Two Midwest natural gas pipelines — Kinder Morgan Interstate Gas Transmission LLC and Northern Natural Gas — have called on FERC to grant them “temporary waivers” of the agency’s existing blanket-certificate rules to carry out the timely construction of mainline pipe expansions to serve ethanol plants and other renewable fuel facilities.
The Federal Energy Regulatory Commission’s current regulations permit companies to build minor pipe projects under blanket-certificate authority, but they exclude the construction of larger mainline projects. Instead, pipelines are required to seek approval of mainline pipeline construction under the lengthy Section 7 certificate process. In June, however, FERC issued a proposal that would extend blanket-certificate authority to larger interstate gas facilities that previously were ineligible for such consideration, as well as would raise the dollar limits for blanket construction projects (see Daily GPI, June 16).
While FERC considers relaxing its regulations in this area, Kinder Morgan and Northern Natural are seeking an exemption from the still-in-effect rigid blanket certificate rules to “facilitate the timely construction of the [pipeline] infrastructure required to implement the Renewable Fuel Standard” of the Energy Policy Act of 2005 (EPAct).” Absent a waiver, the pipelines said they would be unable to build the infrastructure needed to support the development of new ethanol plants, as required by EPAct [CP06-418.
Many of the nation’s existing and proposed ethanol refineries are located in the Midwest — the pipelines’ service areas — because the region grows much of the nation’s corn, the primary feedstock for ethanol.
Kinder Morgan said currently it provides service to 16 ethanol plants in Wyoming, Nebraska, Colorado and Kansas, and it recently entered into contracts to serve five new plants proposed in Nebraska and Kansas for up to 24,331 Dth/d. Another 25 plants requiring up to 206,175 Dth/d of gas are proposed for the region — 13 projects through early 2008 and 12 projects beyond that date, it noted.
Kinder Morgan “is well-positioned to serve most of these plants by lateral extensions, but the increased volumes will require [it] to expand some of the smaller diameter pipes near the end of its system. Under the Commission’s current regulations, [Kinder Morgan] would be required to file as many as 30 separate applications, plus amendments, for a series of relatively minor system expansions,” the pipeline said.
Northern Natural currently provides 157,133 Dth/d to 37 ethanol plants in Iowa, Nebraska, Minnesota, South Dakota and Wisconsin; has filed an application to serve 10 more ethanol plants; entered into contracts to serve one new plant and one plant expansion in Iowa and South Dakota for up to 17,500 Dth/d; and has received inquiries regarding service for another 42 new plants or expansions of existing plants requiring up to about 240,000 Dth/d.
“Of these inquiries, Northern expects a significant number to become actual projects for Northern’s system requiring up to approximately 120,000 Dth/d of service beginning in 2007 through 2009. Like [Kinder Morgan], Northern can serve many of these projects with branchline…modifications; however, others will require some mainline looping and compression,” the MidAmerican Energy pipeline said.
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