NGI The Weekly Gas Market Report
El Paso Corp.’s Tennessee Gas Pipeline has asked FERC for authorization to acquire various ownership interests in approximately 530 miles of pipeline facilities in the Gulf of Mexico and onshore Louisiana from Columbia Gulf Transmission Co. and an affiliate.
The request follows a deal brokered by the two pipelines in late October, whereby Tennessee would acquire Columbia Gulf’s ownership interest in certain offshore and onshore pipe facilities known as the Blue Water System, the South Timbalier System and the South Pass 77 System, as well as laterals connected to the three systems, compression and a liquids separation and gas dehydration plant (see NGI, Nov. 12, 2007). Tennessee also would acquire a supply pipeline owned by Columbia Deep Water Services Co., an affiliate of Columbia Gulf.
In addition, Tennessee requested authorization to abandon its lease of 115 MMcf/d of capacity to Columbia Gulf from the terminus of the South Pass 77 System to Columbia Gulf’s mainline system at Egan, LA.
“Upon closing of the acquisition, the agreement…provides that Tennessee and Columbia Gulf will dismiss certain litigation currently pending between them before the Commission and the courts of the State of Texas,” the application said [CP08-55]. Closing is expected in the first half of the year, assuming regulatory approval is received, according to the pipelines.
Tennessee and Columbia Gulf have been engaged in a running battle at the Federal Energy Regulatory Commission since 2004, when Tennessee accused Columbia Gulf of engaging in a “pattern of anticompetitive conduct and practices” by denying its request to construct an interconnect from its Muskrat line to the Columbia Gulf-operated side of the Blue Water System at Egan (see NGI, March 22, 2004). The Tennessee-requested interconnection was eventually built and placed into service in October 2006, but not before FERC issued three orders directing Columbia Gulf to permit the tap.
In May 2007 FERC required Columbia Gulf to pay a $2 million penalty for its repeated refusal to allow Tennessee to construct the interconnection on the Blue Water line that was jointly owned and operated by the two pipelines (see NGI, May 28, 2007).
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