FERC Approves $972 Million Gas Pipeline Expansion Project

John Jordan | April 1, 2015

fercWASHINGTON, DC—The Federal Energy Regulatory Commission issued a certificate last month to Spectra Energy that authorizes the construction of the $972-million Algonquin Incremental Market Project.

The controversial project was embraced by the region’s building trades, but met some opposition from environmental groups and local politicians.

The Certificate of Public Convenience and Necessity for the expansion of the existing Algonquin gas pipeline, the abandonment of a meter and regulation station in New London, CT and the removal and replacement of some facilities along the 1,127-mile gas pipeline was issued by FERC contingent on Houston-based Spectra Energy meeting a host of conditions.

The project will allow the pipeline to expand its delivery capacity to a maximum of 342,000 dekatherms per day. The pipeline extends from Lambertville and Hanover, NJ and extends through New Jersey, New York, Connecticut, Rhode Island and Massachusetts and ends in the Boston area.

Work on the expansion project involves the construction of approximately 37.4 miles of pipeline and related facilities in New York, Connecticut, and Massachusetts. While Spectra still requires the approval of the New York State Department of Environmental Conservation, the company is hopeful it can begin construction during the second quarter of this year. The Algonquin Incremental Market project, or AIM, is 100% subscribed by major local distribution companies in New England

The plan calls for the replacement of approximately 20.1 miles, in three segments, of 26-inch-diameter pipeline with 42-inch-diameter pipeline in Putnam, Rockland, and Westchester counties in New York State and Fairfield County, CT.

Spectra will also install approximately two miles of 36-inch-diameter pipeline looping in Middlesex and Hartford counties in Connecticut; replace approximately 9.1 miles of 6-inch-diameter pipeline with 16-inch-diameter pipeline on the E-1 System Lateral in New London County, CT; install approximately 1.3 miles of 12-inch-diameter pipeline looping in New London County, CT and install approximately 4.1 miles of 16-inch-diameter pipeline and approximately 0.8 miles of 24-inch-diameter pipeline off its existing I-4 System Lateral in Norfolk and Suffolk counties in Massachusetts.

Algonquin also will add 81,620 horsepower of compression at six compressor stations in New York, Connecticut, and Rhode Island, including the installation of two new 15,900 horsepower natural gas-fired compressor units, restaging one existing compressor unit, installing gas cooling for the new compressor units, and modifying station piping at the Stony Point Compressor Station in Rockland County.

Another local initiative will involve the installation of one new 10,320 horsepower natural gas-fired compressor unit, restaging one existing compressor unit, replacing the compressor body of one existing compressor unit, installing gas cooling for the new compressor unit, and modifying station piping at the Southeast Compressor Station in Putnam County.

Spectra also plans on a number of construction projects at its compressor and meter stations in Connecticut, Rhode Island and Massachusetts. In total, the company plans to modify 24 existing meter stations in New York, Connecticut, and Massachusetts; and remove, replace, or install various pig launcher and receiver facilities, valves and related piping, and pressure regulating facilities in New York, Connecticut, and Massachusetts.

With the approval of the certificate from FERC earlier this month, Spectra has 60 days to submit an implementation plan to the agency that it hopes will lead to a certificate to proceed from FERC., according to Spectra spokesperson Marylee Hanley. She said the firm is finalizing its selection of a construction manager for the project and it will be up to the contractor where and when work will begin. The company expects the expansion project to be on-line by November 2016.

In response to FERC’s approval of the certificate of for the AIM project, Spectra Energy said in a prepared statement, “We are committed to responsible development, reliable operations and respectful, ongoing engagement with the communities we serve as this project continues to move forward. We anticipate receiving a timely notice to proceed and will continue to work with FERC and appropriate regulatory agencies throughout construction so we are able to meet the project’s two-year construction schedule and safely deliver new supplies of much needed domestic natural gas to the Northeast by November 2016.”

At a hearing on Sept. 15, 2014 at the Muriel Morabito Community Center in Cortland, Matthew Pepe, Director of Government Relations of the Construction Industry Council of Westchester & Hudson Valley, Inc. and the Building Contractors Association of Westchester and Mid-Hudson Region, testified in favor of the AIM project.

“Our Associations’ members and their many employees support the AIM project first and foremost because the region’s aging energy infrastructure needs to be updated,” he said. “This project will also create construction jobs, increase the tax base for cash strapped localities and provide cost effective energy for the region.” Pepe was among a host of business and organized labor organizations that attended the FERC hearing and testified in support of the gas pipeline expansion project.

“The AIM Project will put people to work in the Hudson Valley. The men and women you see here tonight from the local Laborers, Operating Engineers and Teamsters truly are local,” he added. “They live in this area, work in this area, buy products and services and pay taxes in this area.”

The news of the FERC approval of the Certificate of Public Convenience and Necessity drew the ire of some project critics, including three Democratic caucus members of the Westchester County Board of Legislators who criticized the FERC ruling.

“By summarily approving this risky gas line project, the Federal Energy Regulatory Commission has shown that it is deaf to the valid concerns of residents and elected leaders, who simply asked for a more stringent review before letting Spectra move ahead,” said County Legislator Pete Harckham. “I’m disappointed and frustrated that a good deal of effort and energy went into identifying serious questions regarding the pipeline that they (FERC) apparently don’t feel need to be answered.”

Spectra Energy also is advancing several other major development projects including the Access Northeast, which it stated will provide improved electric reliability in New England by directly supplying approximately 70% of the region’s most efficient gas-fired power generation. The project will expand the Algonquin and Maritimes and Northeast transmission systems by using existing pipeline footprints. Spectra Energy is partnering with Northeast Utilities and also has a strategic alliance with Iroquois Gas Transmission to advance the $3-billion pipeline development. However, at press time Spectra has not filed any plans with FERC on the Access Northeast project.

John Jordan
Editor, Real Estate In-Depth