Pipelines

FERC earlier this week gave Williams Gas Pipelines Central onemore chance to settle the lingering, controversial cost-recoveryissues arising from the reformation of three of its gas supplycontracts for production in Colorado.

A new gas tolling agreement between TransCanada PipeLines andthe Canadian Association of Petroleum Producers (CAPP) soon mayreplace Nova Gas Transmission’s 19-year-old, postage-stamp pricingsystem with a formula based on distance- and the diameter of thepipe used for transportation. A memorandum of understanding (MOU),signed by CAPP and TransCanada, marks the culmination of asettlement process started when the Canadian gas industry signed apeace accord last April, which also assured construction of theAlliance Pipeline and approval of the TransCanada-Nova merger.

Western-based El Paso Energy, which lassoed Tennessee Gas Pipeline and a route to New England three years ago, rode into the Southeast last week, announcing it will acquire Sonat and its Southern Natural Gas Pipeline in a $6 billion deal.

Serving a projected 30 Tcf natural gas market in 2010 willrequire “substantial” expansion of the existing interstate pipelineand storage infrastructure, but the level of construction isn’texpected to be out of line with what the two areas have experiencedin recent years, according to a study released last week by INGAAFoundation Inc. This means that pipe and compressor manufacturersand construction contractors shouldn’t face any problems in meetingthe demand, it said.

Westcoast Energy said its subsidiary St. Clair Pipelinessubmitted an application to Canada’s National Energy Board forconstruction of the Canadian portion of the TriState PipelineProject. The project would provide 450 MMcf/d of new firmtransportation capacity from the Chicago Hub through Indiana andMichigan to the Dawn Hub in Ontario. Project partner CMS Energyfiled an application for the U.S. portion in November of last year.Westcoast has a 33.3% stake in TriState.

TransCanada Pipelines Monday canceled part of its C$403 millionsystem expansion project on its Canadian Mainline because of aninability to resolve negotiations with a local tribe of Indians,yet the pipeline company insists other parts of the expansion willcontinue. TransCanada would not disclose the nature of thedisagreement except to say the parties could not resolve aboriginaland treaty rights issues as well as future economic opportunityissues.

Westcoast Energy said its subsidiary St. Clair Pipelinessubmitted an application to Canada’s National Energy Board forconstruction of the Canadian portion of the TriState PipelineProject, which would provide 450 MMcf/d of new firm transportationcapacity from the Chicago Hub through Indiana and Michigan to theDawn Hub in Ontario. Project partner CMS Energy filed anapplication for the U.S. portion in November of last year.Westcoast has a 33.3% stake in TriState.

TransCanada Midstream (TCM), a business unit of TransCanadaPipeLines Ltd., bought Alberta Energy Co.’s (AEC) outstandingshares (49.995%) in PanAlberta Resources Inc. (PARI) for $35million plus about $7 million in assumed debt. PARI owns 50% of theEmpress II straddle plant and holds gas liquids extraction rightswith respect to gas volumes of Pan-Alberta Gas Ltd.

Westcoast Energy said its St. Clair Pipelines subsidiary filedthe last major component required for the Millennium Pipelineproject yesterday with the National Energy Board in Canada. Thecompany filed an application for a $165 million pipeline that wouldlink Union Gas’ Dawn Hub in Ontario to lake crossing facilities tobe built by TransCanada. TransCanada filed an application for thelake crossing facilities earlier this week. St. Clair’s 50-mileMillennium West Pipeline would deliver about 700 MMcf/d of gas toPatrick Point on the shores of Lake Erie.