Table Of Content145 FERC ¶ 61,108
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: Jon Wellinghoff, Chairman;
Philip D. Moeller, John R. Norris,
Cheryl A. LaFleur, and Tony Clark.
Trunkline Gas Company, LLC Docket No. CP12-491-000
ORDER APPROVING ABANDONMENT
(Issued November 7, 2013)
1. On July 26, 2012, Trunkline Gas Company, LLC (Trunkline) filed an application
for authority under section 7(b) of the Natural Gas Act (NGA)1 to abandon by sale to an
affiliate2 approximately 770 miles of mainline transmission pipeline and appurtenant
facilities for conversion to oil pipeline transmission service. Trunkline also requested
authority to abandon in place certain mainline compression facilities that it would no
longer need after the pipeline facilities are abandoned. For the reasons discussed below,
the Commission will grant the requested abandonment authorization.
I. Background
2. Trunkline, a limited liability company organized and existing under the laws of
Delaware, is a natural gas company as defined by section 2(6) of the NGA engaged in the
business of transporting natural gas in interstate commerce.3 Trunkline’s interstate
pipeline system extends from Texas, Louisiana, and production areas in the Gulf of
Mexico, northeast to a principal terminus at the Indiana-Michigan state line near Elkhart,
Indiana. Trunkline’s interstate pipeline system extends from points near Premont, Texas
and points near Patterson, Louisiana to Trunkline’s Longville, Louisiana compressor
1 15 U.S.C. § 717f(b) (2012).
2 Trunkline indicates that the affiliate will be designated by its parent company,
Energy Transfer Equity, L.P. (Energy Transfer). Energy Transfer is the parent of
Southern Union Company, which indirectly owns 100 percent of the equity interest in
Trunkline.
3 15 U.S.C. § 717a(6) (2012).
Docket No. CP12-491-000 - 2 -
station and then north through Arkansas, Mississippi, Tennessee, Kentucky, Illinois, and
Indiana to its terminus at the Michigan-Indiana border near Vistula, Indiana.
3. Trunkline states that its system was originally constructed in the early 1950s to
transport Gulf Coast natural gas production to Panhandle Eastern Pipe Line Company
(Panhandle).4 Trunkline subsequently expanded its system to provide additional firm
supply service to Panhandle and other Midwest customers, including Ameren Illinois
Company (Ameren Illinois)5 and Consumers Power Company (Consumers).6 Trunkline
states that as demand increased, it further expanded its system to include mainline loops
and extensions into the offshore Gulf Coast area.
4. Trunkline asserts that due to changes in the natural gas industry, its customers
began to reduce contract demand in the mid-1980s. Trunkline states that this trend was
exacerbated as other pipelines began transporting Canadian natural gas to Midwest
markets in the late 1990s. As a result, in 2000, Trunkline’s requested, and was granted,
authorization to abandon a portion of Line 100-1 and related facilities, reducing its
certificated system-wide mainline transportation service level from 1,810 thousand
dekatherms (MDth) per day to its current level of 1,555 MDth per day (2001 Trunkline
Abandonment).7 As discussed below, the instant proposal would reduce Trunkline’s
ability to provide mainline transportation service by an additional 597 MDth per day, to a
total of 958 MDth per day through its Independence, Mississippi compressor station, and
from 1,109 MDth per day out of the Texas portion of its system through the Longville,
Louisiana compressor station to 920 MDth per day.
II. Proposal
A. Facilities
5. Trunkline proposes to abandon approximately 770 miles of mainline transmission
pipeline and appurtenant facilities by sale to an affiliate to be designated by its parent,
Energy Transfer, and abandon in place twelve compressor units. Trunkline states that the
affiliate will convert the abandoned pipeline facilities to oil transportation service.
4 Trunkline Application at 7.
5 Ameren Illinois was formerly known as Central Illinois Public Service Company.
6 On May 22, 1959, the Commission authorized a system expansion that included
the facilities that Trunkline intends to abandon herein. Trunkline Gas Co., 21 FPC 704
(1959).
