Calling the proposal a “repackaged” version of one that FERC shot down last year, a group of producers this week urged the Commission to reject a bid by Transcontinental Gas Pipe Line to spin off part of its South Texas mainline and lateral facilities to an unaffiliated Texas intrastate pipeline, Dallas-based Crosstex CCNG Transmission Ltd.
In May 2003, the Federal Energy Regulatory Commission halted the sale of Transco’s 400-mile South Texas Mainline system to another Texas intrastate pipe, Enbridge Pipelines LP. While it initially approved the sale, the agency later, without any prodding from the courts, vacated the order authorizing the spin-off of the facilities (see Daily GPI, May 1, 2003).
The latest proposal “repackages the abandonment by sale to Enbridge that the Commission properly rejected in 2003,” said Shell Offshore Inc., ChevronTexaco Natural Gas, BP America Production Co., ConocoPhillips Corp. and Exxon Mobil Corp. All of the producers are shippers on Transco’s South Texas system.
Transco is seeking to abandon a portion of its South Texas Mainline system, which includes certain onshore transmission and gathering facilities located in Texas. The facilities are “essentially the same” as those that Transco tried to spin off to Enbridge Pipelines, the producers noted. Transco would retain the portion of its certificated North Padre Island (NPI) lateral that extends from the offshore Gulf of Mexico to onshore in South Texas, and that portion of its transmission system downstream of Station 30 in Wharton County, TX, to its terminus in New York City.
The proposed spin-off would require existing shippers on Transco’s South Texas system to obtain Section 311 intrastate transportation service from Crosstex in order to access interstate markets located downstream of Transco’s Station 30, they said.
“For those shippers whose gas originates on the NPI lateral, the spin-off would exacerbate the circumstances arising from Transco’s recent spindown of the upstream portion of the NPI lateral [to affiliate Williams Field Services Co.]. The combined effect of the earlier spindown and the proposed spin-off would be that the NPI shippers would be required to pay separate rates for gathering (provided by Transco’s gathering affiliate), IT-feeder service in Transco’s NPI lateral, Crosstex’s Section 311 service, and finally transmission service downstream of Transco’s Station 30,” the producers said.
The further breakup of Transco’s interstate system could impair the emerging liquefied natural gas (LNG) market, they noted. “It would be fundamentally unsound policy to break up existing interstate pipelines lying between the proposed LNG terminals and interstate gas markets by abandoning portions of the interstate pipelines by sale to intrastate pipelines.”
At least two LNG projects proposed by Cheniere Energy Inc. and Exxon Mobil affiliate Vista del Sol LNG include plans for pipelines to interconnect with Transco and other interstate pipes in Texas, the producers said. “The planned interconnections with Transco are at locations on Transco’s South Texas Pipeline facilities that are the subject of the proposed abandonment.”
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