National Fuel Gas Supply Corp. and ANR Pipeline, sponsors of theproposed Independence Pipeline, are espousing a system alternativethat essentially would result in a considerably scaled-down versionof the competing Millennium Pipeline project.

Instead of bringing western Canadian gas into the U.S. acrossLake Erie, as the Columbia Gas Transmission’s Millennium projectenvisions, National Fuel and ANR support a “one-corridoralternative” by which the 650 MMcf/d Millennium volumes would beshipped over expanded SupplyLink and Independence lines to theLeidy, PA, hub, and then transported by displacement or backhaul toNational Fuel’s station in Ellisburg, PA. From there, the scenariocalls for construction of a 19-mile pipeline connecting Ellisburgto Columbia’s existing A-5 Line, which extends to just north of NewYork City.

Under this alternative, Millennium would essentially be foldedinto the related SupplyLink and Independence projects, whichtogether would span from Joliet, IL, to the Leidy hub. The entireMillennium project, which was conceived as a 417-mile line, wouldbe reduced to nothing more than a replacement and possible upgradeof Columbia’s 12-inch A-5 Line to either 24 or 36 inches. “Mysuggestion is that’s all they need” to bring expanded volumes tothe East Coast, said National Fuel President Richard Hare. Thisoption would satisfy the “driving force” behind the Millenniumproject, which is to serve the New York City market, noted GregMaliken, senior engineer of facility planning at National Fuel.”They just need a gas supply.”

The alternative – dubbed the Leidy Interconnection SystemAlternative – was reviewed and rejected by FERC staff in its draftenvironmental impact statement (DEIS) on Millennium, which wasissued in April [CP98-150]. Staff dismissed the alternative sayingit would have “greater environmental impact…since it would beabout 88.5 miles longer and would require more compression…”Instead, staff favored a Niagara Spur Alternative to the MillenniumPipeline by which gas still would be brought into the U.S.Northeast through Canada, but the controversial Lake Erie crossingproposed for the project would be eliminated. It asked NationalFuel, Millennium and other pipelines to submit comments on the”feasibility” of the Niagara Spur Alternative.

Hare, in response to staff’s request, contends FERC staff madesome incorrect assumptions and conclusions that caused it todismiss the Leidy Alternative, specifically that the option wouldrequire the construction of a 50-mile pipeline from the Leidy hubto its Ellisburg station, plus an additional 8,000 horsepower ofcompression. He says National Fuel is “certain” it can transportthe Millennium volumes from Leidy to Ellisburg by displacementand/or backhaul. No additional compression would be needed atEllisburg, Hare noted, and the only construction required would bea 19-mile, 36-inch line connecting Ellisburg to Columbia’s A-5Line. This would cost about $31 million, he estimated.

Hare said the total additional facilities needed to carry outthe Leidy Alternative would be $388 million, which he estimated wasabout $78 million less than what it would cost to build the westernportion (Lake Erie crossing) of Millennium and the associatedCanadian facilities. The $388 million would cover the necessarylooping and compression additions to the SupplyLink andIndependence projects, which would boost the design capacity of thetwo to about 1.4 Bcf/d, enabling them to meet both the needs ofMillennium and Transco’s proposed MarketLink project. Also includedis the cost to construct a new line between Ellisburg andColumbia’s A-5 Line.

The Leidy Alternative “would be environmentally superior becauseit would eliminate 254 miles of [Millennium-related] pipeline inthe U.S. and Canada and, most importantly, [would] eliminate theneed to cross Lake Erie,” Hare said in a filing at FERC earlierthis month.

Moreover, the alternative could result in further cost savingsby reducing the size of proposed Chicago-to-Dawn pipelines, henoted. For example, he believes the proposed Vector Pipeline couldbe downsized because – under the Leidy option – there would nolonger be any need for it to supply 650 MMcf/d of gas toMillennium. It still, however, would “serve the needs in easternCanada of Consumers Gas and Union Gas, who are the two majorsponsors of the Vector Pipeline.”

In its comments on the Millennium DEIS, ANR indicated that partof the reason it supported the Leidy Alternative was that itbelieved it would allow the Commission to “promptly authorize” itsSupplyLink and Independence projects, the latter of which has beenthe target of unprecedented landowner opposition.

Columbia understandably isn’t interested in exploring the LeidyAlternative. “I’ve visited with them several times, and they werenot receptive to my suggestions,” Hare told NGI. Karl Brack, aspokesman for Columbia, said the company remains “confident” thatMillennium is the “right choice for our customers.” He indicatedColumbia, which has a 47.5% interest in Millennium, will respond tothe National Fuel/ANR proposal later this month. Other sponsors ofMillennium are TransCanada, Westcoast Energy and MCN Energy.

Hare urged FERC staff to give “serious consideration” to theLeidy Alternative when weighing it against the Niagara Spur SystemAlternative. Under the Niagara Spur scenario, the Millenniumvolumes would be shipped from Dawn over the systems of Union Gasand TransCanada and picked up at Niagara on the Niagara Spur -which loops the city of Buffalo – and transported to aninterconnect with National Fuel and then onto Millennium inAllegany County, NY.

Susan Parker

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