1998

FERC last week approved an amended certificate for SouthernNatural Gas (Sonat) to build a controversial mainline extensionthat’s intended to provide customers with an alternative to theexisting pipeline now serving northern Alabama. The fate of theproject, however, still hangs in the balance since the InteriorDepartment’s Fish and Wildlife Service (FWS) hasn’t yet issuedSonat a permit to build through a protected wildlife refuge.

As part of its ongoing quest to comprehensively reform thenatural gas industry, FERC last week announced that it is planninga series of conferences to tackle issues ranging from its proposedcapacity auction to state unbundling to a pre-filing collaborativeprocess for gas pipeline projects.

Many western producers believe the coal bed methane legislationsigned into law last week by the president puts drilling operationsin the Powder River Basin and other basins heavy in coal gas backon track. Not so, said Amoco Production Co., warning thelegislation (S. 2500) doesn’t accomplish what was intended.

Indiana Gas Co. and Citizens Gas, Light & Coke said theyplan to appeal to the Indiana Supreme Court an appellate courtdecision issued last week ordering the break-up of their jointventure energy marketing company, ProLiance Energy, which sellsmore than 200 Bcf of gas and 3 million MWh of power per year.

FERC’s proposal to organize and monitor the short-term marketthrough daily auctions is either a belated and unnecessaryadministrative nightmare – or the road to vigorous competition inthe transportation market, i.e. the “commoditization” oftransportation.

Last week’s agreement by Semco Energy Gas Co. to a three-yeardeal with TransCanada PipeLines Ltd. for management of its gassupply gives TransCanada its largest asset management relationshipto date. Semco also will buy the majority of its gas supplies fromTransCanada for the three years of the agreement, which iseffective April 1, 1999.

Regulations related to the construction of interstate gaspipeline facilities took center stage at FERC last week, with theCommission proposing on one hand two initiatives aimed atstreamlining and expediting the certificate process for newprojects, while at the same time seeking through a third measure toexplore the possibility of involving landowners earlier on in theprocess – a move that, while generally viewed as inevitable andeven necessary, could pose added headaches for gas pipelines.

The Pipeline Customer Coalition (PCC) says it supports FERC’sproposed revisions to its complaint procedures that would fosterinformal resolution of commercial differences upfront. Theobjective is to speed up the complaint process at the Commission bycutting down on the number of formal complaints filed. Thecoalition believes this can be accomplished by the FERC mandatingthat regulated energy companies make available “carefullydelineated” pre-filing dispute resolution measures for theircustomers’ use.

Southern California has become the latest hot spot for gaspipeline competition. Following the successful $50,000 bid twoweeks ago for Southern California Gas’ option to purchase (in 2012)the California portion of the Kern River Pipeline, Williams wastedno time in drawing up plans for Kern River’s first major extensionproject since going into operation in 1992.