7 Trunkline Gas Co., 94 FERC ¶ 61,381 (2001) (2001 Trunkline Abandonment).
Docket No. CP12-491-000 - 3 -
6. The facilities Trunkline proposes to abandon include: (1) 45.0 miles of the 24-
inch-diameter Line 100-1, extending east from Valve 43-1 near Buna, Texas to the
Longville, Louisiana compressor station; (2) 725.5 miles of the 30-inch-diameter
Line 100-2, extending northeast from the Longville, Louisiana compressor station to the
Tuscola, Illinois compressor station; and (3) twelve compressor units, totaling 15,850
horsepower at compressor stations in Pollock and Epps, Louisiana; Shaw and
Independence, Mississippi; and Joppa, Illinois. Trunkline states that the facility
abandonments will result in a reduction of its ability to provide winter mainline
transportation service from the current level of 1,555 MDth per day to 958 MDth per day
through its Independence compressor station and from 1,109 MDth per day to 920 MDth
per day out of the Texas portion of its system through the Longville compressor station.8
B. Trunkline’s Explanation of Its Abandonment Request
7. Trunkline states that the interstate natural gas pipeline industry has continued to
change since the Commission approved the 2001 Trunkline Abandonment, with new
sources of gas supply and additional pipeline infrastructure providing its pipeline
customers with alternative service options. Trunkline states that the majority of its major
market-area customers have reduced their reliance on Trunkline’s system as compared to
long-term firm service levels of previous years.9
8. Trunkline asserts that 90 percent of its market area contract demand can be served
by other interstate pipelines. Trunkline notes that after the proposed abandonment, it will
continue to serve its core market area north of Tuscola through its remaining looped
facilities with access to supplies through Panhandle and Rockies Express Pipeline L.L.C.
(Rockies Express). Consequently, Trunkline states that it no longer needs the facilities it
intends to abandon for their original purpose, i.e., transporting supply from the Gulf
Coast region.
8 Historically, Trunkline calculated its system-wide mainline capacity through its
Shaw, Mississippi compressor station. However, increases in Perryville, Louisiana area
supply and receipts from the Fayetteville Express Pipeline downstream of the Shaw
compressor station have replaced much of the traditional Gulf of Mexico production on
Trunkline’s system. For this reason, Trunkline now calculates mainline capacity through
its Independence, Mississippi compressor station. Trunkline Application at 4.
9 As an example, Trunkline notes that in the 1970s and 1980s Consumers had a
firm service contract demand of 700 MDth per day. Trunkline states that after the 2001
Trunkline Abandonment, Consumers, still its largest firm shipper, had a total contract
demand of 336 MDth per day. Trunkline further states that as of November 1, 2012,
Consumers held firm service entitlements of 100 MDth per day in winter months and
200 MDth per day in the summer. Trunkline Application at 8-9.
Docket No. CP12-491-000 - 4 -
9. In support of its proposed abandonment, Trunkline asserts that there is excess
pipeline capacity available in the Midwest,10 enhanced by recently constructed projects
such as Rockies Express.11 Trunkline contends that there is currently 32,609 million
cubic feet (MMcf) per day of capacity existing on pipelines from the Gulf of Mexico
region and 47,813 MMcf per day existing on pipelines from Southwest production areas,
including Trunkline’s production areas in Texas and Louisiana.12 Trunkline also asserts
that over 35 percent of the demand in the Northeast was supplied from the Marcellus and
Utica shale production areas, as compared to less than 15 percent just two years ago.13
Trunkline contends that as a result, pipelines that have historically delivered gas into the
Northeast from the Gulf Coast, such as Texas Eastern Transmission, LP (Texas Eastern)
and Tennessee Gas Pipeline Company, L.L.C. (Tennessee Gas), are now transporting this
new supply source. Trunkline explains that lower utilization of the Gulf-to-Northeast
path on these systems frees up capacity that now competes for Midwest markets.
10. In addition, Trunkline contends that because of the excess capacity described
above, it must offer firm service at substantially discounted rates in order to maintain
capacity under contract. Trunkline notes that at the time of the 2001 Trunkline
Abandonment, it was discounting over 90 percent of its firm maximum daily quantities.14
Trunkline asserts that the two open seasons it held in 2012, resulting in no requests for
long-term firm service, and two requests to turn back existing discounted firm service,
confirms that there is no additional demand for annual long-term firm transportation on
its facilities.
11. Trunkline asserts that there is a limited natural gas market for the capacity it
proposes to abandon. Trunkline asserts that Consumers has steadily reduced its capacity
10 Trunkline states that its primary market area is located in the Midwestern states
of Illinois, Indiana, Michigan, and parts of Tennessee.
11 Trunkline states that Rockies Express can transport up to 1,800 million cubic
feet (MMcf) per day.
12 Trunkline Application at 10 (citing the U.S. Energy Information
Administration’s U.S. State-to-State Capacity report).
