Maritimes & Northeast Pipeline, L.L.C.; Notice of Application

DEPARTMENT OF ENERGY

[Docket No. CP96-809-000]

Maritimes & Northeast Pipeline, L.L.C.; Notice of Application

October 11, 1996.

Take notice that on September 23, 1996, Maritimes & Northeast

Pipeline, L.L.C. (Maritimes & Northeast), c/o M&N Management Company,

1284 Soldiers Field Road, Boston, Massachusetts, 02135, filed an

application in Docket No. CP96-809-000. The application seeks authority

under Section 7(c) of the Natural Gas Act (NGA) to construct, install,

own, operate, and maintain a large-diameter natural gas pipeline which

would connect to Maritimes & Northeast's proposed Phase I facilities

near Wells, Maine and extend about 230 miles to a point near Woodland,

Maine. Maritimes & Northeast also proposes to construct certain natural

gas compression stations and other smaller diameter natural gas

pipeline laterals and spurs. Maritimes & Northeast has also filed an

application in Docket No. CP96-810-000 for a Presidential Permit and

authority under Section 3 of the NGA to construct and operate certain

international border facilities near Woodland, Maine and St. Stephen,

New Brunswick, Canada. The details of Maritimes & Northeast's proposal

are more fully set forth in the application which is on file with the

Commission and open to public inspection.

Specifically Maritimes & Northeast proposes to construct about

229.6 miles of 24-inch and 1.8 miles of 30-inch mainline pipeline and

two new mainline compressor stations. Each of the two proposed

compressor stations will have a horsepower rating of 15,580. One is

proposed to be located near Richmond, Sagadahoc County, Maine and the

other is near Woodland, Washington County, Maine. Maritimes, &

Northeast also proposes to build 154 miles of various pipeline laterals

and meter stations in Maine near Cousins Island, Westbrook, Skowhegan,

Bucksport, Oldtown and Millinocket, and Woodland. The total cost of

these facilities is estimated to be $404 million.\1\

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\1\ As part of the 1998 and 1999 Facilities discussed above,

Maritimes & Northeast proposes to construct, install, own, operate

and maintain ancillary above-ground appurtenant facilities,

including but not limited to, mainline crossover and blowoff piping

and valving, pressure regulating devices, gas metering equipment,

cathodic protection devices, and launchers, receivers and associated

piping and valves for internal inspection instruments and cleaning

devices.

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Maritime & Northeast is a limited liability company, organized and

existing under the laws of the state of Delaware. Maritimes &

Northeast's members are M&N Management Company, a wholly-owned

subsidiary of PanEnergy Corp; Westcoast Energy (U.S.) Inc., a wholly-

owned subsidiary of Westcoast Energy, Inc. and Mobile Midstream Natural

Gas Investment, Inc., a wholly-owned subsidiary of Mobile Oil

Corporation.

Maritimes & Northeast proposes to construct the facilities in two

stages; the 42.1 miles of 24-inch pipeline from Wells, Maine to a point

near Cumberland Center, Maine, the Cousins Island Lateral and the

Westbrook Lateral would be constructed in 1998 (these facilities would

cost about $63 million), and the remainder of the proposed facilities

would be constructed in 1999 (these facilities would cost about $341

million). Maritimes & Northeast says that the facilities will have a

design delivery capacity of 440,000 MMBtu per day.

Maritimes & Northeast says that the proposed facilities constitute

Phase II of the Maritimes & Northeast Pipeline Project, a natural gas

transportation facility for the Sable Offshore Energy Project (Sable

Island). The Sable Island project is being developed by a consortium of

United States and Canadian energy companies and is scheduled to make

significant offshore supply available to eastern Canada and the

northeastern United States in 1999. Maritimes & Northeast Pipeline

Limited Partnership, a New Brunswick, Canada limited partnership

consisting of Canadian affiliates of the members of Maritimes &

Northeast, has filed an application with the Canadian National Energy

Board requesting regulatory authorizations necessary to construct the

Canadian portion of the Phase II facilities.

Maritimes & Northeast says that the need for firm natural gas

transportation capacity from Sable Island to the Maine, New Hampshire,

Massachusetts and other northeastern markets is evidenced by the

precedent agreements executed by the parties and included as Exhibit I

to the application. Maritimes & Northeast says that these precedent

[[Page 54431]]

agreements were signed as a result of an open season it held on a non-

discriminatory basis from March 18, 1996 through April 17, 1996. From

April 17, 1996 to June 30, 1996, Maritimes & Northeast says that it

clarified the service requests and negotiated the terms and conditions

of such services. In addition, Maritimes & Northeast continued to

aggressively market to potential customers who did not participate in

the open season with the understanding that open season participants

returning executed precedent agreements by June 30, 1996, had first

call on U.S. Facility capacity, and any remaining capacity would be

contracted on a first-come, first-served basis. Thus, as of June 30,

1996, seventeen shippers have now executed binding Precedent Agreements

for long-term firm transportation service with Maritimes & Northeast,

thus fully subscribing the propose design capacity of 440,000 MMBtu/d.

