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CP12-491-000 PDF

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145 FERC ¶ 61,108 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners: Jon Wellinghoff, Chairman; Philip D. Moeller, John R. Norris, Cheryl A. LaFleur, and Tony Clark. Trunkline Gas Company, LLC Docket No. CP12-491-000 ORDER APPROVING ABANDONMENT (Issued November 7, 2013) 1. On July 26, 2012, Trunkline Gas Company, LLC (Trunkline) filed an application for authority under section 7(b) of the Natural Gas Act (NGA)1 to abandon by sale to an affiliate2 approximately 770 miles of mainline transmission pipeline and appurtenant facilities for conversion to oil pipeline transmission service. Trunkline also requested authority to abandon in place certain mainline compression facilities that it would no longer need after the pipeline facilities are abandoned. For the reasons discussed below, the Commission will grant the requested abandonment authorization. I. Background 2. Trunkline, a limited liability company organized and existing under the laws of Delaware, is a natural gas company as defined by section 2(6) of the NGA engaged in the business of transporting natural gas in interstate commerce.3 Trunkline’s interstate pipeline system extends from Texas, Louisiana, and production areas in the Gulf of Mexico, northeast to a principal terminus at the Indiana-Michigan state line near Elkhart, Indiana. Trunkline’s interstate pipeline system extends from points near Premont, Texas and points near Patterson, Louisiana to Trunkline’s Longville, Louisiana compressor 1 15 U.S.C. § 717f(b) (2012). 2 Trunkline indicates that the affiliate will be designated by its parent company, Energy Transfer Equity, L.P. (Energy Transfer). Energy Transfer is the parent of Southern Union Company, which indirectly owns 100 percent of the equity interest in Trunkline. 3 15 U.S.C. § 717a(6) (2012). Docket No. CP12-491-000 - 2 - station and then north through Arkansas, Mississippi, Tennessee, Kentucky, Illinois, and Indiana to its terminus at the Michigan-Indiana border near Vistula, Indiana. 3. Trunkline states that its system was originally constructed in the early 1950s to transport Gulf Coast natural gas production to Panhandle Eastern Pipe Line Company (Panhandle).4 Trunkline subsequently expanded its system to provide additional firm supply service to Panhandle and other Midwest customers, including Ameren Illinois Company (Ameren Illinois)5 and Consumers Power Company (Consumers).6 Trunkline states that as demand increased, it further expanded its system to include mainline loops and extensions into the offshore Gulf Coast area. 4. Trunkline asserts that due to changes in the natural gas industry, its customers began to reduce contract demand in the mid-1980s. Trunkline states that this trend was exacerbated as other pipelines began transporting Canadian natural gas to Midwest markets in the late 1990s. As a result, in 2000, Trunkline’s requested, and was granted, authorization to abandon a portion of Line 100-1 and related facilities, reducing its certificated system-wide mainline transportation service level from 1,810 thousand dekatherms (MDth) per day to its current level of 1,555 MDth per day (2001 Trunkline Abandonment).7 As discussed below, the instant proposal would reduce Trunkline’s ability to provide mainline transportation service by an additional 597 MDth per day, to a total of 958 MDth per day through its Independence, Mississippi compressor station, and from 1,109 MDth per day out of the Texas portion of its system through the Longville, Louisiana compressor station to 920 MDth per day. II. Proposal A. Facilities 5. Trunkline proposes to abandon approximately 770 miles of mainline transmission pipeline and appurtenant facilities by sale to an affiliate to be designated by its parent, Energy Transfer, and abandon in place twelve compressor units. Trunkline states that the affiliate will convert the abandoned pipeline facilities to oil transportation service. 4 Trunkline Application at 7. 5 Ameren Illinois was formerly known as Central Illinois Public Service Company. 6 On May 22, 1959, the Commission authorized a system expansion that included the facilities that Trunkline intends to abandon herein. Trunkline Gas Co., 21 FPC 704 (1959). 