FERC approves gas lines for Northeast

The US Federal Energy Regulatory Commission Wednesday approved certificates for two major natural gas pipeline projects to serve northeastern US markets. The commission also said it would revive a classification process for high-cost gas wells so that producers could claim an existing tax credit.


WASHINGTON, DC�The US Federal Energy Regulatory Commission Wednesday approved certificates for two major natural gas pipeline projects to serve northeastern US markets. The commission also said it would revive a classification process for high-cost gas wells so that producers could claim an existing tax credit.

Pipelines
FERC granted certificates for an Independence Pipeline Co. project and for ANR Pipeline Co.'s SupplyLink project. The commission previously had withheld approval until the project sponsors could show their lines would meet market demand.

Both companies had to file agreements showing that nonaffiliated shippers had contracted for at least 35% of their proposed project capacity. Independence filed agreements for 38% of its capacity and ANR for 78%.

FERC said, before construction can begin, both projects must file binding throughput agreements.

It attached about 100 environmental conditions to the Independence project. More than 1,000 objections have been lodged against the project by landowners along the proposed right of way, and others.

Indepedence would be a 400.4-mile, 36-in. line from Defiance, Ohio, to a terminus near Leidy, Pa. The $677.9 million project would move up to 1 bcf/day.

FERC approved a proposal that National Fuel Gas Supply Corp. abandon facilities along its existing system in Eshbaugh and Lamont counties, Pa., so that Independence can use them.

The SupplyLink Project would expand ANR's existing system, adding 72.4 miles of 36- and 42-in. line and compression facilities at five locations in Indiana, Illinois, Michigan, and Ohio. The $124.8 million project would move up to 750 MMcfd of gas.

James Hoecker, FERC chairman, said, "Today's decision recognizes the need for more secure and abundant natural gas supply options in the Northeast markets. These broad public interest and economic considerations are balanced in this case against impacts on landowners and the environment."

Gas credit
FERC had stopped determining which wells qualified for high-cost production tax credits after it deregulated the gas industry in 1989. Producer groups had been urging FERC to reinstate it.

Last year a federal court ruled that companies could still obtain the tax credits if FERC made a determination that the gas was high-cost.

The credits were available for tight gas production, Devonian shale gas, gas from geopressured brine, and coal seam gas. FERC staff said the tax credits are currently 52�/MMbtu for tight gas and about $1.06 for the other sources of gas.

FERC voted to reinstate its review process for wells drilled before 1993, even if not currently producing, so they can quality for the tax credits through 2002. The commission is due to issue a final rule containing more details within a few days.

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