FERC gives Kern River project speedy approval

From today's Gas Daily:

***FERC gives Kern River project speedy approval

Only three weeks after receiving the certificate application, FERC
Friday granted Kern River Gas Transmission authority to proceed
with a 135 million cfd expansion of its system that will move new
gas supplies from Wyoming to California. The unprecedented speed in
which FERC completed its review of the $81 million project grew out
of the commission's desire to address the energy crisis in
California, which is expected to worsen this summer in light of
forecasts for continued high gas prices and shortages of power
generation capacity.
FERC typically takes several months to complete the review
process of a pipeline project application of similar size to Kern
River's, a FERC spokeswoman said. But the commission said its staff
was able to successfully coordinate regulatory efforts with
federal and state agencies to ensure Kern River's application
process moved expeditiously.
"We are pleased the FERC has fast-tracked this application," said
Kirk Morgan, director of business development for Kern River. "We
are looking at every option to bring additional supplies of natural
gas to the California market in time for the summer cooling
season," he said.
The expansion will include three new "emergency" compressor
stations: the Elberta Compressor Station in Utah County, Utah; the
Veyo Compressor station in Washington County, Utah; and the
Daggett Compressor Station in San Bernardino County, Calif. The
installation of these new facilities -- which have been approved by
various permitting agencies in Wyoming, Utah, Nevada and California
-- will boost capacity on the system by 19%, Kern River said.
The proposal also included upgrades at three existing
compressor stations: the Muddy Creek Compressor Station in
Lincoln County, Wyo., the Fillmore Compressor Station in Millard
County, Utah; and the Goodsprings Compressor Station in Clark
County, Nev. The plan also included an upgrade of the existing
Wheeler Ridge Meter Station in Kern County, Calif. Kern River said
Friday that the expansion's expected in-service date is July 23.
"Our rapid certification of these facilities is evidence that we
are prepared to do whatever we can to rush supplies to the West
Coast markets," FERC Chairman Curt Hebert said in a statement
Friday. "My fellow commissioners, William L. Massey and Linda K.
Breathitt, pulled together, with staff's assistance, to give priority
to the West's energy needs."
Although she voted to approve the certificate, Breathitt wasn't
completely happy with the process involved in permitting. "[I]t has
been somewhat difficult for me to view Kern River's 'California
Action' project as being one that necessarily merits the kind of
extraordinary regulatory treatment that we have granted the
applicant in this case," Breathitt wrote in a partial dissent. "My
hesitation does not come only from the fact that Kern River has
pending before this commission a very similar proposal in which
the parties have raised valid concerns that would pertain to any
expansion of Kern River."
In a separate proceeding, Kern River, a subsidiary of Williams,
filed an application with FERC last year for permission to add
124,500 dth/d of firm transportation service, which is scheduled
to go into service May 1, 2002. Breathitt argued that it would have
made more sense for the commission to have considered the two
applications at the same time.
But she also stressed that, because of capacity constraints at
the Wheeler Ridge, Calif., interconnections with the intrastate
distribution systems of Southern California Gas and Pacific Gas and
Electric, the Kern River expansion may not benefit its intended
beneficiaries -- power plant operators. "[T]he record of this
proceeding is inadequate for the commission to independently
assess the congestion issues at Wheeler Ridge," she said. "I am very
uncomfortable that this order does not take the opportunity for a
fuller airing of this issue."
Breathitt argued that FERC's order will not necessarily result
in any net increase of gas in the California marketplace because of
the congestion at Wheeler Ridge.
Intervenors in the case, she noted, have alleged that insufficient
take-away capacity at Wheeler Ridge and the resulting degradation of
firm shippers' rights will place them in a situation analogous to
the type of capacity rights controversy that FERC recently
addressed at the Topock delivery point.
She praised FERC staff for meeting the compressed deadlines in
the order, but she also said, "The precedent we have created could
be a double-edged sword. What signals does this order really send?
Will the commission be able to keep up this pace on other pending
'emergency' expansion applications?" (CP01-106) MH/CD