7 Trunkline Gas Co., 94 FERC ¶ 61,381 (2001) (2001 Trunkline Abandonment). Docket No. CP12-491-000 - 3 - 6. The facilities Trunkline proposes to abandon include: (1) 45.0 miles of the 24- inch-diameter Line 100-1, extending east from Valve 43-1 near Buna, Texas to the Longville, Louisiana compressor station; (2) 725.5 miles of the 30-inch-diameter Line 100-2, extending northeast from the Longville, Louisiana compressor station to the Tuscola, Illinois compressor station; and (3) twelve compressor units, totaling 15,850 horsepower at compressor stations in Pollock and Epps, Louisiana; Shaw and Independence, Mississippi; and Joppa, Illinois. Trunkline states that the facility abandonments will result in a reduction of its ability to provide winter mainline transportation service from the current level of 1,555 MDth per day to 958 MDth per day through its Independence compressor station and from 1,109 MDth per day to 920 MDth per day out of the Texas portion of its system through the Longville compressor station.8 B. Trunkline’s Explanation of Its Abandonment Request 7. Trunkline states that the interstate natural gas pipeline industry has continued to change since the Commission approved the 2001 Trunkline Abandonment, with new sources of gas supply and additional pipeline infrastructure providing its pipeline customers with alternative service options. Trunkline states that the majority of its major market-area customers have reduced their reliance on Trunkline’s system as compared to long-term firm service levels of previous years.9 8. Trunkline asserts that 90 percent of its market area contract demand can be served by other interstate pipelines. Trunkline notes that after the proposed abandonment, it will continue to serve its core market area north of Tuscola through its remaining looped facilities with access to supplies through Panhandle and Rockies Express Pipeline L.L.C. (Rockies Express). Consequently, Trunkline states that it no longer needs the facilities it intends to abandon for their original purpose, i.e., transporting supply from the Gulf Coast region. 8 Historically, Trunkline calculated its system-wide mainline capacity through its Shaw, Mississippi compressor station. However, increases in Perryville, Louisiana area supply and receipts from the Fayetteville Express Pipeline downstream of the Shaw compressor station have replaced much of the traditional Gulf of Mexico production on Trunkline’s system. For this reason, Trunkline now calculates mainline capacity through its Independence, Mississippi compressor station. Trunkline Application at 4. 9 As an example, Trunkline notes that in the 1970s and 1980s Consumers had a firm service contract demand of 700 MDth per day. Trunkline states that after the 2001 Trunkline Abandonment, Consumers, still its largest firm shipper, had a total contract demand of 336 MDth per day. Trunkline further states that as of November 1, 2012, Consumers held firm service entitlements of 100 MDth per day in winter months and 200 MDth per day in the summer. Trunkline Application at 8-9. Docket No. CP12-491-000 - 4 - 9. In support of its proposed abandonment, Trunkline asserts that there is excess pipeline capacity available in the Midwest,10 enhanced by recently constructed projects such as Rockies Express.11 Trunkline contends that there is currently 32,609 million cubic feet (MMcf) per day of capacity existing on pipelines from the Gulf of Mexico region and 47,813 MMcf per day existing on pipelines from Southwest production areas, including Trunkline’s production areas in Texas and Louisiana.12 Trunkline also asserts that over 35 percent of the demand in the Northeast was supplied from the Marcellus and Utica shale production areas, as compared to less than 15 percent just two years ago.13 Trunkline contends that as a result, pipelines that have historically delivered gas into the Northeast from the Gulf Coast, such as Texas Eastern Transmission, LP (Texas Eastern) and Tennessee Gas Pipeline Company, L.L.C. (Tennessee Gas), are now transporting this new supply source. Trunkline explains that lower utilization of the Gulf-to-Northeast path on these systems frees up capacity that now competes for Midwest markets. 10. In addition, Trunkline contends that because of the excess capacity described above, it must offer firm service at substantially discounted rates in order to maintain capacity under contract. Trunkline notes that at the time of the 2001 Trunkline Abandonment, it was discounting over 90 percent of its firm maximum daily quantities.14 Trunkline asserts that the two open seasons it held in 2012, resulting in no requests for long-term firm service, and two requests to turn back existing discounted firm service, confirms that there is no additional demand for annual long-term firm transportation on its facilities. 11. Trunkline asserts that there is a limited natural gas market for the capacity it proposes to abandon. Trunkline asserts that Consumers has steadily reduced its capacity 10 Trunkline states that its primary market area is located in the Midwestern states of Illinois, Indiana, Michigan, and parts of Tennessee. 11 Trunkline states that Rockies Express can transport up to 1,800 million cubic feet (MMcf) per day. 12 Trunkline Application at 10 (citing the U.S. Energy Information Administration’s U.S. State-to-State Capacity report). 13 Trunkline Application at 11 (citing the Commission’s April 2012 Northeast Market Snapshot Report). 