The precedent agreements were filed as privileged and confidential

under Section 388.112 of the Commission's regulations. Maritimes &

Northeast however announced the names of its proposed shippers and

volumes assigned to each shipper. Finally, Maritimes & Northeast says

that Mobil Natural Gas Inc. (Mobil), an affiliate of Mobil and one of

the major Sable Island producers, has executed a twenty-year backstop

Precedent Agreement for all capacity that is not subject to service

agreements entered into by other parties from the date of commencement

of Phase II service. This includes all capacity made available in the

future because of the termination of the precedent agreements or

service agreements prior to the end of the period of twenty years from

the date of commencement of Phase II service. However, Maritimes &

Northeast will continue to try to market any and all capacity that

becomes available in spite of Mobil's backstop agreement.

Maritimes & Northeast says that the Phase II shippers will be

ultimately responsible for obtaining the gas supplies to be transported

through the Maritimes & Northeast facilities. Gas supplies needed for

service through the 1998 Facilities will be available from the North

American pipeline grid at negotiated prices. Maritimes & Northeast says

that commencing November, 1999, all of the Phase II Facilities will be

in service providing customers access to natural gas from Sable Island.

Maritimes & Northeast also says that it has concurrently filed a

request for blanket import and export authorization on behalf of its

shippers and for itself for operational purposes with the Department of

Energy, Office of Fossil Energy.

Maritimes & Northeast says that the precise method of financing

Phase II has not been determined, but that no financing impediments are

anticipated. Maritimes & Northeast anticipates that 25% of the required

capital will be furnished by the Members as equity and that 75% will

consist of non-recourse or limited recourse debt, initially raised

during the construction period primarily from commercial banks and/or

insurance companies. Maritimes & Northeast assumes that both the

construction and long-term debt will bear interest at the rate of eight

percent (8.0%) and be retired over 20 years. Maritimes & Northeast also

proposes that its equity investment earn at the rate of fourteen

percent (14.0%).

Maritimes & Northeast says that the proposed rates are straight-

fixed-variable (SFV) rates and reflect a roll-in of the Phase I costs.

The rates are designed to recover the costs of the facilities proposed

herein over the life of those facilities. Maritimes & Northeast says

that the rates for interim service utilizing the 1998 Facilities will

be rates negotiated at a level at or below the maximum rates for Phase

I. The cost of all 1998 Facilities will be deferred and rolled into

total system costs, after a credit (if any) for net revenues received

from shippers using the 1998 Facilities, and will be used to develop

the U.S. Facilities rates to be effective when the 1999 Facilities are

placed in service.

The proposed rates and charges for services proposed to be rendered

by Maritimes & Northeast are set forth in its pro forma FERC Gas

Tariff, included in Exhibit P of the application. Maritimes & Northeast

requests authorization to charge the rates referenced above as its

initial rates. Services proposed to be offered by Maritimes & Northeast

include a 365-day firm transportation service (MN365), 151-day and 90-

day firm seasonal services (MN151 and MN90) and firm off-peak service

(MNOP). Interruptible service will be available under Rate Schedule

MNIT.

Maritimes & Northeast says that the Phase II tariff, First Revised

Volume No. 1, is based upon the Phase I tariff, with certain

modifications to reflect the interconnection of the facilities of

Maritimes & Northeast with the Canadian facilities at the international

border and to reflect certain changes required by the Commission's July

31, 1996, Preliminary Determination for Phase I.

Maritimes & Northeast proposes that Rate Schedule MN365 be a

recourse rate schedule for Phase II. Costs have been allocated to

service under Rate Schedule MN365. Maritimes & Northeast proposes that

Rate Schedules MN151, MN90 and MNOP be treated as negotiated rates,

subject to the treatment accorded in Shell Gas Pipeline Company.\2\

Maximum and minimum rates are stated on the tariff rate sheets for each

such rate schedule in accordance with Shell. Maritimes & Northeast will

record each volume transported, billing determinant, rate component,

surcharge, and revenue associated with its negotiated rates so that

these may be filed and separately identified, and separately totaled,

in all future rate case filings.

