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NGPL expansion in Texas that will serve LNG exports can begin construction: FERC

Highlights

Local opponents have pushed for Eastern project delays amid health crisis

Regulators promise work will continue, even as some deadlines extended

Houston — Kinder Morgan's Natural Gas Pipeline Company of America can start construction of its Gulf Coast Southbound project in Texas, the Federal Energy Regulatory Commission said Tuesday.

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The approval was the latest sign that regulators are allowing gas infrastructure to move forward over fierce objections of local opponents as the coronavirus pandemic threatens worker safety. During a teleconference with reporters March 19, the commission's chairman said FERC's work would not be slowed by efforts to control the spread of the coronavirus.

Several projects, including Gulf Coast Southbound, are being designed to feed gas to LNG export facilities. Even as the health scare shifts trade flows, disrupting some construction efforts and depressing commercial activity, US liquefaction facilities have recently been seeing robust utilization. Low input and shipping costs continue to make deliveries to some regions economic.

The compression-based expansion of NGPL's Gulf Coast Mainline natural gas system will boost supplies to Cheniere Energy's LNG terminal near Corpus Christi. It will enable the system to provide 300,000 Dt/d of firm southbound transportation capacity to Corpus Christi Liquefaction. It would also allow NGPL to make 28,000 Dt/d available to the market.

The project, which received certificate authorization February 21, will include a new 10,000-horsepower compressor unit and related facilities at a compressor station in Victoria County, Texas; a new 15,900-hp turbine at a station in Wharton County, Texas; and two new 23,470-hp turbines at a station in Harrison County, Texas. NGPL also plans to abandon in place some existing compressor units at two of those stations.

The same pipeline system also provides a backbone of feedgas to Cheniere's Sabine Pass LNG export terminal in Louisiana. Cheniere operates two trains at Corpus Christi and is building a third there; It operators five trains at Sabine Pass and is building a sixth there.

The approval of construction on the NGPL expansion is affirmation that FERC is keeping pipeline construction going. The agency is also addressing ratemaking issues in a way that will give operators some breathing room.

On Monday, FERC ordered a public hearing to be held on a request by Williams' Transcontinental Gas Pipe Line to revise tariff rules to address shortfalls in which its costs have exceeded revenues. The operator is concerned that, given current gas prices and projections for future gas prices, it will continue to accumulate losses through its cash-out reconciliation mechanism for the next several years.

"We find that there are material issues of fact in dispute that cannot be resolved based upon the record before us, and which are best addressed in a hearing," FERC said.

ALLIANCE PIPELINE

Also Monday, FERC granted an Alliance Pipeline request to extend the deadline to file a Section 4 rate case by 60 days. A contested settlement approved in 2016 required Alliance to file its rate case by Wednesday.

Alliance stated that, due to the spread of the coronavirus, the sudden transition of workers to remote environments hampered the operator's ability to prepare the filing on the agreed schedule.

"Alliance notes that the Section 4 rate case will include a proposed rate increase and, for that reason, amending the settlement to extend the time for Alliance to file the Section 4 rate case will not prejudice Alliance's shippers from an earlier realization of reduced rates," FERC said.