13 Trunkline Application at 11 (citing the Commission’s April 2012 Northeast
Market Snapshot Report).
14 Trunkline states that over the past several years, the level of discounted firm
quantities has varied from approximately 83 to 91 percent. Trunkline Application at
Exhibit Z-3.
Docket No. CP12-491-000 - 5 -
demand over the years.15 Trunkline also states that Ameren Illinois has consolidated its
operations with affiliated local distribution companies, giving it multiple pipeline options
that did not previously exist.16 Trunkline states that for many years it was one of two
pipeline options for Memphis Light, Gas and Water (Memphis Light) and that Memphis
Light held significant capacity on Trunkline. Trunkline states that in 2004, however,
ANR Pipeline Company (ANR) constructed a delivery meter to Memphis Light and that
Memphis Light’s annual 80 MDth per day contract with Trunkline expired on March 31,
2012.17
III. Notice, Interventions, Comments, Protests, and Answers
12. Notice of Trunkline’s application was published in the Federal Register on August
14, 2012.18 The intervenors identified in Appendix A filed timely, unopposed motions to
intervene.19
13. The Illinois Commerce Commission, Liberty Energy (Midstates) Corp, Memphis
Light, and Northern Illinois Gas Company d/b/a Nicor Gas Company filed late motions to
intervene. The entities filing the untimely motions to intervene have demonstrated an
interest in this proceeding and granting their motions will not delay, disrupt, or unfairly
prejudice any parties to the proceeding. Thus, the Commission will grant the untimely
motions to intervene.20
14. As indicated in Appendix A, certain parties filed comments with their motions to
intervene. In addition, several landowners, two U.S. Senators and twelve Members of
Congress (jointly) (Congressional Delegation), and state and federal agencies filed
15 Consumers is a public utility and a firm transportation customer of Trunkline.
16 Ameren Illinois can be served by eight other interstate pipelines. Trunkline
Application at 13.
17 Trunkline states the expiring contract was replaced with a winter-only
agreement for 20 MDth per day. Trunkline Application at 13, Trunkline February 26,
2013 Data Response at 3.
18 77 Fed. Reg. 48,509 (2012).
19 Timely, unopposed motions to intervene are granted by operation of Rule 214 of
the Commission’s regulations. 18 C.F.R. § 385.214 (2013).
20 18 C.F.R. § 385.214(d) (2013).
Docket No. CP12-491-000 - 6 -
comments on Trunkline’s proposal. These commenters are identified in Appendix B to
this order.21
15. Ameren Services Company (Ameren), the Association of Businesses Advocating
Tariff Equity (ABATE), Consumers, the Governor of Michigan, Rick Snyder (Governor
of Michigan), the Michigan Public Service Commission (Michigan PSC), and the
Tennessee Valley Authority (TVA) protested the application.22 The protestors object to
the proposed abandonment, arguing that: (1) Trunkline’s open-season procedures were
improper; (2) Trunkline will be unable to meet existing service obligations and future
service demands in the Midwest; (3) the proposed abandonment will have a detrimental
effect on the continuity of service provided by Trunkline; (4) the proposed abandonment
raises rate issues that should be addressed; and (5) the Commission should convene a
technical conference or evidentiary hearing to address the protestors’ concerns.
16. Trunkline filed an answer to the protests and comments, and Consumers filed an
answer to Trunkline’s answer. Trunkline and Consumers each filed subsequent answers.
Rule 213(a)(2) of our regulations prohibits answers to protests and answers to answers
unless otherwise ordered by the decisional authority.23 The Commission finds good
cause to waive Rule 213(a) and admit these answers because doing so will not cause
undue delay and the pleadings may assist the Commission in its decision making process.
The protests and answers are addressed below.
IV. Discussion
17. Since Trunkline proposes to abandon certificated facilities used for the
transportation of natural gas in interstate commerce subject to the jurisdiction of the
Commission, the proposal is subject to the requirements of section 7(b) of the NGA.24
21 On December 19, 2012, ProLiance filed out-of-time supplemental comments.
On December 21, 2012, Trunkline filed an answer asking the Commission to reject the
late comments. The Commission will accept Proliance’s late-filed comments as they do
not unduly prejudice or delay the proceeding.
22 LeCompte-Hall, L.L.C. filed a protest that was subsequently withdrawn.
23 18 C.F.R. § 385.213(a)(2) (2013).
24 15 U.S.C. § 717f(b) (2012).
