Texas Eastern’s 300 MMcf/d Lebanon Lateral expansion wasapproved by FERC this week with a few conditions, including placingthe pipeline at risk for the cost of unused capacity on the line.The project would add 17,070 hp of compression to the 114-mileline, which stretches from an interconnection with PanhandleEastern near Gas City, IN, to interconnections with Tetco, CNGTransmission and Columbia gas at Lebanon, OH. Total capacity of thesystem following the expansion would be about 660 MMcf/d. Threeshippers, including Dayton Power and Light, Duke Energy and PublicService Electric and Gas signed up for 28% of the proposedcapacity.
The Commission dismissed protests of Sun Company, an existingshipper on the line, that Tetco failed to show sufficient marketsupport for the $31 million expansion. Sun urged FERC to disregardTetco’s agreement with its affiliate Duke Energy for 31 MMcf/dbecause it lacked “objective validation,” and said Tetco couldprovide 55 MMcf/d of service requested by Dayton Power and Lightwith existing capacity. At most, Sun said, the pipeline has shownarms-length contracts for only 8% of the proposed capacity. Sunalso charged Tetco failed to consider using capacity turned back byother shippers or scheduled contract terminations.
But FERC determined at least 26% of the capacity proposed wouldbe subscribed under long-term (10-year) agreements consideringadditional turnbacks and that was sufficient to issue acertificate. “In view of the unsubscribed capacity involved here,we will place Texas Eastern at-risk for costs of this project tothe extent that the facilities are underutilized.”
As to Sun’s charge that Tetco currently lacks adequate takeawaycapacity, the Commission said it found Tetco “will have amplecapacity commencing Nov. 1 and continuing for the next five years.Contract terminations that include capacity downstream of Lebanonwill enable [Tetco] to take away any volumes contracted for throughthe proposed expansion.”
FERC concluded the project would lead to an 18% reduction in100% load factor LLFT rates paid by incremental shippers andgranted Tetco’s request to make a limited section 4 filing toadjust its tariff accordingly prior to the in-service date of Nov.1.
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