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Cited as "1 FE Para. 70,261" Cited as "1 FE Para. 70,261"
Tennessee Gas Pipeline Company (ERA Docket No. 87-28-NG), October 31,
1989.
DOE/FE Opinion and Order No. 195-B
Final Opinion and Order Granting Authorization to Import Natural Gas from
Canada
I. Background
On October 9, 1987, the Economic Regulatory Administration (ERA) 1/ of
the Department of Energy (DOE) issued DOE/ERA Opinion and Order 195 (Order
195) 2/ authorizing Tennessee Gas Pipeline Company (Tennessee) to import from
Canada up to 5,000 Mcf of natural gas per day during the period November 1,
1987, through October 31, 1988. Order 195 conditionally authorized Tennessee
to import up to 29,900 Mcf of Canadian gas per day during the period November
1, 1988, through October 31, 1989, up to 79,700 Mcf of Canadian gas per day
during the period November 1, 1989, through October 31, 1990, and up to
125,000 Mcf per day thereafter through October 31, 2002. The gas would be
purchased from KannGaz Producers Ltd. (KannGaz) for Tennessee's system supply
and would be delivered to Tennessee through an existing interconnection with
TransCanada PipeLines Limited (TransCanada) near Niagara Falls, New York. The
first year import volumes could be imported by Tennessee through existing
pipeline facilities. The ERA conditioned authorization for imports above 5,000
Mcf per day on the issuance of a final ERA opinion and order after review by
the DOE of the Federal Energy Regulatory Commission's (FERC) environmental
analysis and completion of the DOE's National Environmental Policy Act of 1969
(NEPA) 3/ responsibilities in connection with the new facilities required for
the transportation of the additional authorized volumes.
FERC's environmental analysis responsibilities necessitated the
preparation of a Final Environmental Impact Statement (FEIS) by FERC which
assessed the impacts of the additional facilities proposed by Tennessee to
increase the pressure on its Niagara Spur pipeline and northern No. 200
mainline to enable receipt of the remaining import volumes from KannGaz and
move them from the Niagara Spur through its mainline.4/ The FEIS was issued
July 8, 1988.5/
On July 15, 1988, at the request of Tennessee, the ERA issued DOE/ERA
Opinion and Order No. 195-A 6/ removing the condition imposed on the
importation of 29,900 Mcf per day during the period November 1, 1988, to October 31, 1989. That action was based on Tennessee's showing that two
existing compressors required to transport the additional imports that had
been operated under temporary authority at its station 233 and 230-B
compressor installations were authorized for permanent operation by the FERC
on June 30, 1988.7/ The authority to operate those existing compressors on a
permanent basis provided Tennessee with sufficient capacity to move the
additional 29,900 Mcf per day of authorized import into its system on November
1, 1988.
On February 23, 1989, Tennessee filed a request that Order 195 again be
modified to remove the NEPA related conditions stated in Ordering Paragraphs B
and D thereof.8/ In support of its request, Tennessee asserts that all the
environmental information necessary to remove the conditions is included in
the aforementioned FERC FEIS for the Ocean State Power Project. Tennessee
notes that the FERC issued an order on October 3, 1988, granting a certificate
of public convenience and necessity authorizing Tennessee to construct and
operate facilities on its Niagara Spur and on its mainline in order to
transport the volumes of natural gas to be purchased under the KannGaz
contract.9/ A FERC order on rehearing issued November 29, 1988, slightly
modified the initial order but did not affect the proposed construction of the
new facilities.10/ In issuing its certification of the construction and
operation of the new facilities, the FERC relied on the July 8, 1988, FEIS in
assessing the environmental impacts of the proposed construction. Tennessee
states that it proposes, beginning on November 1, 1989, to use the facilities
on its Niagara Spur identified in the FEIS and permitted by FERC's certificate
of public convenience and necessity to transport the additional imported
volumes into its system. Accordingly, Tennessee submits that the FERC's FEIS
contains all the information required for a determination to remove the NEPA
condition imposed on the remaining increments of its import authority.
