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 projectfor 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 seek a “one-corridor alternative”by which the 650 MMcf/d Millennium volumes would be shipped overexpanded SupplyLink and Independence lines to the Leidy, PA, hub,and then transported by displacement or backhaul to National Fuel’sstation in Ellisburg, PA. From there, the scenario calls forconstruction of a 19-mile pipeline connecting Ellisburg toColumbia’s existing A-5 Line, which extends to just north of NewYork City.

Under this alternative, Millennium would essentially beswallowed up by the related SupplyLink and Independence projects,which 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 market, said National Fuel President Richard Hare.

This 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…..”

But Hare, responding to the DEIS, contends FERC staff erred inits conclusion by assuming the Leidy Alternative would require theconstruction of a 50-mile pipeline from the Leidy hub to itsEllisburg station, plus an additional 8,000 hp of compression. Hesays National Fuel is “certain” it can transport the Millenniumvolumes from Leidy to Ellisburg by displacement and/or backhaul. Noadditional compression would be needed at Ellisburg, Hare noted,and the only construction required would be a 19-mile, 36-inch lineconnecting Ellisburg to Columbia’s A-5 Line. This would cost about$31 million, he estimated.

The scenario espoused by National Fuel and ANR also wouldrequire an additional 168 miles of looping of 36-inch pipe and anadded 14,000 hp of compression on the SupplyLink project,increasing the projected cost from $125 million to about $395million, he said. Also, an additional 90,000 hp at six compressorstations would be needed for the Independence project, increasingthe cost from $678 million to $765 million, according to Hare. Hesaid these changes would boost the design capacity of bothSupplyLink and Independence to about 1.4 Bcf/d, enabling them tomeet both the needs ofMillennium and Transcontinental Gas PipeLine’s proposed MarketLink project.

All told, the additional facilities needed to carry out theLeidy alternative would total $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, such as TransCanada Pipeline’s proposed St.Clair pipeline, that would be required.

“This one-corridor alternative would be environmentally superiorbecause it would eliminate 254 miles of pipeline in the U.S. andCanada and, most importantly, [would] eliminate the need to crossLake Erie. It would also be an economically superior alternativebecause the cost of the facilities eliminated would substantiallyexceed the cost of the required expansions to SupplyLink,Independence and the National system,” Hare told FERC.

Moreover, the alternative could result in further cost savingsby reducing the size of the proposed Chicago-to-Dawn pipelines, henoted. For example, he believes the Vector Pipeline could bedownsized because-under the Leidy option-there would no longer beany need for it to supply 650 MMcf/d of gas to Millennium. Itstill, however, would “serve the needs in eastern Canada ofConsumers Gas and Union Gas, who are the two major sponsors of theVector Pipeline.” Vector, however, already has received final FERCapproval.

Columbia understandably isn’t interested in exploring the Leidyalternative. “I’ve visited with them several times, and they werenot receptive to my suggestions. I suggested this alternative, plusother enhancements to Millennium, but they chose to stay with theirproject,” Hare told NGI. Karl Brack, a spokesman for Columbia, saidthe company remains “confident” that Millennium is the “rightchoice for our customers.” He indicated Columbia, which has a 47.5%interest in Millennium, will respond to the National Fuel/ANRproposal when it files its DEIS comments later this month. Othersponsors of Millennium are TransCanada, Westcoast Energy and MCNEnergy.

Hare urged FERC staff to give “serious consideration” to theLeidy Alternative. In the DEIS, the staff endorsed the Niagara SpurSystem Alternative for Millennium, which also would eliminate theproject’s Lake Erie crossing. Under this scenario, the Millenniumvolumes would be shipped from Dawn, ON, over the systems of UnionGas and TransCanada, and picked up by Tennessee Pipeline at theNiagara import point on its Niagara Spur-which loops the city ofBuffalo-and transported to an interconnect with National Fuel andthen onto Millennium in Allegany County, NY.

Hare conceded the Niagara Spur Alternative was “doable,” andadded that National Fuel would “cooperate” if it turns out to bethe “chosen route.” However, he contends it won’t meet thescheduled in-service dates that “everyone on the East Coast needs,”would require Millennium to make a new project filing, has a longerroute and would be costlier.

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