Critical

If the Federal Energy Regulatory Commission (FERC) loses the jurisdictional battle over the siting of Sound Energy Solutions (SES) liquefied natural gas (LNG) import terminal in Long Beach, CA, to the California Public Utility Commission (CPUC), that will spell serious trouble for all future LNG projects facing regulatory review, said FERC Commissioner Joseph T. Kelliher.

The $13 billion, 10-year energy tax package is expected to face several challenges this week from Republican senators seeking to strip it from the wider corporate tax cut bill (S. 1637). Few, however, were willing to speculate last week as to whether the energy tax provisions would survive to remain part of the broader tax legislation.

A dramatic rise in the six-year forward futures prices for both crude oil and natural gas within the past couple of years has attracted “relatively little attention” as a trend that “can significantly affect the long-term path of the U.S. economy,” said Federal Reserve Chairman Alan Greenspan Tuesday. Greater focus by the U.S. on liquefied natural gas (LNG) would reverse this price pattern for gas, he believes.

Tennessee lifted Thursday a Critical Day 1 OFO Alert (see Daily GPI, Nov. 4) for customers under Rate Schedules LMS-MA and LMS-PA. However, customers under Rate Schedule FS, including customers utilizing the Storage Swing Option (SSO) service, will remain subject to the alert until further notice.

Adding to restrictions under its Critical Day 1 OFO Alert that took effect Tuesday, Tennessee said that beginning Wednesday all storage injections under Rate Schedule FS will be limited to the Maximum Daily Injection Quantity (MDIQ). This includes customers using Storage Swing Option (SSO) service under Rate Schedule LMSMA. A penalty of $5/Dth plus the applicable regional daily spot price will apply for volumes in excess of MDIQ.

Citing high linepack and high storage balances, Tennessee issued a systemwide Critical Day 1 OFO Alert that will take effect Tuesday. The alert requires customers under Rate Schedules LMS-MA and LMS-PA to keep actual deliveries into the system less than or equal to scheduled quantities plus 2% (or 1,000 dekatherms, whichever is greater) and actual takes out of the system greater than or equal to scheduled quantities minus 2% (or 1,000 dekatherms, whichever is greater). Volumes outside of the designated tolerance will be charged $5/Dth plus the applicable regional daily spot price. See the bulletin board for details about Tennessee restrictions on storage and Park/Loan nominations.

Columbia Gas said Thursday a Critical Day designation for Market Area 34 in southeastern Virginia, initiated Sunday, will remain in place Friday through Sunday and will also be applied to storage injections. Based on forecasted markets, available facilities and capacity utilization, there is still no non-firm capacity available to Market Area 34, the pipeline said. In addition, it projects that no excess injection capacity will be available for non-firm storage services, thus ruling out MDIQ overruns, SIT injections, imbalance paybacks and ISS injections.

Columbia Gas extended a Critical Day designation for Market Area 34 in southeastern Virginia, initiated on Sunday (see Daily GPI, Sept. 2), through at least Thursday.

Ending weeks of haggling over critical energy legislation, the Republican-led Senate threw in the towel last Thursday night, substituting last year’s Democrat-crafted energy bill for this year’s legislation and passing it by a vote of 84-14. The first time around — in April 2002 — the same bill cleared the Senate by a bipartisan vote of 88-11 (see NGI, April 29). Last week’s vote, which sets the stage for Congress to vote out the first piece of major energy legislation in 11 years, came as Congress prepared to leave for its August recess.