NGI The Weekly Gas Market Report
The battle between Coastal Corp.’s ANR Pipeline and supportersof the proposed Guardian Pipeline over the lucrative Wisconsin andnorthern Illinois markets intensified last week, as each sidepresented its case through displays of public support. Yet, despitethe bickering and ANR’s attempts to keep Guardian from being built,the pipeline project is expected to be filed with FERC as soon asnext month.
At the beginning of last week, a host of Wisconsin businesses,labor unions and state and local government officials ralliedbehind the proposed Guardian Pipeline as their last, best hope ofinjecting natural gas competition into the state. The coalition,which includes Governor Tommy Thompson, said the proposed 147-mile,$230 million interstate pipeline can create competition with ANRPipeline, resulting in lower energy prices for consumers andincreased reliability.
To date, ANR is the only company to successfully supply gas tothe heavily populated areas in eastern Wisconsin. It is in theprocess of getting a $37.5 million expansion approved by FERC. Ifapproved, the expansion would add 200 MMcf/d to ANR’s system in thestate. Other projects designed to serve the area, such as theViking Voyageur, the redesigned Voyageur project and theIllinois-Wisconsin Express, were never able to be completed.
“A second natural gas pipeline serving southeast Wisconsin willhelp our business members by providing a competitively priced andample supply of natural gas,” said Dick Olson, executive directorof the Wisconsin Industrial Energy Group, an association of some ofthe state’s largest energy users. “Other states have access to morethan one natural gas supplier and have realized real cost savings.The Guardian project will help us keep pace with our regionalcompetitors.”
To combat Guardian’s attempt to demonstrate its viability, ANRissued results from a poll taken by Wisconsin Trends, a reputedindependent source of data collection. In the statewide publicopinion poll, ANR said 33% of those surveyed said regulators shouldbe primarily concerned about the “environmental disruption the newpipeline may cause.” The poll also indicated that 26% of the peoplewho took the survey said “rights of private landowners” should bethe top concern. ANR said the poll was a clear indication of thepublic’s support of ANR.
“These public opinion findings by the highly regarded WisconsinTrends research group amount to a compelling statement in supportof [ANR] by the hard-working families of Wisconsin,” said JeffConnelly, CEO of ANR. “Their message to regulators and governmentofficials is loud and clear: ‘when it comes to building natural gaspipelines, don’t build what we don’t need.'”
Connelly said ANR’s solution to the region’s demand needs ismuch more practical. “With smaller phased-in expansions,[ANR] isright on target with public opinion in Wisconsin. Guardian Pipelineand its supporters, on the other hand, are totally ignoring theviews of the state’s voters and natural gas users.”
Last week was not the first time the public has been broughtinto this issue. The outcry of support for Guardian followed a pleamade last month from a group of 160 Wisconsin landowners along theproposed Guardian route calling for the project’s dismissal. Thisgroup, called Neighbors Standing United, is petitioning WisconsinCircuit Court to intervene in a lawsuit filed by ANR against theWisconsin Public Service Commission (see NGI, July 26). ANR and thelandowners, who are led by Weenonah Brattset, want the court toreverse and set aside Commission orders conditionally approvingGuardian.
“Every single landowner in our group is prepared to take thisall the way through the courts to condemnation. If this [Guardian]pipeline is permitted, we would go in and appeal our property taxassessments be reduced to reflect the decrease in the value of ourlands because of the pipeline,” Brattset said last month.
Yet, others in the state hold different opinions than Brattset.”This project is good for our state and its workers,” said LyleBalistreri, president of the Milwaukee Building and ConstructionTrades Council, another group that voiced its support for Guardian.”The Guardian Project will provide a boost to our region’s economicdevelopment and will directly and indirectly benefit our membersand the state as a whole.”
Despite the objections from landowners, the project is in goodshape, said David Fantle, a spokesman for Guardian. He said thesupporters of the project are working with the “pockets ofobjecting landowners,” to iron out solutions. “Besides that, theonly objections we’ve heard are from ANR, but that isn’tsurprising.”
ANR is not only battling Guardian. KN’s Horizon Pipeline, aproposed 1.2 Bcf/d project that would run from Joliet, IL, to HalesCorners, WI, has also received harsh criticism from the Coastalsubsidiary. Last July, ANR hired Charles Cicchetti, a formerWisconsin Public Service Chairman and presently a member of thePacific Economics Group, to do a study on Guardian, and byimplication, Horizon. Among the harsh comments in Cicchetti’sreport, he said, “a high-cost pipeline.will allow the regulatedmonopolist affiliate to pass excessive pipeline transportationcosts through to its captive customers.” Although the reportfocused on Guardian, ANR said many of the analyst’s commentsapplied to Horizon as well.
Although ANR would argue, Horizon has shown it would be put togood use if built. During an open season that finished in July, thepipeline signed preliminary agreements for 800 MMcf/d of capacity(see NGI July 2). KN hopes to begin construction on Horizon in thespring of 2001.
Guardian too has demonstrated demand for its capacity. WisconsinGas has already said it would subscribe to 650 MMcf/d on Guardianand is planning to build a 35-mile service lateral to connect theGuardian line at Watertown with its Milwaukee-area distributionsystem. Fantle said the LDC plans to file the lateral project withthe Wisconsin Public Service Commission at the same time Guardianis filed with FERC.
The proposed $230 million Guardian Pipeline project is jointlyowned by Wisconsin Gas parent WICOR, CMS Energy Corp. and VikingGas Transmission Co. Running from proposed interconnections withmajor pipelines at the Chicago hub near Joliet, IL, to Watertown,WI, the pipe would add between 750 MMcf/d and 1.1 Bcf/d of firmtransportation capacity, depending on market need, to the southernWisconsin and northern Illinois market in November 2002.
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