II. Decision
Under section 3 of the Natural Gas Act (NGA) an application to import
natural gas must be approved unless, after opportunity for hearing, it is
found that the import "will not be consistent with the public interests." 11/
The Office of Fossil Energy (FE) is guided in making its determination by the
DOE's natural gas import policy guidelines.12/ Under this policy, the
competitiveness of an import in the markets served is the primary
consideration for meeting the public interest test. In the case of long-term
arrangements such as this, need for the gas supply and security of supply are
also important considerations. In addition, NEPA requires FE to consider the
environmental effects of natural gas import authorizations. A. Environmental Considerations
The FERC was the lead Federal agency in conducting an examination of the
environmental effects of constructing Tennessee's additional Niagara Spur
pipeline facilities and preparing the FEIS. The FERC has the responsibility
under section 7 of the NGA to certificate the pipeline facilities supplying
the gas. The DOE participated as a cooperating agency during the preparation
of the FEIS. After the FEIS was issued by the FERC it was adopted by the
DOE.13/ FE relied on the FEIS in assessing the environmental effects of
granting or denying Tennessee's import.
If FE denied this application for importing gas to the Northeast U.S.,
Tennessee would need to look elsewhere for an alternative supply of gas to
meet the expected future requirements of its customers in the region.
Tennessee may be required to construct additional pipeline facilities in other
locations to transport gas supplies from other sources. However, regardless of
whether Tennessee's increased imports are approved, the facility additions
proposed on the Niagara Spur in New York would still take place because they
already have been approved in connection with a Canadian gas import
arrangement that will supply the Ocean State electric generating facilities
that will be built in Rhode Island.14/ Although Ocean State's project and
Tennessee's application in this docket are independent import projects, the
two proposals are dependent on the expansion by Tennessee of its Niagara Spur.
The FERC, on October 3, 1988, granted a certificate of public convenience and
necessity authorizing Tennessee to construct and operate facilities on its
Niagara Spur and on its No. 200 mainline in order to transport Canadian gas to
the Ocean State plant and to take delivery of gas for system supply.15/ The
environmental impacts associated with Tennessee's proposed imports and Ocean
State's approved imports would be no different because they are tied to the
same Niagara Spur expansion.16/
Since both projects involve common facilities, the FEIS addressed the
environmental impacts of the transmission facilities proposed by Tennessee, as
well as the new power plant and ancillary facilities proposed by Ocean State.
The FEIS discussed and evaluated the following proposals by Tennessee for
facilities to expand throughput on its Niagara Spur pipeline and No. 200
mainline system to enable it to accommodate the scheduled buildup of contract
volumes authorized to be imported from KannGaz: (1) expand measurement and
odorization facilities at the Lewiston Meter Station at the Niagara River in
Niagara County, New York; (2) convert from temporary to permanent operation
the idle 3,500-horsepower (hp) compressor at Station 233 on Tennessee's
mainline in Livingston County, New York, previously approved by the FERC for
interim service; (3) convert from temporary to permanent operation the idle 1,000-hp compressor at Station 230B on Tennessee's mainline in East Aurora,
New York, at the interconnection of the Niagara Spur and the mainline and add
1,200 hp of compression at Station 230B; and (4) construct a new 4,500-hp
compressor station at Lockport, in Niagara County, New York.
The FEIS concluded that no significant impacts would occur as a result
of the proposed compressor station additions and construction of the new
compressor station. It was recommended, however, that the proposed compressor
additions be designed such that operational compressor noise shall not exceed
Ldn of 55 dBA at any existing noise-sensitive areas nearby (such as hospitals
and residences). We note that the certificate granted by the FERC for the
Ocean State project,17/ was conditioned on the requirement that Tennessee
submit to the FERC post-construction sound level surveys to verify that these
performance goals have been achieved.18/ Tennessee has agreed to the noise
emission limitations.
B. Order 195 and Order 195-A
Orders 195 and 195-A operate as final opinions and orders for requested
import volumes up to 29,900 Mcf per day. Issues ad