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UNITED STATES OF AMERICA BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
IN THE MATTER OF ) ) DOCKET NO. CP14-___-000 TEXAS GAS TRANSMISSION, LLC )
ABBREVIATED APPLICATION FOR AUTHORIZATION TO CONSTRUCT AND OPERATE PIPELINE FACILITIES
Pursuant to Section 7(c) of the Natural Gas Act (“NGA”), as amended, 15 U.S.C.
§ 717(f), and Section 157.7 of the regulations of the Federal Energy Regulatory
Commission (“Commission”), 18 C.F.R. § 157.7, Texas Gas Transmission, LLC (“Texas
Gas”) submits this abbreviated application for a certificate of public convenience and
necessity (“Application”) and requests authorization for the construction and operation of
facilities which will allow it to efficiently and reliably flow proposed quantities of natural
gas north to south on its existing system, while retaining the current capability to flow
south to north, in order to accommodate customers who are seeking access to the
Marcellus/Utica shale supplies on the northern end of the Texas Gas system with an
ultimate destination to serve new markets in the Midwest and South (“Ohio-Louisiana
Access Project” or “Project”).
Texas Gas requests authorization to (i) construct, own, operate, and maintain a
new compressor station located in Ouachita Parish, Louisiana (“Bosco Compressor
Station”); (ii) modify the existing interconnect between Texas Gas and Gulf South
Pipeline Company, LP (“Gulf South”) at Bosco to allow bi-directional gas flow (“Gulf
South-Bosco Meter Station”); and (iii) make certain yard and station piping modifications
at the existing Dillsboro, Columbia, Pineville, and Eunice Compressor Stations, to allow
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each of the compressor stations, which have traditionally flowed gas south to north, to
efficiently and reliably flow the proposed quantities north to south while retaining the
existing capability to flow south to north.
The new Bosco Compressor Station will be built near the location of the existing
interconnect between Texas Gas and Gulf South in Ouachita Parish, Louisiana, and will
consist of one 10,915 horsepower (“hp”) Solar Taurus 70 turbine compressor unit
designed to facilitate delivery of approximately 175,000 MMBtu per day from Texas
Gas’ mainline to Gulf South via the proposed modified Gulf South-Bosco Meter Station.
The new Bosco Compressor Station, which is not a mainline unit, will allow gas on
Texas Gas to be compressed to a pressure high enough to enter the Gulf South system.
The Project is designed to meet the demand to transport natural gas produced in
the Marcellus/Utica Shale Region to mid-western and southern markets on the Texas Gas
system in an environmentally prudent manner through use of existing pipeline
infrastructure, and will provide service in a rational time frame that will meet the needs of
these markets. R.E. Gas Development, LLC (“R.E. Gas”), Jay-Bee Production Co. by its
agent DMRB Services, LLC (“Jay-Bee”), Louisville Gas and Electric Company
(“LG&E”), Gulfport Energy Corporation (“Gulfport”), Sabine Pass Liquefaction, LLC
(“Sabine”), DTE Energy Trading, Inc. (“DTE”), and Public Energy Authority of
Kentucky (“PEAK”) are the customers supporting this Project, having executed
precedent agreements under Rate Schedule FT for firm transportation.
To accommodate the needs of its customers, Texas Gas respectfully requests that
the Commission process the instant Application and issue a final order granting the
authorizations requested herein on or before June 18, 2015. Receipt of a final order by
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such date will allow Texas Gas to begin full construction by August 1, 2015, and to place
the Project facilities in service by June 1, 2016. Achieving this in-service date is critical
to meeting the market requirements of the customers providing the support for the Project
and preserving the commercial arrangements reflected in the precedent agreements with
the Project’s customers.
Texas Gas will work with Commission Staff to help facilitate the Commission’s
review of the Project in order to achieve the requested in-service date that meets the
market’s needs, the commercial requirements of these customers, and the Commission’s
processing requirements for this type of certificate application. Texas Gas is also seeking
a predetermination that it may roll-in the costs of the Project into its Commission-
approved rates in its next general rate proceeding.
In support of this abbreviated Application, Texas Gas submits the following
information:
I. APPLICANT
The exact legal name of the applicant is Texas Gas Transmission, LLC, and its
principal place of business is 9 Greenway Plaza, Suite 2800, Houston Texas 77046.
Texas Gas is a natural gas company as defined by the NGA, as amended;1 is engaged in
the business of transporting natural gas in interstate commerce; is a limited liability
company organized and existing under the laws of the State of Delaware; and is duly
authorized to do business in the States of Texas, Louisiana, Arkansas, Mississippi,
Tennessee, Kentucky, Indiana, Illinois, and Ohio.
1 15 U.S.C. § 717(6).
