Transcontinental Gas Pipe Line may construct its 53-mileSoutheast Louisiana Crossover (SELA) offshore Louisiana, theFederal Energy Regulatory Commission said in an order voted outWednesday, but it will be at risk to recover its costs.

By connecting Transco’s Southeast Louisiana Gathering Systemwith its Central Louisiana Gathering System the crossover, pluscompression, will provide up to 264 MMcf/d in incremental capacityfrom offshore to Station 50 on its mainline at Eunice, LA. TheCommission agreed Transco should be allowed to charge non-SFV ratesin order to compete with other offshore pipelines with similarrates.

Transco has only one firm customer signed up at a discountedrate for 220 Bcf over ten years, which would average out to about15% of capacity over time and guarantee the recovery of only $2million of the $16.7 million annual cost of service. Under thesecircumstances Transco will have to bear the risk of failure to fillup the line.

FERC turned down interveners’ requests to have the crossoverdeclared non-jurisdictional, saying it already had denied attemptsto have the two systems it connects classified as gathering sincethey were made up of extensive pipelines with significantdiameters, indicating transmission. FERC approved negotiated ratesproposed by Transco under three different rate schedules.

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