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Retooled Millennium Pipeline Work Slated to Begin in ’06

Wed December 14, 2005 - Northeast Edition
CEG



ALBANY, NY (AP) A planned natural gas pipeline stretching across New York’s Southern Tier to suburban New York City was going nowhere. Now it has new life.

The Millennium Pipeline, first proposed in 1997, was envisioned as a 425-mi. link connecting gas supplies in Canada with the New York City market. Backers saw the pipeline as a way to supply gas to the growing energy trading market and to power plants they believed would spring up around the state.

That proposal stalled, but backers have since retooled plans, gotten a key new partner and are awaiting final federal approval to start work on the pipeline’s initial phase in the second half of 2006. They plan to have the first part of pipeline running in late 2007.

The original $683-million line ran into opposition from local groups along the route and some environmentalists. In 2002, New York’s Department of State ruled the line would threaten fish and wildlife around Haverstraw Bay in Rockland County, a waterfront revitalization project in Croton-on-Hudson in Westchester and drinking water supplies for New York City and Westchester.

Columbia Gas Transmission Corp., the owner of the biggest stake in the pipeline, appealed the finding to U.S. Department of Commerce Secretary Donald Evans, but he upheld New York’s objection. The decision is now being challenged in U.S. District Court in Washington. The state still opposes the plan.

Meanwhile, the power plants that many energy officials expected to get built never did as the economy — and energy demand — slid after the Sept. 11, 2001, terrorist attacks, said Karl Brack, a vice president of Columbia Gas. The burgeoning energy trading business that thrived in 2000 and 2001 also collapsed with the bankruptcy of Enron Corp.

“Today the customers are much less from power generation, or marketing and trading,” Brack said. “Large investor-owned utilities in the Northeast, like ConEd and KeySpan, are the ones stepping up saying we want the capacity to serve the baseline growth in our market.”

Columbia Gas, owned by Merrillville, IN-based NiSource Inc., is now working on a scaled-back plan and has a new partner, KeySpan Corp., the operator of gas utilities in New York, Massachusetts and New Hampshire that serve 2.6 million customers. KeySpan acquired a 21 percent share of the project.

DTE Energy Co. of Michigan kept a 10-percent stake, even after Canadian partners Trans Canada Pipe Lines Ltd. and West Coast Energy Inc., backed out.

The new project’s first phase includes a 186-mi. section from Corning to Ramapo, replacing and upgrading an existing Columbia Gas line. In western New York, the new line would connect with the 157 mi. long Empire State Pipeline owned by Williamsville-based National Fuel Gas Co.

The pipeline starts in Canada.

In southern New York, the gas would be transported through the existing Algonquin Pipeline, which already crosses the Hudson River. That would connect to the planned Islander East pipeline that will link Connecticut to New York via Long Island Sound.

“These are both critical infrastructure needs for the U.S. Northeast and downstate New York in particular,” KeySpan Executive Vice President David Manning said. “The project was stalled and we needed to make sure we did everything we could to make it happen.”

The second phase of pipeline construction is on hold pending the Hudson crossing decision. It would link the first phase directly to the New York City metropolitan market.

Pipeline officials said the line would help alleviate natural gas price spikes in the Northeast by providing a way for different gas companies to supply the region and give distributors access to storage capacity in the Great Lakes region.

“We’re connecting to different supply of gas, accessing domestic Rocky Mountain gas and western Canadian gas,” Manning said. “But the real magic is in the storage facilities. Having storage is a huge advantage.”

Manning said that with access to that storage, Northeast customers won’t have to face the same price spikes when supplies from the Gulf of Mexico run short or demand rises with colder weather.

The project also is expected to provide thousands of construction jobs, Brack said.