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FERC approves Transco's Northeast Supply Enhancement gas pipe project

Transcontinental Gas Pipe Line Co. LLC won certificate approval Friday from the Federal Energy Regulatory Commission for its Northeast Supply Enhancement natural gas pipeline project, which would add 400 MMcf/d of incremental supply into New York markets and potentially place downward pressure on Transco Zone 6 pricing.

FERC voted 3-1, with Commissioner Cheryl LaFleur, who represents a key swing vote, welcoming recent additional information the developer provided about the end use of the gas that allowed for more analysis of downstream greenhouse gas emissions.

LaFleur in a concurring statement pointed to Transco estimates that the project would displace 900,000 barrels of oil a year and that the shipper, National Grid USA, plans to convert 8,000 customers per year from No. 2 fuel oil to natural gas as well as provide natural gas service to new development.

The project still faces an important test in New York, which has authority to approve or deny a water quality certification. Gov. Andrew Cuomo has faced pressure from environmentalists and the New York City Council to reject the project as well as requests from developers and others to support the project. National Grid has warned that it would not be able to add gas service to customers in some areas if the project were denied. A New York decision is due mid-May. Approvals are also needed in New Jersey.

The Northeast Supply Enhancement project involves a new compressor station in Somerset County, N.J., as well as installation of about 23.5 miles of pipeline in the New York Bay; 3.5 miles of pipeline in Middlesex County, N.J.; and 10 miles of pipeline in Lancaster County, Pa.

Debate over how far FERC must go to consider downstream greenhouse gas emissions has divided the commissioners in some cases and has been the subject of challenges of some FERC-approved projects in court.

Transco April 24 supplemented the record at FERC with further greenhouse gas calculations.

In her concurring statement, LaFleur also pointed to information provided by National Grid, noting that its mostly residential customers rely on natural gas for basic needs like home heating, cooking and hot water.

"Notably, we also know that this project will displace the use of a more carbon-intensive fuel, No. 2 fuel oil, which will offset some CO2 emissions from the project," LaFleur said in her statement.

She said she appreciated that FERC disclosed information from Transco on downstream end use in the order, but she said that FERC did not quantify or "consider" the downstream emissions. The order instead lists some of the Transco information, describing it as a "hypothetical scenario in which the entire capacity of the project would displace existing or new fuel oil use in New York."

"I am encouraged that parties submitted this information in the record, particularly in light of the commission's asserted inability to ascertain such downstream information," LaFleur said.

Commissioner Richard Glick dissented in part, once again faulting the commission for failing to consider the significance of the project's contribution to climate change. In addition, he said FERC failed to identify reasonably foreseeable indirect effects, despite the added greenhouse gas information provided by Transco.

"Here, we know the location (New York City) and the end-use (a replacement heating source) of the natural gas to be transported, and yet the commission mysteriously concludes that it cannot reasonably foresee the GHG emissions released when the gas is burned — which is, to my knowledge, the only way that natural gas is used to provide heating," he said.

Maya Weber and Jasmin Melvin are reporters for S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.