As a result of an almost two-year effort, Tennessee Gas Pipelineannounced yesterday it has renegotiated contracts for 80% of thefirm transportation capacity that’s due to expire on its system inNovember 2000. At the same time, the pipeline said it has fullyrecontracted its storage capacity, a large chunk of which wasscheduled to expire also.

All told, Tennessee renewed contracts for about 2.8 Bcf/d of theexpiring 3.58 Bcf/d of firm capacity, according Steve Beasley,Tennessee’s vice president of marketing and business development.The contracts were “at or near” the pipeline’s maximum rates andfor terms of nearly three years. Surprisingly, most of the renewalswere with the pipeline’s large historical LDC customers, such asBoston Gas, Atlanta Gas Light, Nicor and National FuelDistribution. About 800 MMcf/d of the expiring firm capacityremains unsubscribed capacity, but the pipeline doesn’t think itwill have any problem re-marketing it.

During the past two years (phase one), “we’ve been kind offocusing our efforts on that…piece of the pie” that will expirenext year, namely Tennessee’s contracts with its traditionalshippers, Beasley said. “In essence, we’ve been spending half ofthe time developing contingency plans not knowing what was going tohappen in [LDC] restructuring. A big part of that was focused onattaching new supplies. And we’ve added a substantial amount ofburnertips” with power plants and industrial customers, he toldNGI.

Now that Tennessee has completed phase one, it’s “now in aposition” to begin negotiations with future shippers (phase two).”In the future, we’re going to have a changed portfolio, withstrong relationships with a new set of shippers,” such asmarketers, producers and power generators, Beasley said. Hebelieves the demand for pipeline capacity will be particularlystrong with the latter group. “We have on the Tennessee systemeither filed or under construction new attachments which representabout 1 MMcf/d of capacity virtually all [with] power plants.”

Tennessee doesn’t foresee any obstacles to meeting the newdemand. In the Gulf of Mexico, the pipeline has added close to 1MMcf/d of capacity in order to supply customers with deep-watergas, Beasley said. Also, it has access to the increased amounts ofCanadian gas supplies coming into Chicago through backhaul serviceon affiliate Midwestern Gas Transmission.

Of the remaining 800 MMcf/d of expiring capacity, Beasley saidabout 110 MMcf/d is in the southern market (Tennessee, Mississippiand Louisiana); 275 MMcf/d is on the Broad Run Spur lateral in WestVirginia that connects Tennessee to the Columbia and CNGTransmission system; 200 MMcf/d is available at the Elisburg Hub inPennsylvania; and about 57 MMcf/d is available to serve the NewYork City market.

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