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The names, titles, and mailing addresses of the persons to whom communications
and correspondence concerning the application should be addressed are:
Michael E. McMahon A. Gregory Junge Senior Vice President and General Counsel Michael R. Pincus J. Kyle Stephens Van Ness Feldman, LLP Vice President, Regulatory Affairs 1050 Thomas Jefferson St., NW Kathy D. Fort Seventh Floor Manager, Certificates & Tariffs Washington, D.C. 20007 Texas Gas Transmission, LLC Phone: (202) 298-1800 9 Greenway Plaza, Suite 2800 Fax: (202) 338-2361 Houston, Texas 77046 agj@vnf.com Phone: (713) 479-8033 mrp@vnf.com Fax: (713) 479-1846 Mike.McMahon@bwpmlp.com Kyle.Stephens@bwpmlp.com Kathy.Fort@bwpmlp.com
Each of the identified persons is designated to receive service in accordance with
18 C.F.R. § 385.203(b)(3). Texas Gas requests that the Commission place these persons
on the official service list for this proceeding, pursuant to 18 C.F.R. § 385.2010. Texas
Gas requests that the Commission waive Rule 203(b)(3) to allow service upon each of the
designated persons.
II. BACKGROUND
Significant amounts of natural gas are being produced in the Marcellus/Utica
Shale production areas and there has been an increased demand for pipeline infrastructure
to transport these natural gas supplies to markets. The proposed Ohio-Louisiana Access
Project will meet this market demand by creating additional interstate transportation
capacity from Lebanon, Ohio to Midwestern and Southern markets on the Texas Gas
system.
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The Project’s modified and new facilities will enable Texas Gas to meet the
requirements of its customers and the broader needs of the market with minimal
environmental impact. The Project adds north-to-south transportation capacity by relying
primarily on Texas Gas’ existing facilities, which avoids the need to build substantial
greenfield pipeline facilities to meet transportation demand. By modifying Texas Gas’
existing pipeline system, the Project will allow Texas Gas to flow gas bi-directionally and
provide access to markets located in the Midwestern and Southern regions of the United
States. The Project also will enhance gas supply flexibility for existing and future
customers of Texas Gas by making additional gas supplies available to the Texas Gas
system and those consuming markets. For these reasons, the Commission should find
that the Ohio-Louisiana Access Project is required by the present and future public
convenience and necessity and grant Texas Gas the authority necessary to construct, own,
operate, and maintain these facilities.
III. OPEN SEASON RESULTS
In the fall of 2013, Texas Gas began negotiating with certain customers who
desired south-bound transportation capacity on its system. On October 8, 2013, Texas
Gas provided notice pursuant to Section 6.20[4] of the General Terms and Conditions of
its FERC Gas Tariff that certain unsubscribed capacity would be reserved for the Ohio-
Louisiana Access Project beginning as early as June 1, 2016. Specifically, Texas Gas
reserved 162,000 million British thermal units (“MMBtu”) per day on the mainline from
Lebanon, Ohio to the Bastrop Compressor Station (“Bastrop”) located in Morehouse
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Parish, Louisiana and 126,800 MMBtu per day on the mainline from Bastrop to the
Eunice Compressor Station located in Acadia Parish, Louisiana for use in the Project.
Texas Gas entered into a binding precedent agreement with Sabine, who became
the foundation customer for an ultimate 300,000 MMBtu per day of capacity in the
Project. As a result of entering into the precedent agreement, pursuant to Section 6.20[4]
of its FERC Gas Tariff, Texas Gas held a binding open season beginning November 25,
2013 and ending January 13, 2014, which resulted in additional binding precedent
agreements for firm transportation of 326,000 MMBtu per day for a total of 626,000
MMBtu per day.
The Project is supported by seven shippers that have executed precedent
agreements for firm transportation agreements. Sabine executed a precedent agreement
for a firm transportation agreement, subject to negotiated rates and pursuant to Rate
Schedule FT, for 150,000 MMBtu per day as of the service commencement date of the
transportation agreement and increasing to 300,000 MMBtu per day for a primary term of
10 years. R.E. Gas executed a precedent agreement for a firm transportation agreement
subject to negotiated rates and pursuant to Rate Schedule FT, for 100,000 MMBtu per
day for a primary term of 20 years. Jay-Bee executed a precedent agreement for two
transportation agreements both of which are subject to negotiated rates and pursuant to
Rate Schedule FT. The Jay-Bee agreements provide for (i) 25,000 MMBtu per day for a
primary term of ten years; and (ii) 35,000 MMBtu per day for a primary term of 10 years.
LG&E executed a precedent agreement for a transportation agreement subject to
negotiated rates and pursuant to Rate Schedule FT, for 60,000 MMBtu per day for a
primary term through October 31, 2026. Gulfport executed a precedent agreement for a
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transportation agreement subject to negotiated rates and pursuant to Rate Schedule FT,
for 50,000 MMBtu per day for a primary term of 20 years. DTE executed a precedent
agreement for a transportation agreement subject to negotiated rates and pursuant to Rate
Schedule FT, for 46,000 MMBtu per day for a primary term of 10 years. PEAK executed
a precedent agreement for a transportation agreement subject to negotiated rates and
pursuant to Rate Schedule FT, for 10,000 MMBtu per day for a primary term of 10 years.
