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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