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FERC RULING SEEKS PROOF PIPELINE PROJECT IS NEEDED

The Federal Energy Regulatory Commission has ruled that National Fuel Gas Co. and its partners in the proposed Independence natural gas pipeline project must prove there is a market need for more natural gas in the Northeast before they can build new pipelines stretching from Michigan to New Jersey.

Environmentalists, lawmakers and opponents of Market Link called the ruling a victory.

But National Fuel and its two partners -- ANR Pipeline Co. and Transcontinental Gas Pipe Line Corp. -- in the proposed 400-mile Independence Pipeline said they still are cautiously optimistic that the project will be built.

Spokesmen from Coastal Corp.'s ANR subsidiary in Detroit, Mich., National Fuel, and the Williams Co.'s Transco unit in Houston, said they will need to review "the unusual interim order" handed down by FERC before they could comment on how it might affect their plans to bring additional gas from Western Canada to the Northeast.

But the firms said in a statement that they will continue to push the project. "We remain firmly committed to these projects and are confident that our continuing efforts will prove successful in meeting the demand for new pipeline capacity and services in the eastern United States," the companies said.

The $678 million Independence project is one of a series of proposed pipelines that would increase the flow of natural gas to the eastern Seaboard, where the companies believe there will be strong demand for the fuel, especially among electric power plants.

ANR's Supply Link pipeline would bring gas from Jolliette, Ill., to Defiance, Ohio, where the Independence pipeline, which would consist of 36-inch diameter pipe with an initial capacity of 916 million cubic feet of gas per day, would carry gas to Leidy, Pa. There, Transco's Market Link pipeline would connect to existing pipelines and transport the gas through Pennsylvania and New Jersey.

FERC staff members issued a favorable environmental impact statement on the projects in November. "We are pleased that FERC has taken another step in its review of our projects," the companies said.

Before any of the proposed pipelines can be built, they must receive approval from federal regulators and also show that there is a need for the extra pipeline capacity by finding customers to move gas on the system.

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