Millennium Pipeline President David Pentzien said yesterday it ismore evident now than ever before that significant additional capacityis needed to the Northeast. His remarks ran contrary to theconclusions of a recent Energy Information Administration report (seeDaily GPI, May 25), which found onlyabout 840 MMcf/d of additional capacity is needed in the near term incontrast to the more than 2 Bcf/d of capacity that is planned. ButPentzien noted recent market indicators show an undeniable need forlots more supply access.

“If you look at what’s happened to the Northeast basis duringthe last month-and-a-half, it just indicates to me that people areresponding to the demand and that portion of the Northeast islooking for additional transportation,” Pentzien said in aninterview with NGI.

In the last month, the one- and two-year forward curves onNortheast basis (the difference in price between the Henry Hub andspot points in the Northeast) have blown out from 50 cents to atleast a dollar, sometimes even more depending on who you’re gettingquotes from, he said. “To experience this type of basis change inthe summer is phenomenal. It’s ususally something that’s driven bythe onset of cold weather as opposed to the anticipation ofshortages in the winter. Right now it’s a pretty significantshift.”

“And there is higher volatility on top of that, he added. “Ifyou look at Dawn basis — [Dawn, ON] is essentially whereMillennium would start — it’s trading at about 20 cents. You lookat New York City basis of about $1, and you have 80 cents inbetween. Millennium is a 50-cent project. It tells me that, coupledwith our contracts, the power plants were proposing to serve, yousee a pretty strong motivation for expansion.”

He also said that after a long, bumpy ride the Millenniumproject appears poised to cross the last few mile markers in theregulatory process in the next few months and should be in-servicein November 2001. The fate of the project now depends on twothings: the evaluation of the route change in Westchester County,NY, and a final environmental impact statement, which must bereviewed by other several federal agencies regarding the pipeline’sHudson River crossing.

“I look at the Westchester County issue as being one that issolved,” Pentzien said. “We’ve been dotting all the I’s andcrossing all the T’s. FERC told us they needed a little bit moreinformation to make their evaluation to expedite their analysis andas I said in a letter to them last week, we are more than happy tocomply and they’ll have that information by the middle of June.We’re doing our best to get them everything they need.”

The Commission has asked Millennium to examine Iroquois’recently filed Eastchester extension project as a possiblereplacement to Millennium, but Pentzien said they would serve twoentirely different markets with different customers (see Daily GPI,May 25). “If people would refer back to the draft environmentalimpact statement on Millennium, you’ll notice there’s a section inthere that compares our system to 10 or 15 other types ofalternatives, so the fact the FERC asked us to do this with[Iroquois’] Eastchester project, I think, is more procedural innature. My official response is I think Eastchester’s filing isjust another indication of the market in the immediate Northeastarea. We are serving two entirely different markets in my opinion.”

Regarding the controversial Hudson River Crossing, Pentziennoted that the New York Department of Environmental Conservationalready has issued a water quality certificate. “The biggest thingis the federal agencies need to have the final environmental impactstatement to make their final determinations,” he said.

“We have signed contracts. There’s a huge amount of power plantinfrastructure that either exists in the area or will be built inthe area, and the basis is blowing out. There are a lot of goodthings happening,” he noted. “The optimism level is pretty high inthat the things that we set out to do three years ago, which was toadd capacity to this marketplace, are at the point where everythingis finally coming together.”

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