Docket No. CP12-491-000 - 7 -
A. Open Season Procedures
18. To gauge the demand for available capacity on its pipeline system, Trunkline held
two open seasons from March 23 through April 20, 2012, soliciting bids for long-term
firm transportation capacity and offers from existing shippers to turn back capacity to
Trunkline.25 Trunkline states that it received no requests for long-term firm service and
that two shippers submitted requests to turn back existing discounted firm capacity.
Trunkline asserts that the open-season results confirm that there is no additional demand
for annual long-term firm transportation on its facilities and that its shippers’ needs for
additional transportation are being met by other means.
19. In its protest, TVA states that because it was unaware of Trunkline’s abandonment
plan prior to the turn-back solicitation, it had no reason to evaluate its existing long-term
firm contracts.26 TVA further states that it would have entered into discussions with
Trunkline regarding reliability impacts, if it had known that Trunkline’s turn-back
solicitation had been related to a potential proposal to abandon facilities. TVA
specifically asks the Commission to require Trunkline to hold a new turn-back
solicitation.27
20. In a January 9, 2013 data request, Commission staff asked Trunkline to hold a
supplemental open season because at the time of the 2012 open seasons, Trunkline did
not indicate that a proposal to abandon capacity would be submitted to the Commission if
expiring contracts were not renewed. The data request stated that the additional open
season would help staff assess the strength of demand among those protesting the
abandonment application, as well as other shippers. Trunkline held a supplemental open
season from January 18 through February 1, 2013. No bids were received.
25 Trunkline Application at Exhibit Z-5.
26 TVA August 29, 2012 Protest at 2-3. TVA is an electricity provider owned by
the federal government that has multiple long-term firm contracts on Trunkline’s pipeline
used to serve its Lagoon Creek facility in Haywood County, Tennessee.
27 It appears that at least some of Trunkline’s customers were aware of Trunkline’s
abandonment plans at the time of the open seasons. In its discussion about the two open
seasons held by Trunkline in 2012, Consumers asserts “[i]t is no surprise that, knowing
the reliability/degradation of service issues that would result from the proposed
abandonment” that Trunkline’s customers were unwilling to enter into contracts for long-
term firm service. Consumers August 29, 2012 Protest at 7. The protestors’ concerns
about the post-abandonment reliability of service on Trunkline’s system are addressed
below.
Docket No. CP12-491-000 - 8 -
21. Consumers states that it agrees with Commission staff’s decision to ask Trunkline
to hold a supplemental open season.28 However, Consumers asserts that the results of the
supplemental open season do not accurately reflect the strength of demand for capacity
on Trunkline’s system. Consumers contends that once Trunkline announced its intention
to abandon 38 percent of its current mainline capacity, Trunkline’s shippers had no
choice but to seek other options to meet their obligations to their customers. Consumers
states that it wants to maintain its historical commercial relationship with Trunkline, but
notes that it is not interested in paying the maximum rate to Trunkline for firm service
that it asserts will not be as reliable post-abandonment as the service currently being
provided.29 Consumers contends that there is no mechanism to accurately gauge the
strength of demand on Trunkline’s system, and that the appropriate remedy is for the
Commission to deny Trunkline’s abandonment application.
Commission Response
22. As TVA requested, Trunkline held a supplemental open season. To the extent that
TVA wished to enter into a long-term firm service agreement with Trunkline for
additional capacity or turn back existing contracted-for service after learning of
Trunkline’s abandonment plan, TVA could have done so during that time. The
Commission disagrees with Consumers’ characterization of open seasons held in relation
to an abandonment proposal as being essentially either too early or too late, depending on
whether customers are aware of the abandonment plans. The use of results from open
seasons to demonstrate the existence or lack of demand is standard in abandonment
proceedings.30 In this case, open seasons were held both before and after Trunkline filed
its abandonment request and, under both scenarios, Trunkline received no requests for
long-term firm service. The Commission finds the original and supplemental open
seasons held by Trunkline to be sufficient and proper to assess the strength of demand for
available capacity on its pipeline system.
28 Consumers February 4, 2013 Answer at 6.
29 Id. at 6-7.
30 See e.g., El Paso Natural Gas Co., 136 FERC ¶ 61,180, at P 26 (2011)
(recognizing an open season where no customers bid on available capacity as support for
El Paso’s claim that there will be no future impact on firm transportation services as a
result of the proposed abandonment). See also, Transwestern Pipeline Co. L.L.C.,
140 FERC ¶ 61,147, at PP 16-17 (2012) (finding that Transwestern’s open season results
demonstrate that there is little or no demand for additional firm service on the looped
lateral Transwestern proposed to partially abandon).