14 Trunkline states that over the past several years, the level of discounted firm quantities has varied from approximately 83 to 91 percent. Trunkline Application at Exhibit Z-3. Docket No. CP12-491-000 - 5 - demand over the years.15 Trunkline also states that Ameren Illinois has consolidated its operations with affiliated local distribution companies, giving it multiple pipeline options that did not previously exist.16 Trunkline states that for many years it was one of two pipeline options for Memphis Light, Gas and Water (Memphis Light) and that Memphis Light held significant capacity on Trunkline. Trunkline states that in 2004, however, ANR Pipeline Company (ANR) constructed a delivery meter to Memphis Light and that Memphis Light’s annual 80 MDth per day contract with Trunkline expired on March 31, 2012.17 III. Notice, Interventions, Comments, Protests, and Answers 12. Notice of Trunkline’s application was published in the Federal Register on August 14, 2012.18 The intervenors identified in Appendix A filed timely, unopposed motions to intervene.19 13. The Illinois Commerce Commission, Liberty Energy (Midstates) Corp, Memphis Light, and Northern Illinois Gas Company d/b/a Nicor Gas Company filed late motions to intervene. The entities filing the untimely motions to intervene have demonstrated an interest in this proceeding and granting their motions will not delay, disrupt, or unfairly prejudice any parties to the proceeding. Thus, the Commission will grant the untimely motions to intervene.20 14. As indicated in Appendix A, certain parties filed comments with their motions to intervene. In addition, several landowners, two U.S. Senators and twelve Members of Congress (jointly) (Congressional Delegation), and state and federal agencies filed 15 Consumers is a public utility and a firm transportation customer of Trunkline. 16 Ameren Illinois can be served by eight other interstate pipelines. Trunkline Application at 13. 17 Trunkline states the expiring contract was replaced with a winter-only agreement for 20 MDth per day. Trunkline Application at 13, Trunkline February 26, 2013 Data Response at 3. 18 77 Fed. Reg. 48,509 (2012). 19 Timely, unopposed motions to intervene are granted by operation of Rule 214 of the Commission’s regulations. 18 C.F.R. § 385.214 (2013). 20 18 C.F.R. § 385.214(d) (2013). Docket No. CP12-491-000 - 6 - comments on Trunkline’s proposal. These commenters are identified in Appendix B to this order.21 15. Ameren Services Company (Ameren), the Association of Businesses Advocating Tariff Equity (ABATE), Consumers, the Governor of Michigan, Rick Snyder (Governor of Michigan), the Michigan Public Service Commission (Michigan PSC), and the Tennessee Valley Authority (TVA) protested the application.22 The protestors object to the proposed abandonment, arguing that: (1) Trunkline’s open-season procedures were improper; (2) Trunkline will be unable to meet existing service obligations and future service demands in the Midwest; (3) the proposed abandonment will have a detrimental effect on the continuity of service provided by Trunkline; (4) the proposed abandonment raises rate issues that should be addressed; and (5) the Commission should convene a technical conference or evidentiary hearing to address the protestors’ concerns. 16. Trunkline filed an answer to the protests and comments, and Consumers filed an answer to Trunkline’s answer. Trunkline and Consumers each filed subsequent answers. Rule 213(a)(2) of our regulations prohibits answers to protests and answers to answers unless otherwise ordered by the decisional authority.23 The Commission finds good cause to waive Rule 213(a) and admit these answers because doing so will not cause undue delay and the pleadings may assist the Commission in its decision making process. The protests and answers are addressed below. IV. Discussion 17. Since Trunkline proposes to abandon certificated facilities used for the transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission, the proposal is subject to the requirements of section 7(b) of the NGA.24 21 On December 19, 2012, ProLiance filed out-of-time supplemental comments. On December 21, 2012, Trunkline filed an answer asking the Commission to reject the late comments. The Commission will accept Proliance’s late-filed comments as they do not unduly prejudice or delay the proceeding. 22 LeCompte-Hall, L.L.C. filed a protest that was subsequently withdrawn. 23 18 C.F.R. § 385.213(a)(2) (2013). 24 15 U.S.C. § 717f(b) (2012). Docket No. CP12-491-000 - 7 - A. Open Season Procedures 18. To gauge the demand for available capacity on its pipeline system, Trunkline held two open seasons from March 23 through April 20, 2012, soliciting bids for long-term firm transportation capacity and offers from existing shippers to turn back capacity to Trunkline.25 Trunkline states that it received no requests for long-term firm service and that two shippers submitted requests to turn back existing discounted firm capacity. Trunkline asserts that the open-season results confirm that there is no additional demand for annual long-term firm transportation on its facilities and that its shippers’ needs for additional transportation are being met by other means. 