A major pipeline group last week said there was “much to like”in the notice of proposed rulemaking (NOPR) that would, among otherthings, expand the blanket construction and abandonment certificateauthority for pipelines under FERC’s Part 157 regulations, but italso had “several major concerns.”

On the plus side, the gas industry’s goal of a 30 Tcf marketwould be “enhanced” by the NOPR because a greater number ofso-called “routine” pipeline projects that now are being treated asmajor Section 7 (c) applications (subject to a lengthycertification process) could, under the proposed rule, be initiatedat the pipeline’s own risk and expense without having to seek priorFERC approval, according to the Interstate Natural Gas Associationof America (INGAA).

But the interstate pipeline group insists the list ofpipeline-related facilities that would qualify for blanketconstruction authority, although expanded under the NOPR, still hascome up short. It contends blanket authority, which under the NOPRwould be extended to apply to meter stations, certain replacementprojects and modifications to compressor engines that don’tincrease capacity, also should apply to interconnections, deliverylaterals and other construction activities that would promote a”seamless national pipeline grid.”

INGAA argued that “excluding the construction ofinterconnecting pipeline segments from the blanket certificateunnecessarily restricts open-access service.” It called on theCommission to reverse its policy decision reached earlier this yearin a case involving KN Interstate Gas Transmission, which deniedblank construction authority to interconnections [RM98-9].

At a minimum, FERC should include the installation ofcompression in interconnection projects as being eligible forblanket certificate authority, INGAA said. “It is common forprevailing pressures of interconnecting pipelines to differ. Thisrequires one of the pipelines to install compression. Includingthese facilities as eligible facilities will facilitate the freeflow of gas.”

Other eligible facilities, the pipeline group says, should bemainline extensions. Although FERC declared these as ineligibleunder the blanket certificate in a 1995 case, INGAA argued that”these lines are similar to [eligible] supply laterals and willcontinue the Commission’s efforts to promote an interconnected andseamless national pipeline grid.”

It was unclear in the NOPR whether construction of “storageinjection/withdrawal wells and the associated storage lines” wouldbe subject to blanket certificate authority “when such a projectdoes not change the capacity of the field,” noted INGAA. It askedthe Commission for clarification on this point. In a separatefiling, Michigan Gas Storage also asked FERC “to make it clearerthat the ‘eligible facilities’ [for blanket certificate authority]include storage facilities as well as transportation facilities.”

With respect to the storage issue, Petal Gas Storage, asubsidiary of Crystal Oil Co., called on FERC to add theconstruction and operation of new salt dome storage caverns to itslist of facilities eligible for blanket certificate authority underproposed changes to the Part 157 regulations. As an alternativeproposal, Petal Gas asked that it be allowed to construct a cavern(e.g. drilling and leaching) and install related facilities (e.g.flow lines) under Part 157 authority, with the understanding thatit could not begin operation of any additional storage capacity andstorage services until it received Section 7 (c) certificateauthority from FERC.

“The regulations currently in place, as well as the revisionsproposed in the NOPR, do not adequately reflect the criticalimportance of salt dome storage in an increasingly competitivenatural gas marketplace, nor advance the Commission’s stated goalof enhancing a natural gas company’s ability to respond morequickly to accommodate new and changing market conditions,” thestorage company said.

On a related issue, FERC has proposed the expansion of apipeline’s authority for abandoning receipt and delivery points, aswell as “eligible” facilities. Specifically, the NOPR would permitpipes to abandon a receipt or delivery point, or a related supplyor delivery lateral, if the point has not been used to provideinterruptible or firm transportation service for one year prior tothe effective date of the proposed abandonment. Or a pipeline couldabandon an “eligible” facility if it receives written consent fromcustomers that have been served in the past 12-month period.

The latter part of the proposal – obtaining written consent -raised a red flag with INGAA. “Depending on the situation, e.g. theabandonment of a tie-over on a mainline or some facilities at aninterconnect with another pipeline, this could be very burdensomebecause of the sheer number of customers that could be affected.”Instead, the pipeline group proposed that abandonment be permittedin cases where it would not “terminate or degrade” service toexisting customers. “This protects existing customers without anunnecessary administrative burden.”

INGAA especially took issue with the provisions in the NOPR thatwould require pipeline replacement facilities to be located withinthe existing right-of-way or on the same site as the originalfacilities being replaced. In addition, the provisions wouldrequire pipelines to use the same temporary workspace that was usedin constructing the original facility.

Calling the Commission’s proposals on workspace “toorestrictive,” INGAA asked that workspace limits not be based onmerely the size of the pipe to be replaced. “Rather, there areother factors involved and the workspace should be adjusted basedon these additional factors. INGAA would like to work with theCommission and other industry participants on setting otherworkspace limits.” It noted the INGAA Foundation has commissioned astudy on this issue, which is expected to be completed in January.

Moreover, “even if the Commission sets limits, [it] should allowthe pipelines flexibility to secure additional temporary andpermanent right-of-way from landowners” on replacement projects,INGAA said. “The general belief is that landowners will beadversely impacted if the temporary workspace is increased.However, the converse is true. The more space pipeline contractorshave to work with, the quicker they can do their work.”

Separately, INGAA also said it was concerned about provisions inthe NOPR that “could be interpreted to mean that anytime any changeis made to a single compressor unit or a new unit is added, thenoise level of the entire compressor station would have to bereduced to 55 [decibels]” in noise-sensitive areas, such as nearschools, hospitals or residences.

“Such proposals imply that almost any modifications toindividual compressor units will force other previously approvedunits in the same station to meet the 55 [decibel] noise limits,even if no modifications to these units are performed,” INGAA said.It asked that the Commission clarify that the 55-decibel noiselevel would apply only to the individual unit being “added,modified, or upgraded” and not to the entire compressor station.

With respect to 7(c) applications, the Commission proposes torequire a minimum content for an acceptable environmental report.For pipelines that don’t meet the minimum requirement in theirinitial certificate applications, their filings would be rejected.”INGAA understands the Commission’s desire to reduce the potentialfor extensive and time-consuming data requests and, thus, shortenthe certificate-approval process. At the same time, [it] musttemper such a desire with the realities faced by pipelines inobtaining this data,” the pipeline group said. It urged FERC tomodify the environmental “checklist” to allow for more generalinformation to be submitted at the time of filing, “along with aschedule of when the more detailed information will be provided.”

Susan Parker

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