Tennessee Gas Pipeline’s Eastern Express Project 2000 is a muchdifferent expansion today-mainly much smaller-as it arrives at FERCthan when it was announced more than a year ago. Last winter, thecompany said there was market interest in more than 4 Bcf/d of firmcapacity along nearly every stretch of its system, from the Gulf ofMexico north, from Chicago and Niagara east and from New Hampshiresouth. But Tennessee filed an application yesterday with FERC toadd only 168 MMcf/d of capacity along the northernmost part of itspipeline at connections with PNGTS and Maritimes.
“[It’s] still a decent sized project, nothing huge by anymeans,” said Mike Stokdyk. “We’re not disappointed in the results.It would be nice if it were larger but between some of the powerplants moving a little slower than what they had anticipated andwhat they were telling us and just general uncertainty in themarketplace with LDC unbundling and so forth, it’s just not a timewhen it’s easy to get people to make firm commitments,” he said.
Eastern Express was whittled down to what most would consider arelatively minor capacity addition for a number of reasons, notleast of which is the anticipation that many of Tennessee’slong-term contracts will expire in 2000. “That will be anopportunity for people to shift around their requirements,” saidStokdyk, but he didn’t think it was “the driving issue” behindmarket decisions. Much more important was the fact that the basisbetween markets and most supply regions simply didn’t justify anexpansion.
“If you look at it on a pure basis spread from Chicago to NewYork for example, you have a basis spread that’s about 30 cents anda lot of these projects [including Eastern Express] are proposing70 cents to get it there. If you’re not an end consumer, then noneof these projects looks that attractive because you don’t have thatarbitrage opportunity,” he conceded. It’s tough to compete thesedays with the release values and IT values on the existingpipelines. The new markets are picking up some firm but also arechoosing to play the capacity release and the IT markets.
Eastern Express Project 2000 is scheduled to provide firmtransportation service commencing November 2000 from theinterconnect at Haverhill, MA, and the planned interconnect atDracut, MA, with the Joint Facilities of Portland Natural GasTransmission System and Maritimes & Northeast Pipeline todelivery points in New England. Two shippers have executed bindingfirm transportation agreements for 173,000 Dth/d of capacity.American National Power has signed up for 34,000 Dth/d for its 550MW gas-fired Blackstone Power plant in Massachusetts, whichcurrently is under construction, and El Paso Gas Services, apipeline affiliate, has signed up for the remaining 139,000 Dth/dof firm capacity primarily to serve four power plants of ProjectDevelopment Corp. (PDC). The PDC plants include the 276 MWBerkshire, MA, plant and the 540 MW Milford, CT, power plant, bothof which are under construction, and the Meriden, CT, and Summit,MA, power plants (up to 1,000 MW) which currently are proposed.
Tennessee is expanding its system by using existing pipe andright-of-way and installing 13,320 hp of compression at twoexisting compressor stations. Total capital is estimated to be $28million.
The pipeline also is expecting to file additional expansionprojects to serve other proposed power generation in New Englandand New York over the next couple years said TGP President JohnSomerhalder. Tennessee believes the majority of any additionalpipeline capacity will be required in 2002, but the pipeline saidit would be glad to work with shippers that have earlier capacityneeds.
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