NGI The Weekly Gas Market Report
FERC handed the proposed Trans-Union Interstate Pipelinesomething of a doubled-edged sword last week. While it issued acertificate for the 42-mile, 430,000 Dth/d pipeline project, itdenied its request to operate it as a single-use line.
Responding to a “limited protest” filed by Lion Oil Co. to openup the pipeline to third-party shippers, the Commission held that”in light of [its] current policy not to issue case-specific, Part157 transportation certificates and consistent with recentCommission decisions, any certificate issued to Trans-Union toconstruct and operate its proposed pipeline will be conditioned onTrans-Union’s filing with the Commission, within 120 days…, anapplication for a Part 284 blanket transportation certificate,along with an open-access tariff and Part 284 rates.”
Trans-Union proposed the line with only one customer in mind —a gas-fired 2,700 MW power generation plant to be constructed byaffiliate Union Power Partners near El Dorado, AR. When completed,it would be one of the largest generation plants in the nation. Theproposed line would connect with the facilities of Texas GasTransmission at the Sharon Compressor Station in Claiborne Parish,LA. Union Power has committed itself to most of the capacity undera 30-year contract.
Dallas-based Panda Energy, parent of Trans-Union and UnionPower, said it decided to build the line only after it consideredand rejected several gas transportation proposals that weresubmitted by Reliant Energy Gas Transmission. Panda Energy said theexisting pipelines were too small to handle the necessary volumes.
Lion Oil, which operates a refinery in El Dorado, protestedTrans-Union’s proposal to build the pipeline as a single-use line,saying that it wanted capacity since the new line would be acheaper alternative to Reliant. The refiner historically hasreceived up to 12,500 MMBtu/d of firm service from Reliant, but itscontract demand was cut back to 9,500 MMBtu/d last April.
The Commission said it wouldn’t require Trans-Union to hold anopen season for capacity on the line “since it appears that Lion isthe only third-party shipper potentially interested in service atthis time.” Nor does it think it’s necessary for Trans-Union torevise its application to increase capacity on the line.
Given that Union Power has indicated it will only need 340,000MMBtu/d of the planned 430,000 MMBtu/d of capacity during the firstphase of its operation, “it appears that there would be capacityavailable on Trans-Union to provide a firm service for Lion atleast in the short term,” the order said [CP00-47].
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