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ETP faces tight schedule for construction of 3.25-Bcf/d Rover pipeline

FERC Commissioner Norman Bay's coming resignation could challenge the schedule for Energy Transfer Partners LP's proposed 3.25 Bcf/d Rover natural gas pipeline, which could delay the transport of additional Appalachian supplies to Midwest, Gulf Coast and Canadian markets until 2018, according to the developer and analysts.

"The combination of the March 31 tree clearing deadline and the uncertainty around getting the FERC order makes a Rover delay very likely," Height Securities LLC analyst Katie Bays said in an interview on Jan. 27.

Energy Transfer's Rover Pipeline LLC must now attempt to get Bay to sign a certificate order before he leaves the commission on Feb. 3. If an order is not issued by that date and if FERC is left without a quorum, the project could be delayed until at least 2018. And even if Rover secures a FERC order prior Bay's departure, the company must still complete certain pre-construction activities. One of those activities is clearing trees on approximately 2,918 acres in Michigan, Ohio, Pennsylvania and West Virginia before March 31.

"If you didn't believe there was a delay likely before, you should start being very serious about that," Bays said. Looking at all the work that needs to be done on the project, she said, "I think that really tests the limits of plausibility."

The project was delayed by the commission after ETP demolished in 2016 the Stoneman House, a structure eligible for listing as a historic site. The demolition led FERC to determine that Section 110(k) of the National Historic Preservation Act applied to the situation, and the U.S. Advisory Council on Historic Preservation, or ACHP, recommended that FERC make a determination of adverse effect. In a letter to the commission, ACHP said that such a determination would mean a period of consultations between FERC and state historic preservation offices and other parties, followed by a memorandum of agreement that would document a resolution of any adverse effects from ETP.

"The idea that there is no chance that this whole MOA process is going to have to play out before a decision is reached in the process — dismissing that completely is really, really inappropriate based upon [the ACHP letter]," Bays said. Even if FERC decides not to pursue an adverse effect determination, the commission must still consider the destruction of the house and the commission's liability under Section 110(k) before issuing a decision.

"FERC's main concern is that, whatever decision they reach, they can defend it in court," Bays said, "because they know they're going to court."

Other analysts remained optimistic that Rover might yet secure a certificate order. In a ClearView Energy Partners LLC note on Jan. 30, analysts considered it probable that Bay would sign off on the project before he leaves.

"We have been expecting FERC to issue the [certificate order] for Rover in January, given that there appeared to be no additional correspondence between the [ACHP] and the FERC related to Rover's destruction of an 1840's farmhouse," the note said.

Energy Transfer spokeswoman Vicki Granado was not available for comment by press time. In December 2016, Rover requested that FERC issue a certificate order for the project before the end of 2016, citing concerns for customers and the implications of a year-long delay. Antero Resources Corp., an anchor customer on the project, wrote a letter to the commission in support of the project on Jan. 24. Antero noted that if Rover cannot begin tree-clearing activities by the end of January, then the project is likely to be delayed by a full year. The project has also received support from unions and at least one association supportive of manufacturing and industrial companies.

"Antero has made significant investments related to the Rover project and has relied on the projected construction schedule and in-service dates," the Antero letter said. The project is expected to tap into Utica and Marcellus shale supplies, which Antero anticipates using to transport to liquid markets. "Such a delay would be a hardship on producers who have invested in anticipation of completion of the Rover project in 2017, as well as consumers who will pay more for their natural gas."

The Sierra Club filed an objection with the commission on Jan. 26. The environmental group asked FERC to deny requests for an expedited approval of the project because of what it described as significant impacts to the environment. It also asked the commission to prepare a supplemental final environmental impact statement.

The approximately $4.2 billion project would involve approximately 510 miles of new 24- to 42-inch-diameter pipeline and accessory infrastructure, including 10 compressor stations, 21 meter stations, 78 mainline valves and six tie-ins. Part of the project's capacity, 1.55 Bcf/d, is scheduled to be in-service for July 2017. The second phase of the project, with service to the Dawn Hub in Canada, is scheduled for November 2017. (FERC docket CP15-93)