Transportation will be provided in accordance with Texas Gas’ existing rate
schedules and tariff provisions. Texas Gas is seeking a predetermination that it may roll-
in the costs of the Project into its Commission-approved rates in its next general rate
proceeding.
IV. REQUEST FOR AUTHORIZATION & DESCRIPTION OF FACILITIES
Texas Gas requests authorization to (i) construct, own, operate, and maintain the
new Bosco Compressor Station to be located in Ouachita Parish, Louisiana; (ii) modify the
existing Gulf South-Bosco receipt meter station to allow bi-directional gas flow; and (iii)
make certain yard and station piping modifications at the existing Dillsboro, Columbia,
Pineville, and Eunice Compressor Stations, to allow each of the compressor stations to
efficiently and reliably flow the proposed quantities north to south, while retaining the
existing capability to flow south to north.
The proposed Bosco Compressor Station is a new 10,915 hp compressor station to
be located in Ouachita Parish, Louisiana.2 Texas Gas proposes to negotiate a perpetual
easement on the property upon which the Bosco Compressor Station will be located. The
Bosco Compressor Station will consist of (i) one Solar Taurus 70 turbine, (ii) yard and
2 See attached Exhibit F.
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station piping between the compressor station and the Gulf South-Bosco Meter Station, and
(iii) other yard and station piping and appurtenant auxiliary facilities and buildings.
Texas Gas proposes to modify the existing Gulf South-Bosco Meter Station to
allow for bi-directional flow so that the meter station may flow from Texas Gas to Gulf
South, as well as the current day flow direction of Gulf South to Texas Gas. To provide bi-
directional flow at the Gulf South-Bosco Meter Station, Texas Gas will (i) utilize the
existing 30-inch tap to run piping and fittings to the proposed Bosco Compressor Station;
(ii) run yard and station piping and fittings from the proposed Bosco Compressor Station to
the Gulf South bi-directional valve switching skid; and (iii) upgrade the existing Texas Gas
remote terminal unit utilizing the existing building.
Texas Gas is proposing to install auxiliary facilities within the yard at the existing
Dillsboro Compressor Station, located in Dearborn County, Indiana, which will allow the
compressor station to efficiently and reliably flow the proposed quantities north to south,
while retaining the existing capability to flow south to north, as currently configured.3
Texas Gas is proposing to modify the Dillsboro Compressor Station to allow for the
flexibility to flow natural gas in either direction by installing various diameter yard and
station piping and various valves, fittings and other auxiliary facilities.
Texas Gas is proposing to install auxiliary facilities within the yard at the existing
Columbia Compressor Station, located in Caldwell Parish, Louisiana, which will allow the
compressor station to efficiently and reliably flow the proposed quantities north to south,
while retaining the existing capability to flow south to north, as currently configured.4
Texas Gas is proposing to modify the Columbia Compressor Station to allow for the
3 See attached Exhibit F. 4 See attached Exhibit F.
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flexibility to flow natural gas in either direction by installing various diameter yard and
station piping and various valves, fittings and other auxiliary facilities.
Texas Gas is proposing to install auxiliary facilities within the yard at the existing
Pineville Compressor Station, located in Rapides Parish, Louisiana, which will allow the
compressor station to efficiently and reliably flow the proposed quantities north to south,
while retaining the existing capability to flow south to north, as currently configured.5
Texas Gas is proposing to modify the Pineville Compressor Station to allow for the
flexibility to flow natural gas in either direction by installing various diameter yard and
station piping and various valves, fittings and other auxiliary facilities.
Texas Gas is proposing to install auxiliary facilities within the yard at the existing
Eunice Compressor Station, located in Acadia Parish, Louisiana, which will allow the
compressor station to efficiently and reliably flow the proposed quantities north to south or
free flow south, while retaining the existing capability to flow south to north, as currently
configured.6 Texas Gas is proposing to modify the Eunice Compressor Station to allow for
the flexibility to flow natural gas north to south or free flow south by installing various
diameter yard and station piping on both the north side and south side of the compressor
station and various valves, fittings and other auxiliary facilities.
The estimated capital cost of the proposed facilities is approximately
$51,904,705, as detailed in the attached Exhibit K. The facilities proposed herein will be
constructed in accordance with all applicable rules and regulations and operated in
accordance with federal pipeline safety regulations of the U.S. Department of
Transportation.
