this month that will defer construction of nearlyall of its previously planned pipeline laterals in the U.S. It alsois expected to show an increase in rates because of newcalculations of construction costs.
The pipeline is expected to defer constructing about 147 milesof Maine laterals, which initially were expected to be in servicewith the Phase II mainline in November. The laterals being shelvedinclude Millinocket, Skowheagan, Bucksport and Woodlands, all ofwhich would have served Maine paper mills. Another line to theWyman Station power plant, which was expected to be converted toburn gas, is not being built because Central Maine Power and FPLare litigating the sale of the plant.
“Because of the economy, some of the other plants and papermills in Maine will not need laterals,” said Maritimes spokesmanBrian Prenda. “We had 440 MMcf/d, now we have 360 MMcf/d.
“We are still working with Champion Paper on their Bucksportlateral, but it would not work for them in 1999,” he said. “They’vealready been approved to build their dual-cycle power plant upthere, and they are going to need natural gas to fire that. We arealso working with CMP [Natural Gas] on local distribution and withBangor Gas. As you know there are several other power plants beingplanned in Maine. We have the Veazie power plant and Gorham powerplant for about 270 MMcf/d scheduled.” In the long run, all of thelaterals will be built, he said. In the meantime, there isever-growing interest among Atlantic Canada gas markets in SableIsland gas production and Maritimes pipeline capacity (please seerelated story).
And despite the short-term set back in the U.S., FERC alreadyhas given the pipeline the green light to begin initialconstruction on Phase II, which is expected to begin service inNovember. Earlier this month over the protests of severalintervenors, the Commission concluded the pipeline’s remainingcontracts were a sufficient showing of market support for it toallow construction to begin. Maritimes still has contracts withfour shippers, including Boston Gas (43,200 Dth/d), Mobil NaturalGas (185,335 Dth/d), Salmon Resources (100,000 Dth/d) and anothercompany (30,240 Dth/d), which total nearly 360,000 Dth/d, or 82% ofthe expected full capacity. It also has a backstop agreement withMobil for an additional 174,665 Dth/d.
Maritimes is owned by affiliates of Duke Energy (37.5%),Westcoast Energy (37.5%) and Mobil (25%). Duke, through itsaffiliates, is responsible for the overall development of the $1billion project and directly responsible for the U.S. portion.Maritimes Phase II includes two compressor stations and 198 milesof 24-inch diameter and 2.2 miles of 30-inch diameter mainlinepipeline from Baileyville, ME, to Westbrook, ME. It will bedesigned to transport 440 MMcf/d of gas. Phase I, the jointly ownedproject with Portland Natural Gas Transmission System, includes 101miles of 30-inch diameter mainline pipeline from Dracut, MA, toWestbrook, ME. PNGTS is expected to begin service utilizing Phase Iin February.
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