19. In its protest, TVA states that because it was unaware of Trunkline’s abandonment plan prior to the turn-back solicitation, it had no reason to evaluate its existing long-term firm contracts.26 TVA further states that it would have entered into discussions with Trunkline regarding reliability impacts, if it had known that Trunkline’s turn-back solicitation had been related to a potential proposal to abandon facilities. TVA specifically asks the Commission to require Trunkline to hold a new turn-back solicitation.27 20. In a January 9, 2013 data request, Commission staff asked Trunkline to hold a supplemental open season because at the time of the 2012 open seasons, Trunkline did not indicate that a proposal to abandon capacity would be submitted to the Commission if expiring contracts were not renewed. The data request stated that the additional open season would help staff assess the strength of demand among those protesting the abandonment application, as well as other shippers. Trunkline held a supplemental open season from January 18 through February 1, 2013. No bids were received. 25 Trunkline Application at Exhibit Z-5. 26 TVA August 29, 2012 Protest at 2-3. TVA is an electricity provider owned by the federal government that has multiple long-term firm contracts on Trunkline’s pipeline used to serve its Lagoon Creek facility in Haywood County, Tennessee. 27 It appears that at least some of Trunkline’s customers were aware of Trunkline’s abandonment plans at the time of the open seasons. In its discussion about the two open seasons held by Trunkline in 2012, Consumers asserts “[i]t is no surprise that, knowing the reliability/degradation of service issues that would result from the proposed abandonment” that Trunkline’s customers were unwilling to enter into contracts for long- term firm service. Consumers August 29, 2012 Protest at 7. The protestors’ concerns about the post-abandonment reliability of service on Trunkline’s system are addressed below. Docket No. CP12-491-000 - 8 - 21. Consumers states that it agrees with Commission staff’s decision to ask Trunkline to hold a supplemental open season.28 However, Consumers asserts that the results of the supplemental open season do not accurately reflect the strength of demand for capacity on Trunkline’s system. Consumers contends that once Trunkline announced its intention to abandon 38 percent of its current mainline capacity, Trunkline’s shippers had no choice but to seek other options to meet their obligations to their customers. Consumers states that it wants to maintain its historical commercial relationship with Trunkline, but notes that it is not interested in paying the maximum rate to Trunkline for firm service that it asserts will not be as reliable post-abandonment as the service currently being provided.29 Consumers contends that there is no mechanism to accurately gauge the strength of demand on Trunkline’s system, and that the appropriate remedy is for the Commission to deny Trunkline’s abandonment application. Commission Response 22. As TVA requested, Trunkline held a supplemental open season. To the extent that TVA wished to enter into a long-term firm service agreement with Trunkline for additional capacity or turn back existing contracted-for service after learning of Trunkline’s abandonment plan, TVA could have done so during that time. The Commission disagrees with Consumers’ characterization of open seasons held in relation to an abandonment proposal as being essentially either too early or too late, depending on whether customers are aware of the abandonment plans. The use of results from open seasons to demonstrate the existence or lack of demand is standard in abandonment proceedings.30 In this case, open seasons were held both before and after Trunkline filed its abandonment request and, under both scenarios, Trunkline received no requests for long-term firm service. The Commission finds the original and supplemental open seasons held by Trunkline to be sufficient and proper to assess the strength of demand for available capacity on its pipeline system. 28 Consumers February 4, 2013 Answer at 6. 29 Id. at 6-7. 