5 See attached Exhibit F. 6 See attached Exhibit F.
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V. REQUEST FOR ROLLED-IN RATE TREATMENT
The Ohio-Louisiana Access Project is supported by firm transportation
agreements subject to negotiated rates with Sabine, R.E. Gas, Jay-Bee, LG&E, Gulfport,
DTE, and PEAK. These agreements are provided in Exhibit I and are filed as Privileged
and Confidential information in Volume II as part of this Application. Texas Gas
requests authority to charge its existing system-wide rates as the recourse rates for the
facilities to be constructed under this Project and also requests a predetermination that it
may roll the Project costs into its Commission-approved system wide rates in a future rate
proceeding. In the interim, Texas Gas is willing to accept the financial risks associated
with the Project.
As shown in the attached Exhibit N, the incremental cost-based transportation
rates for the Project calculated on a stand-alone basis are less than Texas Gas’ existing
approved maximum transportation rate for service from Zone 4 to Zone SL under Rate
Schedule FT.7 The current maximum FT reservation charge for deliveries from Zone 4
to Zone SL is $0.0794 per MMBtu, whereas the calculated stand-alone monthly FT
reservation charge for the proposed expansion facilities (which includes service from
Zone 4 to Zone SL) is $0.0433 per MMBtu. Because Texas Gas’ existing system-wide
rates will fully recover the costs of the Project, existing customers will not subsidize any
of the Project’s costs. Texas Gas will also be at risk for costs related to any unused
capacity between rate cases.
In a future rate proceeding, Texas Gas’ system-wide rates will be reduced as a
result of rolling-in the costs of the Project into the currently approved system-wide rates 7 Zone 4 to SL represents the longest contractual path requested by the customers with contracts that support the Project.
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and rolling in the costs into the system-wide rates will not adversely affect any customer.
A predetermination of rolled-in rate treatment is consistent with Commission precedent
and policy, since (i) it will protect existing customers from subsidizing the costs of the
Project; and (ii) it will lower the rates for all customers in the next rate case. In addition,
all capacity associated with the Project facilities will be subject to Texas Gas’ currently
effective fuel retention percentages.
Texas Gas requests that the Commission make a predetermination that Texas Gas
may roll the costs of the Project into the system-wide rates in a future rate proceeding.
VI. ENVIRONMENTAL MATTERS
Texas Gas will construct the Ohio-Louisiana Access Project in a manner intended
to minimize any adverse environmental impacts. The Project provides for an efficient
use of existing infrastructure by creating new north-to-south transportation capacity on
Texas Gas’ system through the construction of only relatively minor additional facilities,
thereby minimizing the environmental impacts of the Project. As explained below, the
Environmental Report prepared by Texas Gas, attached as Exhibit F-I, supports the
conclusion that, with appropriate mitigation measures, approval of this Project will not
significantly affect the quality of the natural or human environment.
Texas Gas has developed the proposed facilities in a manner intended to avoid
impact on landowners or sensitive resources such as streams, wetlands, forests, and any
threatened or endangered species or any cultural resource. Utilizing construction and
restoration methods that comply with the Commission’s May 2013 “Upland Erosion
Control Revegetation and Maintenance Plan” and “Wetland and Waterbody Construction
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and Mitigation Procedures” will ensure that any adverse impacts will be limited and
temporary.
More specifically, with respect to landowner impacts, the Project’s proposed new
and modified facilities are designed and will be constructed and operated in a manner
intended to minimize land impacts. During construction of the Project, 120.03 acres of
land will be affected. The only permanent land impact will be 15.01 acres at the
proposed new Bosco Compressor Station.
The new Bosco Compressor Station is proposed to be constructed on agricultural
land located adjacent to the existing Gulf South-Bosco Meter Station. Construction of
the new Bosco Compressor Station will affect a total of 24.61 acres of land, with 11.71
acres needed for permanent operation of the new compressor station and 3.30 acres
needed for permanent access to the new compressor station.
The proposed piping and facility modifications at the existing Gulf South-Bosco
Meter Station will result in no new permanent land impact. Of the land affected during
construction at the existing Gulf South-Bosco Meter Station, only 1.28 acres are
temporary and outside Texas Gas’ existing permanent property boundary at the meter
station.
The proposed yard and station piping modifications at the existing Dillsboro,
Columbia, Pineville, and Eunice Compressor Stations will result in no new permanent
land impact. Of the land affected during construction at the existing compressor stations,
only a total of 0.61 acres are temporary and outside Texas Gas’ existing permanent
property boundary – 0.57 acres at the Columbia Compressor Station and 0.04 acres at the
Eunice Compressor Station. No new physical facilities will be placed outside any of the
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existing compressor station yards. Accordingly, the effect upon affected landowners in
each of the areas will be minimal.
In addition, pursuant to 18 C.F.R. §§ 157.6 and 157.10, Texas Gas will make a
good faith effort to notify all affected landowners, towns, communities, and local, state,
and federal governments and agencies involved in the Project and to provide a copy of
the Application to a central public library in each county in the Project area within three
business days of the filing of the Application in accordance with the Commission’s
regulations.
