Some Gulf gas deliveries were in limbo Friday after Pogo Producing filed a last minute motion with FERC requesting immediate issuance of an order allocating receipt point capacity on Southern Natural Gas’ pipeline system upstream of the Toca, LA, processing plant, part of which was scheduled to be taken down for maintenance on Sunday reducing processing capability by 750 MMcf/d.

“We’re not sure which way this is headed. Every affected producer is standing by waiting for the Commission and I really hope they will step up and make the call,” Don McGregor, senior vice president of sales for Pogo, said Friday afternoon.

Pogo told FERC last week that the Toca Unit 1 shut down and Southern’s strict hydrocarbon dewpoint limits could lead to the shut in of as much as 250 MMcf/d of gas production. Pogo has about 52 MMcf/d of production behind the processing plant with no transportation alternatives.

On July 23, Pogo filed a request that FERC, in consultation with the Department of Energy under the Outer Continental Shelf Lands Act, direct Southern to allocate receipt point capacity on offshore pipelines upstream of Toca for two to four weeks beginning Aug 1 to avoid shut-ins while Enterprise Operating Partners works on the processing plant’s turbines.

Because of the Toca shutdown, Southern conducted a study to examine projected hydrocarbon liquids fallout and determined that it needed to impose stricter hydrocarbon dew point limits at its Enterprise, MS, monitoring point downstream of Toca. To reduce the hydrocarbon dew point at Enterprise, Southern projected that cuts of 292 MMcf/d of gas would be needed, falling almost entirely on the points upstream of the Toca plant. In order to ensure that shippers conform to the new dew point standards, Southern imposed volume restrictions at certain locations with steep penalties of $15/Dth for overdeliveries.

“We think there could be verbal agreements [on compensation],” said McGregor. “We think they are honorable people that we’re dealing with. If they gave us their word then we could paper it later, but we couldn’t get to that point.

“It’s a one time thing to ensure that nobody is shut in when there are other avenues to prevent that shut in,” he said. “We’re not pointing fingers at anyone. This is not a grand scheme against Pogo. It’s just where we find ourselves, and what we are trying to do is to make sure that gas and oil flows when there’s no need for it to be shut in.”

FERC ordered an alternative dispute resolution process to take place last week in Houston. However, other producers said it is far too late in the process for FERC to adopt Pogo’s novel allocation scheme.

“It is nothing less than absurd for Pogo to suggest that its last minute, untested, ad hoc and self serving allocation proposal should be given precedence over Southern’s legally effective tariff,” Shell told FERC on Friday. “While not perfect in all respects, the current effective tariff provided the framework within which Southern’s plan for dealing with the Toca plant shut down was developed.” Shell said Southern’s plan for dealing with the situation was the subject of “lengthy review, analysis and comment” and is “more likely to operate fairly and much less likely to produce unintended consequences than Pogo’s last minute plan.

Shell warned the Commission that Pogo’s allocation procedure could result in back pressure problems on the Viosca Knoll gathering system that could result in the permanent shut in of several wells. “Compensation for this type of damage would be substantial and is obviously well beyond anything Pogo has in mind,” Shell said.

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