US FERC approves 223 MMcf/d Millennium Pipeline expansion in New York

Washington (Platts)--29 Nov 2017 519 pm EST/2219 GMT

Millennium Pipeline has received certificate approval from the US Federal Energy Regulatory Commission for the Eastern System Upgrade project, which would add 223 MMcf/d of capacity on the eastern end of its system in New York.

The project will increase capacity along the constrained portion of Millennium's system, specifically from the Corning Compressor station in Steuben County to the interconnect with Algonquin Gas Transmission at Ramapo in Rockland County.

By alleviating this constraint, production within the area will have the potential to increase and deliver more gas into Algonquin, according to Platts Analytics' Bentek Energy. The increase in deliveries will in turn place downward pressure on AGT city-gate prices.

The project entails a roughly 7.8-mile-long, 30- to 36-inch-diameter loop in Orange County known as the Huguenot Loop, two new 24,000 hp compressor stations in Sullivan and Delaware counties and other modifications to existing Millennium stations.

Millennium has precedent agreements with nine shippers, all of which are local distribution companies or municipalities, for about 91% of the capacity and is marketing the remaining 20,500 Dt/d, according to FERC's certificate order (CP16-486), issued late Tuesday.

Unlike Millennium's Valley Lateral project, which has been caught up in a legal tangle between FERC and the New York State Department of Environmental Quality over a water quality certificate, the Eastern System Upgrade has already received air and water quality approval from the state agency.

Construction of the Valley Lateral, which would serve a new power plant, was held up when the 2nd US Court of Appeals on November 2 granted an administrative stay of the notice to proceed with construction, at the request of the DEC.

In granting approval for the Eastern System Upgrade, FERC found Millennium had taken sufficient steps to minimize harm to landowners and communities. For instance, it noted 88% of the Huguenot Loop would be within existing rights of way.

It rejected arguments presented by the Delaware Riverkeeper Network -- including through a report by Accufacts -- that the 36-diameter portion of the Huguenot Loop was larger than needed for the project. FERC's staff's review of pipeline hydraulic flow models found that "Millennium properly designed its facilities to provide an additional 223,000 Dt/d of new firm transportation service to meet the requirements of its expansion shippers while operating under winter and summer design conditions and meeting all other contractual obligations and minimum delivery pressures."

FERC also countered arguments from Delaware Riverkeeper that the commission had improperly segmented its National Environmental Policy Act review by not considering the project alongside the Valley Lateral.

"In this case, the projects will not result in a single pipeline or one that is linearly, physically or functionally interdependent," the commission said.

While taking note of multiple comments opposing the project, FERC said that its environmental assessment found the upgrade will have no significant impacts.

The certificate order also addressed at length arguments about the scope of FERC's analysis of greenhouse gas emissions, an area of active litigation challenging pipeline projects.

While maintaining that upstream greenhouse gas emissions are not mandated as part of FERC's NEPA review, the commission nonetheless provided upper bound estimates for upstream GHG emissions of 180,000 mt/year CO2 equivalent from extraction, 350,000 mt/year CO2 equivalent from processing and 57,000 mt/year CO2 equivalent from the upstream non-project pipelines.

Citing a prior federal appeals court ruling that found one of its environmental reports to be inadequate, FERC also pointed out that, in this case, its final environmental assessment estimated that if all 223,000 Dt/d of gas were transported to combustion end uses, downstream emissions would reach about 4.3 million mt/year of CO2.

Opponents to the project, including Delaware Riverkeeper, were already promising legal challenges.

Millennium spokeswoman Michelle Hook Wednesday welcomed the certificate and said the company is working on an implementation plan to begin construction.

"FERC did a thorough job on the order and fully addressed objections raised by opponents," she said.

--Maya Weber,

--Jack Winters,

--Edited by Richard Rubin,

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