Three natural gas pipeline affiliates — a small interstate and two intrastates — have asked FERC for approval to combine their facilities to form one new interstate system to better serve the Missouri and Illinois gas markets.
Missouri Interstate Gas LLC (MIG), Missouri Gas Co. LLC (MGC) and Missouri Pipeline Co. LLC (MPC) propose to consolidate their pipeline facilities to create a 263-mile, up to 16-inch diameter interstate system delivering 85 MMcf/d of gas to Missouri and Illinois. The pipelines, if integrated, plan to increase transportation capacity in the future, a spokesman said.
“The new pipeline, which will be owned by MGC, will serve the public interest by establishing a new interconnection in the interstate grid and by providing more options and better, seamless service to…current customers, without any increase in rates for existing customers,” the sister companies said in their application filed at the Federal Energy Regulatory Commission.[CP06-407, CP06-408, CP06-409].
All three pipelines are based in St. Peters, MO, and are wholly-owned subsidiaries of United Pipeline Systems LLC. MIG owns a 6.6 mile interstate line extending from an interconnection with CenterPoint Energy – Mississippi River Transmission (MRT) in Illinois to an interconnect with affiliate MPC in the northern suburbs of St. Louis, MO.
MPC is a Hinshaw pipeline, exempt from FERC jurisdiction. On the western end of its system, MPC receives gas through an interconnect with Panhandle Eastern Pipe Line (PEPL). On the eastern end, MPC receives gas from interstate affiliate MIG, and delivers it to local distribution companies, Laclede Gas Co. and AmerenUE, and to its sister pipeline, MGC, for redelivery and ultimate consumption within the state of Missouri.
Intrastate MGC extends from an interconnection with MPC to a southern terminus at Fort Leonard Wood, MO, where it delivers gas to Omega Pipeline Co., which, in turn, serves Fort Leonard Wood, a federal military facility. MGC also delivers gas to AmerenUE, an industrial customer and several Missouri cities.
“As an integrated interstate natural gas company, MGC will be able to better serve Missouri customers and respond to the demands of the growing interstate market, especially in Illinois. These transactions will increase market access to multiple gas supply basins on competitive terms, through more efficient transportation arrangements, thus creating more competitive energy markets in the St. Louis and Mid-continent regions,” the affiliate pipes said.
“As three separate companies, applicants operate, and their customers receive service under two separate regulatory regimes [FERC and the Missouri Public Service Commission] and three separate tariffs and rates structures. Multiple contracts and nominations are required, imposing additional administrative and transactional costs on applicants and their customers,” they noted. Consolidating the pipeline systems would eliminate these inefficiencies and shave costs, the affiliates said.
They also said a combined system will ease the gas flow on the interstate grid by providing an alternative path around an existing constraint point on the PEPL system. “Specifically, except during times of peak winter demand, PEPL’s Pleasant Hill compressor station near the Missouri/Illinois border creates a bottleneck on PEPL’s system, which effectively constrains capacity upstream of that point. [An] integrated interstate system will provide shippers an option to bypass that constraint by shipping gas through MGC to its interconnection with MRT.”
In addition, “an integrated interstate natural gas company will provide Missouri customers the opportunity to use or release capacity in the secondary market. Customers on the reconfigured MGC system will be able to contract directly for capacity released on the PEPL, MRT or MGC systems, and will be able to release their own unneeded capacity into these markets,” the affiliates said.
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