FERC temporarily waives gulf infrastructure cost requirements

Nov. 18, 2005
The US Federal Energy Regulatory Commission temporarily waived some construction cost requirements so natural gas infrastructure damaged by Hurricanes Katrina and Rita can be rebuilt more quickly.

Nick Snow
Washington Correspondent

WASHINGTON, DC, Nov. 18 -- The US Federal Energy Regulatory Commission temporarily waived some construction cost requirements so natural gas infrastructure damaged by Hurricanes Katrina and Rita can be rebuilt more quickly.

"Twenty percent of the US natural gas supply comes from the offshore Gulf of Mexico, and much of that production remains shut in because of infrastructure damage. That is contributing to high natural gas prices," FERC Chairman Joseph T. Kelliher said Nov. 17.

Specifically, the commission increased the cost caps for projects that may be constructed under the automatic authorization provisions of Part 157, Subpart F blanket certificate regulations from $8 million to $16 million, and under the prior notice provisions from $22 million to $50 million.

The increased limits will apply to projects providing increased or alternative access to natural gas supplies, it said. The regulations implement provisions of the Natural Gas Act.

FERC also temporarily expanded the definition of "eligible facilities" that can be constructed under the blanket certificates to include main line facilities; extensions of a main line; facilities, including compression and looping, that alter the capacity of a main line; and temporary compression that raises the capacity of a main line.

The cost limit waivers will apply to the newly eligible facilities as long as the facilities will provide increased or alternative access to gas supply, it indicated. Previously, construction under the blanket certificate regulations was limited to facilities necessary to provide service within existing levels covered by FERC certificates.

The temporary waivers and expanded eligibility standards will apply only to projects constructed and placed in service by Oct. 31, 2006, FERC said.

Project proposal move
The commission also temporarily delegated authority to assure prompt processing of natural gas project proposals to Mark Robinson, its energy projects office director.

It received that authority under the federal energy law enacted this past summer. Section 313 of the law directs FERC "to establish a schedule for all federal permits, authorizations, certificates, opinions, or other approvals required for a Natural Gas Act Sec. 3 or 7 proposal."

FERC took the interim step until it can permanently vest the authority with Robinson in a rulemaking. "Our action will prevent unreasonable delays in decisions by other federal and state agencies on gas infrastructure projects," Kelliher said.

This will let Robinson, on a case-by-case basis, establish deadlines and coordinate federal and state actions for all federal authorizations necessary for proposed gas projects under Sec. 3 and Sec. 7 of the Natural Gas Act, according to FERC.

It said that the action applies to all gas proposals before the commission, not just those filed since the new federal energy law was enacted, and any future proposals that may be filed.

Contact Nick Snow at [email protected].