Texas Gas’ Environmental Report, Exhibit F-I, provides an analysis of the
existing environmental conditions and environmental impacts. The site selected for the
Bosco Compressor Station was chosen to have a minimal aesthetic and environmental
impact on the physical environment and surrounding communities along the pipeline,
while meeting the Project’s hydraulic requirements. In addition, the Bosco Compressor
Station will be constructed with equipment designed to reduce air pollutant emissions and
limit attributable noise to a day-night level (“Ldn”) of 55 decibels (“dBA”) at any pre-
existing noise-sensitive area. No additional noise generating equipment will be installed
at the existing Dillsboro, Columbia, Pineville and Eunice compressor stations as only
minor yard and station piping modifications will be required to enable each of these
stations to flow natural gas north to south.
Texas Gas has engaged in consultations and coordination with the affected
federal, state, and county government agencies concerning the proposed construction
activities associated with the Project, and will continue to discuss specific concerns or
requirements should they be raised.
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In sum, the Ohio-Louisiana Access Project will be constructed in a manner
intended to minimize any adverse environmental impacts and with appropriate mitigation
measures will not significantly affect the natural or human environment.
VII. PUBLIC CONVENIENCE AND NECESSITY
The Ohio-Louisiana Access Project is required by the present and future public
convenience and necessity. The need for pipeline infrastructure to transport gas supplies
from the Marcellus/Utica shale region and the market support for this proposed Project is
evidenced by the precedent agreements customers have executed for the Project. The
Project will efficiently utilize existing capacity and provide facilities needed to meet
market demand to transport gas supplies from the Marcellus/Utica shale region to
Midwestern and Southern markets on the Texas Gas system create new market
alternatives and enhance customers’ gas supply options.
As conventional natural gas production declines, gas produced from shale plays
now comprises a substantially larger, and increasingly important, component of the
nation’s domestic gas supply portfolio, and is essential to ensuring continued availability
of adequate natural resource supplies to customers at reasonable prices. The Energy
Information Administration (“EIA”) forecasts that U.S. shale plays will increase by 11
billion cubic feet per day (“Bcf/d”) by 2020, with total natural gas production at 73 Bcf/d
(see graph below).
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16
Gas produced in the Marcellus and Utica Shale production areas is projected to
increase significantly over the next several years. In 2013, the Marcellus/Utica shale
region produced approximately 10 Bcf/d and is forecasted to produce approximately 26
Bcf/d in 2020, an increase of 156 percent (see graph below).
In addition, demand for domestic gas supplies is projected to remain strong.
Wood Mackenzie forecasts that U.S. natural gas demand will grow from approximately
71 Bcf/d in 2013 to 78 Bcf/d in 2020, an increase of 11 percent, with the majority of this
demand, or 4 Bcf/d, occurring in the Southern region of the country.
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Almost all of this demand growth is expected to be from the power generation and
industrial sectors. Wood Mackenzie forecasts that U.S. industrials will growth
approximately 4 Bcf/d and the power generation sector will grow approximately 2 Bcf/d
between 2013 and 2020.
Texas Gas has designed a project that will meet the demand to transport gas
supplies from the Marcellus/Utica shale basins to markets in the South and Midwest. The
Project is supported by seven customers with a precedent agreement consisting of
transportation agreements subject to negotiated rates. These commitments represent
approximately 83 percent of the maximum capacity provided by the Project facilities.
The Project facilities provide a maximum capacity of 758,000 MMBtu per day.8 None of
Texas Gas’ existing customers will subsidize any of the Project’s costs.
8 See Exhibits G, G-I. A portion of the remaining capacity of 132,000 MMBtu per day has been subsequently subscribed by customers of Texas Gas’ Southern Indiana Lateral Project, a market lateral to be constructed off of the Texas Gas system in Henderson County, Kentucky and Posey County, Indiana. Texas Gas will file an application for a Certificate of Public Convenience and Necessity for those facilities in late October 2014.
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Given the long-range production and market demand forecasts and the clear
benefits that will result from this Project, Texas Gas views the risks it is undertaking to
be reasonable. Texas Gas is confident that, as gas production continues to increase from
this area, there will be a corresponding demand for transportation capacity on the Texas
Gas system.
The benefits of this Project support a Commission finding that it not only is
required by the present public convenience and necessity, but will be required by the
future public interest as well. Texas Gas requests the Commission issue the requested
authorization pursuant to section 7(c) of the NGA.
The Project satisfies the criteria for justifying a new project under the
Commission’s Certification of New Interstate Natural Gas Pipeline Facilities Policy
Statement (“Certificate Policy Statement”).9 The Project will provide the following
public benefits: meeting un-served demand, providing new transportation capacity to
serve a demonstrated demand, providing new interconnects that improve the interstate
grid, and providing competitive alternatives. In addition, under the Certificate Policy
Statement, the Commission no longer requires evidence of long-term contracts for all of
the capacity to demonstrate the need for a proposed project.10 Nevertheless, this Project
is adequately supported and Texas Gas is fully at risk for any underutilization. Under
these circumstances, the Project satisfies the requirements of the Certificate Policy
Statement.
