The Federal Energy Regulatory Commission has awarded a preliminary determination (PD) on non-environmental issues to Natural Gas Pipeline Co. of America (NGPL) to convert 10.7 Bcf of cushion gas into working gas at its North Lansing storage field in Harrison County, TX, in order to raise the firm late-season deliverability of the field.

But the order calls for NGPL to conduct a new open season within 15 days for the added capacity because it failed to consider recourse bids and did not solicit turn-back capacity.

The project would increase the field’s working gas level to 84.7 Bcf. It calls for NGPL to install an additional 6,000 horsepower of compression, 17 new injection/withdrawal wells and associated facilities at the 156 Bcf field near Longview, TX. The new injection/withdrawal wells would boost the North Lansing field’s late-season deliverability by 222 MMcf/d, which would support 146,666 Dth/d of additional firm service under Rate Service NSS (Nominated Storage Service), the order said [CP02-391]. The new compression would increase the injection rate and aid the existing compressors during power withdrawal operations, it noted. The cost of the project has been estimated at $31 million.

The NGPL field has a maximum daily injection capacity of 450 MMcf, with a maximum daily deliverability capability of 1.1 Bcf. The field is located at the south end of NGPL’s system and is accessible to Gulf Coast markets, as well as pipelines delivering to the East Coast.

The proposed project “will not result in an increase in the certificated maximum inventory or peak day withdrawal levels at North Lansing, which are sufficient to accommodate the proposed additional service,” the order noted. “What Natural is proposing to increase is the working gas volume at North Lansing, which Natural contends is currently constrained due to available compression.”

FERC ordered Natural to conduct a new open season within 15 days because the pipeline required negotiated fixed rate bids in the original open season (April 2002), but did not provide a cost-of-service alternative and failed to solicit turn-back capacity from its existing shippers. As a result of the April open season, NGPL entered into a binding precedent agreement with a non-affiliated shipper for 146,666 Dth/d of NSS, or 11 Bcf, under a 10-year term at a reservation rate of $3.96/Dth. NGPL requested that the shipper’s name be kept confidential.

“Given our clear intent regarding the availability of a recourse rate option, we will not permit Natural to declare that only negotiated fixed rate bids will be considered valid, and hold an open season that offers shippers no cost-of-service alternative by restricting recourse bids…Thus, we find that Natural’s open season is invalid,” the order said.

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