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\2\ See Order Issuing Blanket Certificate in Docket No. CP96-

159-002 on July 31, 1996 at 76 FERC para. 61,126.

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Finally, Maritimes & Northeast says that a uniform incremental

lateral line rate has been developed for transportation on the laterals

commencing in 1999. The lateral line rate is designed to ensure that

customers regarding service on lateral lines will pay separate rates

for that service reflecting certain of the costs of that service in

addition to the mainline rate.

Maritimes & Northeast says that the pipeline and lateral routes are

environmentally sound and utilize existing rights-of-way corridors for

approximately 64% of the route. Further, Maritimes & Northeast says

that the environmental information provided in Exhibits F-I through F-

IV meets the technical requirements necessary for Commission Staff to

begin an environmental analysis as defined in the Commission's August

1995 ``Guidance Manual for Environmental Report Preparation''. However,

Maritimes & Northeast has not provided the exact locations of the two

compressor stations and the various above-ground facilities proposed in

the application. The Commission Staff cannot establish a schedule for

completion of the environmental impact statement until that information

is received. Furthermore, the Draft Environmental Impact Statement can

not be issued until after the cultural resources field investigation

report, and the major river crossing plans (including the St. Croix

River importation point proposed in Docket No. CP96-810-000) are filed

and analyzed.

Maritimes & Northeast also filed certain exhibits describing a 30-

inch single-pipe alternative that it seeks to construct from Dracut,

Massachusetts to a proposed interconnection with the Portland Natural

Gas Transmission System (PNGTS) near Portland Maine. Maritimes &

Northeast says that its 30-inch single-pipe alternative is designed

[[Page 54432]]

to accommodate service to PNGTS (or other arrangements such as a joint

pipeline or common right-of-way) and to meet the 1997 in-service

requirements for Maritimes & Northeast's Phase I facilities. Maritimes

& Northeast requests the Commission consider its 30-inch single-pipe

alternative from Dracut to Portland in a timely manner in order that it

may be approved, if selected as the most desirable alternative, in time

for the 1997 Phase I commencement of service. However, the Commission

has docketed as Docket No. CP96-178-002, the Dracut to Wells part of

this request as an amendment to Maritimes & Northeast's Phase I

application.\3\ The Commission Staff is unable to establish a schedule

for this request unless Maritimes & Northeast files additional pipeline

certificate exhibits concerning the amendment and further information

about the specific nature of the shared use of a single pipeline or

right-of-way.

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\3\ The amendment was included in parts of the text and exhibits

filed by Maritimes and Northeast in this filing, (Docket No. CP96-

809-000). The Commission will sever those parts of the text and

exhibits and treat them as an amendment to Phase I. Hereafter,

filings concerning the 30-inch single pipeline alternative for the

distance from Dracut to Wells should be filed under Docket No. CP96-

178-002. Filings concerning the 30-inch pipeline alternative from

Wells to Cumberland/Portland, Maine will be considered in this case,

(Docket No. CP96-809-000).

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Any person desiring to be heard or to make any protest with

reference to said application should on or before November 4, 1996,

file with the Federal Energy Regulatory Commission, 888 First Street,

N.E., Washington, D.C. 20426, a motion to intervene or a protest in

accordance with the requirements of the Commission's Rules of Practice

and Procedure (18 CFR 385.214 or 385.211) and the regulations under the

Natural Gas Act (18 CFR 157.10). All protests filed with the Commission

will be considered by it in determining the appropriate action to be

taken but will not serve to make the protestants parties to the

proceeding. Any person wishing to become a party to a proceeding or to

participate as a party in any hearing therein must file a motion to

intervene in accordance with the Commission's rules.

Take further notice that pursuant to the authority contained in and

subject to the jurisdiction conferred upon the Commission by Sections 7

and 15 of the Natural Gas Act and the Commission's Rules of Practice

and Procedure, a hearing will be held without further notice before the

Commission or its designee on this Application if no petition to

intervene is filed within the time required herein or if the Commission

on its own review of the matter finds that a grant of the application

is required by the public convenience and necessity. If a petition for

leave to intervene is timely filed, or if the Commission, on its own

motion, believes that a formal hearing is required, further notice of

such hearing will be given.

Under the procedure herein provided for, unless otherwise advised,

it will be unnecessary for Maritimes & Northeast to appear or be

represented at the hearing.

Lois D. Cashell,

Secretary.

[FR Doc. 96-26768 Filed 10-17-96; 8:45 am]

BILLING CODE 6717-01-M