The Midwest — a region that was said to be “very dependent” on outside sources for natural gas — got a clean bill of health last Wednesday from FERC staff, who concluded in a report that “adequate pipeline and storage capacity” exists to meet the gas needs of the regional market.

The Midwest, defined by FERC as a 15-state region stretching from North Dakota east to West Virginia and south to Oklahoma, consumed 5.8 Tcf of gas in 2000, or twice what it produced (2.78 Tcf) in that year, making it highly reliant on gas imported from Canada and delivered from Louisiana, Texas and the Rocky Mountains, according to a “Midwestern Energy Infrastructure Assessment” presented by FERC’s Office of Market Oversight and Investigations (OMOI) at the Commission’s Wednesday meeting.

The biggest gas consumers were the residential and industrial sectors, accounting for 36% and 33%, respectively, of the region’s total gas demand, while generators made up the smallest part of the market (11%) in 2000, the report noted. But staff pointed out that generation is becoming the fastest growing market for gas in the Midwest.

More than one-third of the region’s supply-demand gap of 3.20 Tcf was filled by Canada (1.27 Tcf) in 2000, while the remainder (1.75 Tcf) was delivered by pipelines in the United States, the report noted. Approximately 20 major gas pipelines serve the Midwest region, with a total capacity of 33.8 Bcf/d, staff told the Commission.

The pipeline infrastructure serving the region has expanded considerably since 2000, and continues to grow. Five major pipe projects were certificated between 2001 and the present, adding 1,914 MMcf/d of new capacity, staff said. As for the status of the projects, three are under construction, one (Trailblazer) is in service, and a pipeline dedicated to a generation plant in Wisconsin awaits construction. Staff further noted three additional pipe projects with a projected capacity of 940 MMcf/d currently are pending before FERC.

The OMOI reported six major pipeline projects are “on the horizon,” and could add as much as 5,609 MMcf/d of transmission capacity and 480 MMcf/d of storage deliverability. At present, the Midwest has a storage capacity of 4.7 Tcf, staff said, adding that the region’s storage has been constant over the past years. The levels “go up and down, but they’re not that drastic.”

On the pricing front, staff said gas prices at Midwest hubs have been fairly consistent over the last three years, with the exception of December 2000 when prices spiked to $15.70/MMBtu at Chicago city gates.

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