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FERC approves Texas pipeline agreement among Kinder Morgan subsidiaries

Kinder Morgan Inc. units received federal authorization for a lease of 100,000 Dth/d of natural gas pipeline capacity in southern Texas that will be used to serve markets in Mexico.

The Federal Energy Regulatory Commission issued a certificate order May 17 that allows Tennessee Gas Pipeline Co. to lease the capacity from Kinder Morgan Border Pipeline LP and Kinder Morgan Tejas Pipeline LLC. Tennessee will use the leased gas supplies to provide transportation to GDF Suez Mexico Comercializadora S de RL de CV, a shipper on the system.

FERC also issued Border and Tejas, which are intrastate pipeline companies, limited jurisdiction certificates that permit the lease but otherwise exempt their state-regulated pipeline system from the commission's jurisdiction.

Tennessee estimated that the construction of additional pipeline looping and compression on its system to create capacity for GDF Suez would cost approximately $168 million, significantly more than the cost of the lease, which requires no new facilities. Tennessee will pay Tejas and Border a monthly lease fee of $608,333 for the capacity, according to a FERC document. GDF Suez will reimburse the monthly fee for the lease, which is less than Border's and Tejas' transportation rate for $0.2236/MMbtu for comparable service. The lease is for an initial five-year term, with an option for Tennessee to extend the agreement.

Tennessee submitted a joint application for the lease authorization with Border and Tejas on Jan. 15. (FERC docket CP18-48)