The U.S. leg of the proposed Vector Pipeline has won finalenvironmental approval at FERC, moving it within one step ofbecoming certified as the first new pipeline capable of providingtakeaway transportation for the steady influx of western Canadiangas supplies entering the Chicago market. The Commission’s actioncomes in the wake of the National Energy Board’s final approval ofthe 15-mile Canadian portion of the project.

Vector is the only project designed for redelivery of westernCanadian gas to markets in the U.S. Midwest and the Northeast thathas managed to sail, at least so far, through the certificationprocess at the Commission. Other competing pipeline projects havebeen plagued by unprecedented landowner opposition and questionsabout the ‘need’ for the projects, and have yet to receive theirpreliminary determinations.

The “biggest single factor” responsible for Vector’s success sofar has been the low level of landowner opposition. “I think thatwe have had relatively little issues [dealing with] environmentaland landowners’ concerns” because most of the new line will bebuilt at or near existing right-of-ways, said Juri Otsason ofCalgary-based Enbridge Inc., which has a 75% interest in Vector andis also part owner of Alliance Pipeline. Also, Vector has “kind ofstayed our course,” not making any changes or amendments to itsinitial project proposal, he noted. And lastly, it applied to buildthe pipeline under an optional certificate, which puts it “at risk”for the costs of construction.

Otsason doesn’t believe that having obtained shipper agreementsfor most of the proposed pipeline’s 1 Bcf/d capacity – 828 MMcf/d -has been the reason FERC has looked upon Vector favorably. “…I’mnot sure that that is really a significant difference between theprojects,” he told NGI.

Otsason said Vector is “hopeful that we will get our finalcertificate early next month.” It expects to begin construction onthe 344-mile pipeline (330 miles in the U.S.) , which will spanfrom the Chicago hub to the Dawn, ON, hub, either late this year orduring the 1999-2000 winter season. Most of the construction, henoted, will occur during the summer of 2000. The pipeline isexpected to be in service by Oct. 1, 2000 at about the same timethat the Alberta-to-Chicago Alliance line is targeted forcompletion. In addition to Alliance, Vector will provide takeawaycapacity for western Canadian gas imported into Chicago on NorthernBorder Pipeline.

The majority of the 1 Bcf/d of gas on Vector will be destinedfor Dawn, particularly during the winter months, but some will bedropped off in Michigan during the summer. “I think because Vectorwill be passing through a number of areas where there is asignificant gas market and also a lot of storage capability,shippers will at times use their capacity to drop gas off inMichigan, for example, in storage. While at other times they willflow it all the way to Ontario,” Otsason said.

At Dawn, Vector will be looking to Union Gas Ltd. to providemost of the takeaway capacity to eastern Canada and to eastern U.S.markets through its connection with TransCanada Pipelines – whichwould transport the gas to Niagara Falls to be picked up byTennessee Gas Pipeline, Iroquois Gas Transmission and the PortlandNatural Gas Transmission System.

In addition, he said that “further down the road” Vector wouldprobably look to “something like” the proposed Millennium projectto increase takeaway capacity at the Dawn hub for western Canadiangas. “I think in light of [the] developments at the FERC in thelast few weeks…the timing for Millennium to be in service by 2000is probably questionable.” Detroit-based MCN Energy Group, whichowns 25% of Vector, is one of the sponsors of Millennium.

Otsason doesn’t believe the Dawn hub will be hurting fortakeaway capacity without Millennium. “I wouldn’t say necessarilythat it [Millennium] is critical. There’s a fair bit of excesscapability on the Union system except for a very few days in thewinter time,” he said. “Ideally from Vector’s standpoint, the moreoptions downstream the better. So we certainly would like to seesomething like Millennium be there. But it’s absolutely notcritical.”

With respect to the final environmental impact statement (FEIS),FERC staff concluded construction and operation of the Vectorpipeline would have “limited adverse environmental impact” ifappropriate environmental measures were put in effect. The factthat 93% of Vector would be built near or within existing pipelineand powerline rights-of-way, that 59 miles of the pipeline would beleased and that most of the facilities would be located in sparselypopulated rural areas were cited by Commission staff as reasons forits decision.

The staff said it reviewed four system alternatives (bothexisting and proposed), but said none were found to be “bothenvironmentally preferable to Vector’s proposal and able to meetthe project objectives.” It also examined a number of major routealternatives and variations, but did not recommend that any beadopted by the Commission.

Susan Parker

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