NGI The Weekly Gas Market Report
TransCanada Pipelines and Westcoast Energy subsidiary St. ClairPipelines last week filed with Canada’s National Energy Board tobuild the last remaining support components required fordevelopment of the Millennium Pipeline project, a 700 MMcf/d gasline designed to serve markets throughout the Northeast.
St. Clair’s50-mile Millennium West Pipeline would pick up 700MMcf/d of gas at Union Gas’ Dawn Hub in Ontario and deliver it toPatrick Point on the Northwest shore of Lake Erie at a newconnection with TransCanada. The St. Clair portion would cost $165million.
The TransCanada portion, called the Lake Erie Crossing, is a61-mile, 36-inch diameter line to the middle of the lake at theU.S. Canadian border and a connection with Millennium. It wouldcost $161.8 million to build.
TransCanada said seven shippers have signed precedent agreementsand subscribed for almost all of the 700 MMcf/d firm transportationservice along the Lake Erie Crossing. “This application reflectsour commitment to provide customers with the downstream connectionsthey need to take advantage of lucrative U.S. Northeast andMid-Atlantic markets,” said John Carruthers, vice-president ofbusiness development for TransCanada Energy Transmission.
Meanwhile in concert with the progress on the Canadian side ofthe border, Millennium sponsors expressed optimism that they aremaking progress on the regulatory front in the U.S. Project ManagerDavid Pentzien said he expects Millennium to receive its firstregulatory green light from FERC in January and be well on its wayto meeting a winter 2000 in-service date.
The in-service date of the $650 million project from Lake Erieto New York was questioned in September by FERC staff becausesponsors were not meeting data requests on a timely basis. “We werejust starting to open the flood gates in the September-October timeframe,” said Pentzien, “so in retrospect it looks like they madetheir comments based on what they had. What they received over thenext two months basically [met] every outstanding environmentaldata request so I think they’re probably in a different position atthis point. I think they would probably say we are back onschedule.”
Pentzien said he still expects to receive the finalenvironmental impact statement and the final order from FERC inJune or July. But he said even if FERC is a couple months late withits final order on the project, it wouldn’t delay the in-servicedate. “It’s really a two-year construction window. I think whatwe’re saying is even if we were to hit a delay of a month or two onthe certification we still have some time to make that up given thetwo-year construction schedule.” He expects FERC will issue apreliminary determination on non-environmental grounds and a draftenvironmental impact statement in January “given what we’vesupplied to them.”
Pentzien said some of the environmental aspects of Millenniumthat were expected to be huge hurdles turned out to be speed bumps.”Lake Erie has become a very manageable process.” He said thebiggest obstacles have been things thrown in the way bycompetitors. Competitors have drawn FERC’s attention to all sortsof environmental issues that really aren’t environmental issues atall, he said. Landowners haven’t been much of a problem becauseMillennium utilizes such a significant amount of existing right ofway: 86% of the line. “We’re seeing about one-seventh the landownerprotests that Independence [Pipeline] is,” he said. “We’re talkingalmost a whole order of magnitude less than Independence.”Independence is a Millennium competitor proposed to cross Ohio andend in western Pennsylvania at the Leidy Hub where it will connectwith a downstream project.
Pentzien also noted the markets along the Millennium projecthave grown substantially. He mentioned Southern Company buyingOrange and Rockland’s power generation. “You don’t buy existingassets and let them sit there and not run. They are very interestedin upgrading and consuming more natural gas. With the recentannouncements by American National Power and Sithe, we’ve got 2,000MW that are within 3,000 feet of Millennium over on the extremeeast side. The last year had a marked increase on the power plantside.”
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