PG&E Gas Transmission-Northwest Corp. (GTN) requested permission from FERC last week to withdraw its application to build its 2003 pipeline looping and compression expansion project, citing lack of demand in the Pacific Northwest region.

“Due to significant changes in market conditions, there is no longer demand for the additional capacity that would result from GTN’s 2003 Pipeline Expansion Project,” said John A. Roscher, director of rates and regulatory affairs for PG&E National Energy Group, the pipeline’s parent.

The additional capacity “is not needed at this time,” said GTN spokeswoman Megan Frey, but she indicated the proposed project could be resurrected later if justified by market demand. She said GTN’s petition to withdraw was not prompted by Moody’s Investor Service’s decision last week to further lower the already sub-investment grade debt and credit ratings of PG&E’s National Energy Group (NEG), and place several subsidiaries (including GTN) under review for possible downgrade. Last week it was revealed that NEG had opted not to put any more money into two large power projects, the Harquahala and Covert projects, it was sponsoring that are about half completed in Michigan and Arizona.

The request to pull out of the pipeline project comes four months after the Commission issued a preliminary determination on non-environmental issues (PD)for the proposed expansion, which called for the construction of 53.6 miles of 42-inch diameter pipe loop along GTN’s mainlines in Idaho, Washington and Oregon and the addition of 19,500 hp of compression in Oregon. GTN asked FERC to vacate the PD [CP02-24).

In issuing the PD in June, the FERC order said GTN had fully subscribed the proposed expansion, executing binding, long-term precedent agreements with five shippers. The shippers included Avista Corp., Calpine Energy Service LP, Cascade Natural Gas, PacifiCorp Power Marketing and Turlock Irrigation District.

The PD further noted that GTN’s open season for the project in May-June 2001 elicited bids for 265,000 Dth/d, which was almost double the amount of capacity that would have been crated by the 2003 expansion (143,000 Dth/d). The project had been proposed to serve the expanding power generation demand and traditional gas load in the Pacific Northwest and California.

The 2.7 Bcf/d, 612 mile GTN system receives gas at the Canadian border and ships it southwest through Idaho, Washington and Oregon. The system terminates at an interconnection with Pacific Gas & Electric and Tuscarora Gas Transmission near Malin, OR.

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