30 See e.g., El Paso Natural Gas Co., 136 FERC ¶ 61,180, at P 26 (2011) (recognizing an open season where no customers bid on available capacity as support for El Paso’s claim that there will be no future impact on firm transportation services as a result of the proposed abandonment). See also, Transwestern Pipeline Co. L.L.C., 140 FERC ¶ 61,147, at PP 16-17 (2012) (finding that Transwestern’s open season results demonstrate that there is little or no demand for additional firm service on the looped lateral Transwestern proposed to partially abandon). Docket No. CP12-491-000 - 9 - B. Public Convenience or Necessity 23. Section 7(b) of the NGA31 provides that an interstate pipeline company may abandon jurisdictional facilities or services if the Commission finds the abandonment is permitted by the “present or future public convenience or necessity.” The courts have explained that in considering the criteria for abandonment under section 7(b), two important principles apply: (1) a pipeline which has obtained a certificate of public convenience and necessity to serve a particular market has an obligation, deeply embedded in the law, to continue to serve; and (2) the burden of proof is on the applicant to show that the public convenience or necessity permits abandonment, that is, that the public interest will in no way be disserved by abandonment.32 This does not mean, however, that abandonment is not permitted if there is any harm to any narrow interest. Rather, the Commission takes a broad view in abandonment proceedings and evaluates abandonment proposals against the benefits to the market as a whole.33 24. The Commission examines abandonment applications on a case-by-case basis. In deciding whether a proposed abandonment is warranted, the Commission considers all relevant factors, but the criteria vary as the circumstances of the abandonment proposal vary. Historically, in reviewing a request for abandonment by sale, the Commission has considered: the needs of the natural gas systems and the public markets served, the environmental effects of the proposed abandonment, the economic effect on the pipelines and their customers, the presumption in favor of continued service, and the relative diligence of the respective pipelines in providing for adequate natural gas supplies.34 The Commission also weighs the claimed benefits of the abandonment against any detriments. 31 15 U.S.C. § 717f(b) (2012). 32 See Transcontinental Gas Pipe Line Corp. v. FPC, 488 F.2d 1325, 1328 (D.C. Cir. 1973); Michigan Consolidated Gas Co. v. FPC, 283 F.2d 204, 214 (D.C. Cir. 1960). 33 See Southern Natural Gas Co., 50 FERC ¶ 61,081, at 61,222 (1990). See also Consolidated Edison Co. v. FERC, 823 F.2d 630, 643-44 (D.C. Cir. 1987) (“We agree with [the Commission] that the ‘public convenience and necessity’ language of the NGA’s abandonment provision [cite omitted] envisions agency policy-making to fit the regulatory climate.”). 34 Southern Natural Gas Co., 126 FERC ¶ 61,246, at P 27 (2009). Docket No. CP12-491-000 - 10 - 1. Impact on Current Customers a. Ability to Meet Contract Demands 25. Trunkline asserts that its proposal will result in no interruption, reduction, or termination of any firm natural gas transportation services it currently provides.35 Trunkline states that on its proposed date of abandonment, November 1, 2013, it will have sufficient capacity to transport all of its firm commitments on the pipeline facilities that will remain after abandonment. Specifically, Trunkline states that its customers’ firm commitments for November 1, 2013, are 953 MDth per day. This service commitment level is below Trunkline’s proposed post-abandonment system capacity of 958 MDth per day. 26. Further, Trunkline notes that its actual pipeline utilization averages 45 to 70 percent of capacity under contract.36 Given these utilization levels, Trunkline states that it expects to be able to continue to provide interruptible transportation in addition to providing contracted-for firm service. Trunkline states that consistent with the principles expressed in the 2001 Trunkline Abandonment order, the proposed abandonment will maintain the “optimum amount of capacity to meet demand, while avoiding unneeded capacity.”37 27. Consumers,38 Laclede,39 and ProLiance40 express concern that Trunkline may have difficulties fulfilling its contractual delivery obligations. ProLiance states that the Commission should scrutinize whether Trunkline will have sufficient capacity to meet the demands of its firm shippers in the future.41 Laclede states that it relies on the 35 Trunkline Application at 18. 36 Trunkline Application at 9, noting that the percentage range is based on monthly averages over five years. 37 Trunkline September 14, 2012 Answer at 7 (citing 2001 Trunkline Abandonment, 94 FERC at 62,420). 38 Consumers February 4, 2013 Answer at 2-4. 39 Laclede August 29, 2012 Comments at 4. Laclede is a public utility engaged in natural gas retail distribution to residential, commercial, and industrial customers in St. Louis and Eastern Missouri. 40 ProLiance August 29, 2012 Comments at 3. 41 Id.

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pipeline and appurtenant facilities by sale to an affiliate to be designated by its parent,. Energy Transfer, and abandon in place twelve compressor
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Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.