Williams (WMB) has filed for an emergency permit to keep a new expansion operating on its Transcontinental Gas Pipe Line (Transco) in the mid-Atlantic, after an appeals court found regulators improperly permitted the project. The potential for winter price volatility hangs in the balance if Transco is forced to shut down the new facilities.
Transco on September 6 filed a request with the Federal Energy Regulatory Commission (FERC) for a temporary emergency certificate of public convenience and necessity for the Regional Energy Access (REA) expansion. The emergency certificate would keep REA facilities in service following a decision in New Jersey Conservation Foundation vs FERC vacating the permit.
Transco placed Phase 1 of the REA expansion in service in October ’23. The pipeline started service on the Phase 2 work on August 2, including work to compressors and meter stations in Pennsylvania and New Jersey. The project has a total capacity of 829 MMcf/d.
The latest Phase 2 start-up came just days after the US Court of Appeals for the District of Columbia ruled against FERC, finding that agency erred when it certificated the REA expansion. The court determined that FERC did not adequately address market studies showing the project is not needed, or state-level targets for lower future emissions.
In the emergency request to FERC, Transco argues the REA facilities provide other benefits on top of nameplate capacity. The new facilities have been integrated into Transco's existing system and enable the flow of an additional 1.235 Bcf/d of "non-REA" flows. In total, the temporary certificate will ensure over 2 Bcf/d of volumes continue to flow through the REA facilities, Transco said.
Northeast gas prices are likely to increase if Transco is forced to shut down the expansion. In the Northeast Supply & Demand Forecast, the value of the REA project comes into focus later this winter, when heating demand is in full swing. Winter weather in the Northeast creates demand spikes that have exposed bottlenecks in the pipeline network, such as between Transco Zone 6 and the Liedy storage hub in northern Pennsylvania. In recent winters, Transco Zone 6 has traded at a premium to Leidy-Transco, at times upward of $1.00/MMBtu. Keeping the REA expansion in operation should narrow the spread between Transco Zone 6 and Liedy spot prices this upcoming winter. – Zach Krause Tickers: WMB.
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