Docket No. CP12-491-000 - 9 -
B. Public Convenience or Necessity
23. Section 7(b) of the NGA31 provides that an interstate pipeline company may
abandon jurisdictional facilities or services if the Commission finds the abandonment is
permitted by the “present or future public convenience or necessity.” The courts have
explained that in considering the criteria for abandonment under section 7(b), two
important principles apply: (1) a pipeline which has obtained a certificate of public
convenience and necessity to serve a particular market has an obligation, deeply
embedded in the law, to continue to serve; and (2) the burden of proof is on the applicant
to show that the public convenience or necessity permits abandonment, that is, that the
public interest will in no way be disserved by abandonment.32 This does not mean,
however, that abandonment is not permitted if there is any harm to any narrow interest.
Rather, the Commission takes a broad view in abandonment proceedings and evaluates
abandonment proposals against the benefits to the market as a whole.33
24. The Commission examines abandonment applications on a case-by-case basis. In
deciding whether a proposed abandonment is warranted, the Commission considers all
relevant factors, but the criteria vary as the circumstances of the abandonment proposal
vary. Historically, in reviewing a request for abandonment by sale, the Commission has
considered: the needs of the natural gas systems and the public markets served, the
environmental effects of the proposed abandonment, the economic effect on the pipelines
and their customers, the presumption in favor of continued service, and the relative
diligence of the respective pipelines in providing for adequate natural gas supplies.34 The
Commission also weighs the claimed benefits of the abandonment against any detriments.
31 15 U.S.C. § 717f(b) (2012).
32 See Transcontinental Gas Pipe Line Corp. v. FPC, 488 F.2d 1325, 1328 (D.C.
Cir. 1973); Michigan Consolidated Gas Co. v. FPC, 283 F.2d 204, 214 (D.C. Cir. 1960).
33 See Southern Natural Gas Co., 50 FERC ¶ 61,081, at 61,222 (1990). See also
Consolidated Edison Co. v. FERC, 823 F.2d 630, 643-44 (D.C. Cir. 1987) (“We agree
with [the Commission] that the ‘public convenience and necessity’ language of the
NGA’s abandonment provision [cite omitted] envisions agency policy-making to fit the
regulatory climate.”).
34 Southern Natural Gas Co., 126 FERC ¶ 61,246, at P 27 (2009).
Docket No. CP12-491-000 - 10 -
1. Impact on Current Customers
a. Ability to Meet Contract Demands
25. Trunkline asserts that its proposal will result in no interruption, reduction, or
termination of any firm natural gas transportation services it currently provides.35
Trunkline states that on its proposed date of abandonment, November 1, 2013, it will
have sufficient capacity to transport all of its firm commitments on the pipeline facilities
that will remain after abandonment. Specifically, Trunkline states that its customers’
firm commitments for November 1, 2013, are 953 MDth per day. This service
commitment level is below Trunkline’s proposed post-abandonment system capacity of
958 MDth per day.
26. Further, Trunkline notes that its actual pipeline utilization averages 45 to 70
percent of capacity under contract.36 Given these utilization levels, Trunkline states that
it expects to be able to continue to provide interruptible transportation in addition to
providing contracted-for firm service. Trunkline states that consistent with the principles
expressed in the 2001 Trunkline Abandonment order, the proposed abandonment will
maintain the “optimum amount of capacity to meet demand, while avoiding unneeded
capacity.”37
27. Consumers,38 Laclede,39 and ProLiance40 express concern that Trunkline may
have difficulties fulfilling its contractual delivery obligations. ProLiance states that the
Commission should scrutinize whether Trunkline will have sufficient capacity to meet
the demands of its firm shippers in the future.41 Laclede states that it relies on the
35 Trunkline Application at 18.
36 Trunkline Application at 9, noting that the percentage range is based on monthly
averages over five years.
37 Trunkline September 14, 2012 Answer at 7 (citing 2001 Trunkline
Abandonment, 94 FERC at 62,420).
38 Consumers February 4, 2013 Answer at 2-4.
39 Laclede August 29, 2012 Comments at 4. Laclede is a public utility engaged in
natural gas retail distribution to residential, commercial, and industrial customers in St.
Louis and Eastern Missouri.
40 ProLiance August 29, 2012 Comments at 3.
41 Id.
Description:northeast to a principal terminus at the Indiana-Michigan state Trunkline’s interstate pipeline system of the Trunkline system for Michigan.