9 Certification of New Interstate Natural Gas Pipeline Facilities, Statement of Policy, 88 FERC ¶ 61,227, at p. 61,748 (1999), Order Clarifying Statement of Policy, 90 FERC ¶ 61,128 (2000), Order Further Clarifying Statement of Policy, 92 FERC ¶ 61,094 (2000). 10 88 FERC at 61,744-748.
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A. Compliance with the Commission’s Certificate Policy Statement
The Commission’s Certificate Policy Statement provides guidance regarding how
the Commission evaluates pipeline construction proposals under section 7(c) of the NGA
to determine if the proposed construction is necessary and will serve the public interest.
In deciding whether to authorize construction of major new pipeline facilities, the
Commission balances the public benefits created by the proposed project against
potential adverse consequences. The Commission gives appropriate consideration to the
enhancement of competitive transportation alternatives, the possibility of overbuilding,
subsidization by existing customers, the applicant’s responsibility for unsubscribed
capacity, the avoidance of unnecessary disruptions of the environment, and the unneeded
exercise of eminent domain in evaluating new pipeline construction.11
Pursuant to the Certificate Policy Statement, the threshold requirement for a
pipeline proposing a new project is that the pipeline must be prepared to financially
support the project without relying on subsidization from its existing customers. Once
the no-subsidization requirement has been demonstrated, the next inquiry is whether the
applicant has made efforts to eliminate or minimize any adverse effect the project might
have on (i) the applicant’s existing customers, (ii) existing pipelines in the market and
their captive customers, or (iii) landowners and communities affected by the route of the
new pipeline. If residual adverse effects on these interest groups are identified after
efforts have been made to minimize them, the Commission evaluates the project by
balancing the evidence of public benefits to be achieved against these residual adverse
effects. The Commission has stated that this is essentially an economic test.12 Only
11 See Dominion Transmission, Inc., 104 FERC ¶ 61,267 (2003), reh’g denied, 105 FERC ¶ 61,350 (2003). 12 See Certificate Policy Statement, 88 FERC ¶ 61,227 at p. 61,745.
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when the benefits outweigh the adverse effects on economic interests does the
Commission complete the environmental analysis where other interests are considered.
As demonstrated below, the proposed Ohio-Louisiana Access Project clearly satisfies the
requirements of the Certificate Policy Statement.
B. Effects on Existing Customers
Existing customers on Texas Gas’ system will not subsidize the costs of the
Project because, as illustrated in Exhibit N, the expected revenues for the Project exceed
its costs. In addition, the Project will have no adverse effect on the quality of service to
existing customers. Indeed, service to existing customers will be enhanced by the
addition of the capacity created by Project, which will be available for use by new and
existing customers. Texas Gas, therefore, has satisfied this threshold element of the
Certificate Policy Statement.
C. Impacts on Existing Pipelines and Their Captive Customers
The construction and operation of the Project will not have adverse effects on
existing pipelines or their captive customers, nor will the Project adversely affect
competition. The proposed facilities will enhance competition and ease existing and
anticipated pipeline constraints in production areas on the northern end of the Texas Gas
system. By providing additional transportation capability the Project is likely to create
competitive pressure that will ultimately have a positive effect on the pricing of natural
gas supplies in the region. This enhanced competition, however, will not adversely affect
the competitive balance in the region. Accordingly, any perceived adverse effects on
other pipelines will be outweighed by the delivery of additional onshore supplies and
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diversity of access to supply sources.13 The Project meets this element of the Policy
Statement.
D. Impact on Landowners and Surrounding Communities
The Project is designed to use existing infrastructure to create new transportation
capacity with minimal new construction and minimal impacts on landowners and
communities. Texas Gas has attempted to locate its new compressor station in an area
that will minimize impact on nearby residents. Thus far, the public has expressed few, if
any, concerns regarding the proposed location of the facilities. Texas Gas will continue
to work with landowners and community representatives after this Application is filed.
Texas Gas will comply with the Commission’s landowner notification
requirements.14 The list of affected landowners that will receive notice of this
Application is included in Volume II, and Texas Gas is seeking Privileged and
Confidential treatment of this information pursuant to 18 C.F.R. § 388.112.
