Maritimes & Northeast Pipeline and Algonquin GasTransmission have filed applications with FERC to build relatedpipeline expansions designed to provide Maritimes shippers with agrowing market in the Boston area and to allow multiple new andexisting Algonquin customers access to a new supply source.

The projects will involve building an extension of the Maritimessystem in a southeastern direction through several Massachusettscounties to the coast where the Algonquin line would connect andextend offshore down the coast and through Boston Bay to Weymouthon the south side of Boston Harbor. The two projects are expectedto be in service in November 2002.

“Access to new supplies of natural gas is essential to keep pacewith the growing market,” said Tom O’Connor, president of M&NManagement, manager of Maritimes & Northeast Pipeline, whichbrings Atlantic Canadian gas to the Northeast from the SableOffshore Energy Project offshore Nova Scotia. “Maritimes’ expansionwill provide greater energy security and reliability for allconsumers in the Northeast. Additionally, as gas-fired electricgenerating plants are built, electricity will be produced moreefficiently and cleanly.”

The Maritimes project, called the Phase III expansion, wouldinclude 24 miles of 30-inch diameter pipeline and one mile of24-inch diameter pipe, extending from Methuen, MA, throughHaverhill, Boxford, North Andover, Middleton, North Reading,Peabody, Danvers and Salem, MA, to a connection with Algonquin’sproposed extension in Beverly, MA. About 76% of the proposedMaritimes extension route would be in or adjacent to existing rightof way owned by New England Power Co.

The Beverly delivery point would become a primary delivery pointfor all Maritimes shippers, and the cost of transportation would bethe same (capped at $0.715/Dth) as for delivery to Maritimes’ otherprimary delivery point at its connection with Tennessee Gas inDracut, MA.

Although Maritimes did not file any new contracts for service tosupport the project, it said its existing shippers support the planbecause the new extension capacity will be available for use by allof them at the same recourse rates they currently pay. Maritimesalso told the Commission it expects markets to develop along theline after it goes into service in a way similar to what occurredalong its 100-mile Phase II project. It does not intend to roll inthe cost of the Phase III project at this time but may seek to doso at a later date. The new Maritimes facilities would be capableof transporting 360,000 Dth/d.

The Algonquin extension project, called HubLine, would include a30-mile, 24-inch diameter offshore pipeline extending from theterminus of Maritimes Phase III to Algonquin’s existing facilitiesin Weymouth along with ancillary facilities onshore. Additionally,a five-mile, 16-inch diameter lateral pipeline is proposed to DeerIsland in Boston Harbor. Algonquin said it chose the offshore routeto avoid the difficult environmental and landowner hurdles of aland route.

“The proposed route was selected to minimize impacts to theenvironment, landowners and the greater Boston community,” saidRobert Evans, president of Duke Energy Gas Transmission, parentcompany of Algonquin. “In the coming months, we will continue toreview the route and solicit input from people interested in theproject so we can construct the pipeline safely and in strictcompliance with all environmental regulations.”

The project has significant market support through long-termcontracts for firm transportation capacity from Duke affiliateTexas Eastern (80,000 Dth/d), Sithe Power Marketing (140,000Dth/d), Southern Energy Kendall LLC (35,000 Dth/d), SouthernConnecticut Gas (20,000 Dth/d) and Providence Gas 500 Dth/d.

“Energy consumers are demanding more and more natural gas,” saidEvans. “Local distribution companies continue to grow their marketsthrough conversions and service area expansions, new and moreefficient gas-fired electric generating plants are being built andexisting power plants are converting to gas.”

Sithe and Southern plan to use their capacity to serve new powerplants while CNG and Providence plan to serve simple residential,commercial and industrial demand growth within their localdistribution services territories. Texas Eastern plans to use itsleased capacity to provide its own shippers with firm hourly swingrights and other imbalance management services. The services andadditional flexibility are expected to reduce Tetco’s reliance onoperational flow orders. Tetco also filed an application this weekfor its lease of the proposed Algonquin expansion capacity.

The projects’ sponsors also included a number of studies tosupport their extensions. Dr. Susan Tierney of Lexicon Inc. andWayne Oliver of Navigant Consulting performed a market/benefitsstudy of the Phase III and HubLine projects, concluding they wouldprovide substantial benefits to Massachusetts residents and the NewEngland gas market as a whole. The projects represent “an exampleof the type of gas delivery infrastructure that the New Englandregion needs to enable the continued development of competitiveenergy markets and to achieve the region’s objective of improvingits air resources through reduced emissions of various airpollutants,” the study concluded.

Maritimes and Algonquin also found support in a recentDepartment of Energy (DOE) report, which concluded greater gaspipeline infrastructure in the region would help reduce demandsurges and high prices for fuel oil. The DOE’s Office of NaturalGas and Petroleum Import and Export Activities recently noted inits Second Quarter Report 2000 that gas demand in New England hasgrown by more than 67% in the last 10 years and will requirecontinued infrastructure expansion to support further growth.

Maritimes & Northeast, a 650-mile gas pipeline traversingAtlantic Canada and the northeastern United States, is owned byaffiliates of Duke Energy (37.5%), Westcoast Energy (37.5%),ExxonMobil (12.5%) and NS Power Holdings Inc. (12.5%).

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