The staff of the Federal Energy Regulatory Commission will prepare an environmental assessment (EA) on the Bayway Lateral Project, involving construction and operation of facilities by Texas Eastern Transmission LP in the City of Linden, Union County, New Jersey.
The commission said in an Aug. 5 notice that it will use this EA in its decision-making process to determine whether the project is in the public convenience and necessity. This notice announces the opening of the scoping process the commission will use to gather input from the public and interested agencies on the project. Comments are due by Sept. 6.
The Bayway Lateral Project would transport approximately 300,000 dekatherms per day from Texas Eastern’s existing Line 38 to serve new commercial customers (the Linden Cogen Power Plant and the Phillips 66 Bayway Refinery).
The project would consist of:
- approximately 2,300 feet of new 24-inch-diameter natural gas pipeline, most of which involves a horizontal directional drill crossing under the New Jersey Turnpike;
- a new fenced metering and regulating station; and
- related appurtenances and ancillary facilities.
Cogen Technologies Linden Venture LP (CTLV) and Phillips 66 Co. on Aug. 4 jointly asked FERC to be allowed to intervene in this case in support of the Texas Eastern project.
CTLV owns five of the six generating units at a natural gas-fired cogeneration facility in Linden, New Jersey (the “Linden Facility”) located on the site of the Bayway Refinery owned by Phillips 66. The majority of the output of CTLV’s five units is sold to Consolidated Edison Company of New York (Con Edison) under a long-term power purchase agreement that expires April 30, 2017, while the remaining output is sold into the organized markets administered by the New York Independent System Operator (NYISO) or pursuant to bilateral agreements.
The majority of the output of the sixth generating unit at the Linden Facility, which is owned by East Coast Power Linden Holding LLC (a CTLV affiliate), is sold to Phillips 66 for use by its Bayway Refinery under a long-term requirements agreement that expires in 2032. Available excess energy and capacity from Linden 6 is sold in the organized markets administered by PJM Interconnection or pursuant to bilateral arrangements.
CTLV currently receives natural gas service from two local distribution companies, Public Service Electric and Gas and Elizabethtown Gas Co., pursuant to a three-party, long-term agreement approved by the New Jersey Board of Public Utilities. This CTLV Gas Service Agreement, which became effective in 1990, is set to expire in the spring of 2017.
Phillips 66’s Bayway Refinery processes mainly light, low-sulfur crude oil from imported and domestic sources. Similar to CTLV, Phillips 66 also currently receives natural gas service from Public Service Electric and Gas pursuant to a long-term agreement entered into in 2001. This Phillips 66 Gas Service Agreement expires in the spring of 2017.
The companies noted that the Bayway Lateral project is fully subscribed pursuant to precedent agreements executed by CTLV and Phillips 66. Although the precedent agreements provide a target in-service date of Jan. 1, 2018, the parties hope for an in-service date as early as Nov. 1, 2017. In order to meet this schedule, the application requests that the commission issue an order granting the requested certificate by Feb. 28, 2017.
Both CTLV and Phillips 66 will benefit directly from the project because it will provide each of them direct access to firm natural gas transmission service under a long-term agreement with Texas Eastern. This will enhance the quality and reliability of gas service for each company, because they will each maintain existing interconnections to the local distribution system and the opportunity to take natural gas service under a state-regulated retail tariff as needed. Such redundancy is useful for both CTLV and Phillips 66, the companies said. For CTLV, Linden 1-5 serves as an important generating resource in the NYISO, providing capacity and energy to transmission-constrained load in New York City. Granting the application, and thereby connecting the Linden Facility to a source of firm natural gas in addition to the existing connection to a local distribution company, will reduce the risk that the Linden Facility is unable to access natural gas when its generating capacity is needed most.
For Phillips 66, redundancy is useful to improve the reliability of the Bayway Refinery, which distributes its refined oil products to East Coast customers.
Both CTLV and Phillips 66 will rely on the lateral project to provide a new source of firm and economically priced natural gas to replace the CTLV and Phillips 66 Gas Service Agreements, which are both set to expire in the spring of 2017. After those agreements expire, and until Texas Eastern completes the project, CTLV and Phillips 66 may need to bridge the gap with other more expensive and likely non-firm natural gas service options.