FERC on Monday rejected Trunkline Gas Co. LLC’s request to rehear a decision ordering the pipeline to stop using “critical notices” and operational flow orders (OFOs) to impose long-term restrictions on the quality of natural gas entering its system.

Gas quality has become a significant issue for pipelines in the past few years because high gas prices have made it more economic for producers to keep liquefiable hydrocarbons, which can become products such as ethane, in the gas stream rather than extract them at processing facilities for resale. Leaving liquids in the gas stream leads to higher heating values, and when the high-Btu gas is transported to locations with lower temperatures it can condense in the pipeline system leading to corrosion or other problems.

As a result, pipelines have taken action to deal with the issue. But because it only became an issue in the last few years, pipeline tariffs are not quite up to speed with current market needs.

Trunkline argued that it should not be required to “cease and desist” from the practice of issuing OFOs because the Federal Energy Regulatory Commission did not order other similarly situated interstate gas pipelines, who were the targets of nearly identical accusations, to stop their activities. In short, it claimed that FERC treated it differently in the early January order than it did in subsequent orders addressing gas quality restrictions on NiSource Inc.’s Columbia Gulf Transmission and El Paso Corp.’s Tennessee Gas Pipeline later that month (see NGI’s Daily GPI, Jan. 5).

But the Commission countered there were reasons for the dissimilar actions. In Trunkline’s case, the pipeline imposed critical notices over a three-year period, reducing the heating value of the gas that it would accept to 1,050 Btu per cubic foot. This was in violation of the pipeline’s tariff on file at the agency, which put the upper limit for heat content at 1,200 Btu, the order on rehearing said [RP04-64-001].

In both the initial and rehearing orders, FERC agreed with producers who had accused Southern Union-owned Trunkline of violating agency regulations and the Natural Gas Act (NGA) by effectively making permanent restrictions on gas quality standards through notices on its website rather than through tariff filings at the agency.

In contrast, “apart from [a Tennessee Pipeline] notice from Jan. 25, 2001 through March 2, 2001, neither Columbia Gulf nor Tennessee attempted to implement a specific gas quality standard that was more restrictive than a specific gas quality standard in their tariffs,” the order noted.

“Columbia Gulf posted critical notices requiring a Btu content of 1,050 Btu/cubic feet. However, Columbia Gulf’s tariff, unlike Trunkline’s, contains no maximum Btu requirement and permits Columbia Gulf to impose additional gas quality restrictions,” it said.

As for Tennessee, after March 2, 2001, the pipeline posted critical notices requiring gas to be processed when the hydrocarbon dew point of the gas is greater than 20 degrees Fahrenheit, the order noted, adding this action was permissible under Tennessee’s tariff. “Tennessee’s tariff contains no hydrocarbon dewpoint limit and permits Tennessee to require gas to be processed,” it said.

“Columbia Gulf and Tennessee were using flexibility allowed by their approved tariffs and were not using notices to implement specific standards that were different from an express standard in their tariffs. Therefore, there was no basis for requiring Columbia Gulf and Tennessee to cease and desist from enforcing gas quality standards in their notices and critical notices.”

The Commission noted, however, that the tariff provisions on which Columbia Gulf and Tennessee relied on in posting the notices of more restrictive gas quality standards were “unjust and unreasonable” because they gave the pipelines too much discretion to change their quality standards without notice or procedures to protect shippers (see NGI’s Daily GPI, Jan. 23).

FERC ordered the two pipelines to incorporate gas quality standards in their tariffs, eliminating the need in the future to impose long-term restrictions on gas quality through critical notices.

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