E. Project Benefits
The Project will provide considerable public benefits with few, if any, residual
adverse effects on existing customers of Texas Gas, existing pipelines and their captive
customers, and landowners and communities along the route of the pipeline. The Project:
(1) will meet the demand to provide transportation capacity to additional markets;
(2) is supported by customers that have signed binding precedent agreements for a
substantial portion of the expansion capacity;
13 The Commission recognizes that it need not protect competitors from competition. Instead the goal is to insure fair competition. Certificate Policy Statement, 88 FERC ¶ 61,227 at p. 61,748. See also Freeport –McMoran Energy LLC, 115 FERC ¶61,201 (2006). “With regard to adverse effects on competing pipelines and such pipelines' captive customers, the Commission finds that the Coden pipeline should serve to benefit other pipelines and their customers because it will transport new, competitively priced natural gas supplies into the interstate grid to meet the ever-growing demand for natural gas in major U.S. markets.” Id at P 18. 14 18 C.F.R § 157.6 (d)
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(3) will not be subsidized by Texas Gas’ existing shippers;
(4) will benefit customers on other interstate pipelines which interconnect with Texas
Gas’ system by providing access to gas supplies not currently connected to those
systems;
(5) will have minimal adverse effect on landowners through the efficient use of
existing pipeline infrastructure;
(6) will not have an adverse effect on the environment; and
(7) will enhance competition and supply alternatives.
For these reasons, the proposed Project meets the criteria in the Commission’s Certificate
Policy Statement and is clearly required by the present and future public convenience and
necessity.
VIII. ENERGY EFFICIENCY
Texas Gas is aware of the Commission’s interest in considering the potential for
energy efficiency in connection with major pipeline infrastructure projects. Texas Gas
has designed the Project to enhance operational efficiencies to the extent practical.
Texas Gas has selected a compressor unit for overall efficiency and that meets applicable
air and noise requirements. Texas Gas also will employ a rigorous maintenance schedule
to maintain pipeline efficiency.
Further, Texas Gas has considered waste heat and co-generation opportunities, in
light of the white paper on waste heat published by the Interstate Natural Gas Association
of America in February 2008. The INGAA white paper identifies initial threshold criteria
for determining whether waste heat generation is feasible. Specifically, compressor
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stations must have a total of 15,000 hp provided by gas turbine compressor units and
these units must operate for a total of 5,250 hours per year (60 percent load factor).
Based on the recommendations contained therein, the Bosco Compressor Station will not
qualify to economically recover heat or support a co-generation facility.
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IX. OTHER APPLICATIONS, FILINGS AND PROJECTS
Texas Gas is not aware of any other application to supplement or effectuate this
Application that must or will be filed by Texas Gas, its customers, or any other person
with any Federal, State, or regulatory body in order to complete the Project.
Texas Gas is developing projects for which it expects to file Applications for
Certificates of Public Convenience and Necessity by the end of 2014. The Southern
Indiana Market Lateral will consist of approximately 29 miles of 20-inch-diameter
natural gas pipeline extending from an existing lateral of the Texas Gas system in
Henderson County, Kentucky and will terminate in Posey County, Indiana. The Southern
Indiana Market Lateral will serve two new industrial users in Indiana that will source a
portion of their natural gas supplies from Lebanon, Ohio and will contract for and utilize
a portion of the excess mainline capacity associated with the proposed Project after it is
in service. The instant Project is not dependent upon the Southern Indiana Market
Lateral, and the Project would go forward even if the Southern Indiana Market Lateral is
not constructed. A recent court case suggests the Commission Staff may elect to process
the environmental review of the Project and the Southern Indiana Market Lateral
concurrently. Texas Gas would not object to concurrent environmental review provided
the Project certificate timeline of June 2015 is preserved.
The Western Kentucky Market Lateral will consist of approximately 19 miles of
24-inch-diameter natural gas pipeline extending from an existing lateral of the Texas Gas
system to a combined-cycle natural gas fired power plant currently under construction.
All facilities associated with the Western Kentucky Market Lateral will be located in
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Muhlenberg County, Kentucky. The plant owner will source its gas supplies solely from
existing points on the Texas Gas system south of Kentucky and will not use any capacity
associated with the proposed Project. The Western Kentucky Market Lateral does not
depend on the instant Project or the Southern Indiana Market Lateral, and the Western
Kentucky Market Lateral would go forward even in the absence of both the instant
Project and the Southern Indiana Market Lateral. The Tennessee Valley Authority
(“TVA”) has completed an environmental review of the proposed natural gas fired power
plant that will be served by the Western Kentucky Market Lateral, and the TVA’s
Environmental Assessment (“EA”) included an analysis of the potential impacts of the
pipeline lateral that will be connected to the plant. The EA concluded that the approval
of the power plant would not be a major federal action significantly affecting the
environment.15
In order to aid the Commission’s review of the Project, Texas Gas has included a
discussion of the acreage impacts associated with the Southern Indiana Market Lateral
and the Western Kentucky Market Lateral in Resource Report 1, Appendix 1F of this
Application. The environmental impacts of these other two projects would occur in areas
geographically remote from the counties affected by the Project facilities, so that those
projects will not create cumulative impacts with the instant Project. Even if some of the
impacts are considered cumulative in nature to the Project’s impacts, those impacts
would be limited given the minimal amount of construction associated with the Project.
15 See Final Environmental Assessment, Paradise Fossil Plant Units 1 and 2 Mercury and Air Toxics Standards Compliance Project, http://www.tva.com/environment/reports/pafmats/pdf/final/ParadiseFEA.pdf.
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Texas Gas has also conducted a binding open season for a potential Northern
Supply Access Project soliciting support for the construction and modification of
aboveground facilities along the Texas Gas mainline to provide additional new capacity
for north to south transportation. The extent of the Northern Supply Access Project, its
scope, and timing are currently unknown, but it is likely to include upgrades to Texas
Gas’ system to facilitate necessary additional station reversals. Although the Northern
Supply Access Project would have some overlap with the Project on the mainline
capacity, the Northern Supply Access Project would be incremental to the proposed
Project, and the construction schedule and in-service dates would be offset from the
proposed Project by more than one year. The project scope of the Northern Supply
Access Project is still unknown, as the necessary facilities have not been determined, and
the potential impacts of the project are unidentifiable.
Texas Gas also has an obsolescence replacement of its Turbine T-1 at the
Columbia Compressor Station scheduled for summer 2015. It is contemplated that the
unit will be replaced with a like or similar unit using the same building and foundation.
The project is still in the engineering design stage and acreage impacts associated with
this project are not known and are not included in Resource Report 1, Appendix 1F.
As the potential future projects become more certain, Texas Gas will update the
Project Application to allow for the Commission’s full review of the impacts known at
that time.
X. NOTICES
A form of Notice suitable for publication in the Federal Register, is attached
hereto.
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XI. DESCRIPTION OF EXHIBITS
This is an abbreviated application filed pursuant to Section 157.7 of the
Commission’s regulations under the NGA. Texas Gas has omitted the exhibits and data
that are inapplicable or are unnecessary to fully disclose the nature and extent of this
proposal. A list of exhibits and documents filed with this Application, incorporated by
reference, and omitted with the reasons relied upon are submitted herewith and as
follows:
Exhibit A Articles of Incorporation and Bylaws Filed as Exhibit A in Docket No. CP04-373-000 and incorporated herein by reference.
Exhibit B State Authorization.
Filed as Exhibit B in Docket No. CP04-373-000 and incorporated herein by reference.
Exhibit C Company Officials
Attached. Exhibit D Subsidiaries and Affiliates
Attached. Exhibit E Other Pending Applications and Filings
Omitted. Texas Gas is not aware of any other applications or filings pending before the Commission that might significantly affect the instant application.
Exhibit F Location of Facilities
Attached.
Exhibit F-I Environmental Report The environmental reports are submitted in Volume I-A.
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Exhibits G, Flow Diagrams, Flow Diagrams Reflecting Maximum G-I, and G-II Capabilities, and Flow Diagram Data
Exhibits G, G-I and G-II are submitted in Volume III, and labeled as Contains Critical Energy Infrastructure Information – Do Not Release (CEII) as defined in 18 C.F.R. § 388.113(c).
Exhibit H Total Gas Supply Omitted. See Exhibit I.
Exhibit I Market Data The precedent agreements are submitted in Volume II and designated as Privileged Information – Do Not Release as they contain sensitive commercial information.
Exhibit J Federal Authorizations Attached.
Exhibit K Cost of Facilities Attached.
Exhibit L Financing Omitted. Texas Gas will finance the proposed construction with funds generated internally, and through borrowings, bond offerings, and/or equity offerings.
Exhibit M Construction, Operation, and Management
Omitted. Texas Gas will construct or cause to be constructed, own, operate, and maintain the proposed facilities.
Exhibit N Revenues, Expenses and Income
Attached.
Exhibit O Depreciation and Depletion Omitted. Depreciation is reflected in Exhibit N.
Exhibit P Tariff Omitted.
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XII. WAIVER OF INITIAL DECISION
Texas Gas requests that the Commission facilitate the processing of this
Application by prompt publication in the Federal Register of Notice of this Application
with a provision that the time for filing protests, petitions to intervene, and notices of
intervention be fixed at the earliest possible date after issuance of the notice and by
implementing the shortened procedures prescribed in Rules 801 and 802 of the
Commission’s Rule of Practice and Procedure.16 If the Commission utilizes such
shortened procedures, Texas Gas waives its rights to an oral hearing and the opportunity
for filing exceptions and requests that the Commission omit the intermediate decision
procedure be omitted.
16 18 C.F.R. § 385.801-802 (2008).
XIV. CONCLUSION
WHEREFORE, Texas Gas requests that, for the reasons set forth herein, the
Commission issue a certificate of public convenience and necessity approving this
proposal on or before June 18, 2015; (i) authorizing Texas Gas to construct, own, operate,
and maintain the Project facilities; (ii) granting a predetermination that Texas Gas may
roll-in the costs of the Project facilities into its Commission-approved rates in its next
general rate proceeding; and (iii) granting any and all waivers, authority, and relief
necessary to implement this proposal.
Respectfully submitted,
TEXAS GAS TRANSMISSION, LLC
J. Kyle Stephens Vice President, Regulatory Affairs & Rates
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