120 FERC ¶ 61,204

FEDERAL ENERGY REGULATORY COMMISSION

WASHINGTON, D.C. 20426

August 31, 2007

In Reply Refer To:

> Transcontinental Gas Pipe Line Corporation

Docket No. RP07-559-000

Transcontinental Gas Pipe Line Corporation

Attn: Stephen A. Hatridge

Senior Counsel

2800 Post Oak Boulevard (77056)

P.O. Box 1396

Houston, TX 77251-1396

Subject : Request for Waiver

Dear Mr. Hatridge:

1.  On August 3, 2007, Transcontinental Gas Pipe Line Corporation
    (Transco) filed a request for waiver of section 55.2 of the General
    Terms and Conditions of its FERC Gas Tariff (GT&C) to the extent
    necessary to: (i) allow Transco to reserve capacity on Transco\'s
    Mobile Bay Lateral to be used for the proposed \"Pascagoula
    Expansion Project\" (Project) for up to 30 months prior to Transco
    filing an application with the Commission for certificate approval
    of the Project and (ii) allow any shippers subscribing to the
    reserved capacity during the interim period (i.e., the period of
    time between the date that the capacity is reserved and the
    in-service date of the Project) to have a right-of-first-refusal to
    the subscribed capacity during such interim period pursuant to
    section 48 of the GT&C. The Commission hereby grants the requested
    waiver as discussed herein.

2.  Public notice of Transco's filing was issued on August 9, 2007.
    Interventions and protests were due as provided for in section
    154.210 of the Commission's regulations, 18 C.F.R. § 154.210 (2007).
    Pursuant to Rule 214, 18 C.F.R. § 385.214 (2007), all timely motions
    to intervene and any motions to intervene out-of-time filed before
    the issuance date of this order are granted. No protests or comments
    were filed.

3.  Transco states that, on February 20, 2007, it filed tariff sheets in
    Docket No. RP07-178-000 in which it proposed to, among other things,
    reserve capacity for an upcoming pipeline expansion project for up
    to two years and to make any capacity so reserved available on a
    limited-term basis up to the in-service date of the expansion
    project without a right-of-first-refusal. Transco states that, on
    March 22, 2007, the Commission issued an order[^1] in that docket
    which directed Transco to revise its proposal to eliminate the
    two-year period and to incorporate a provision which allows Transco
    to reserve capacity for up to one year prior to filing the
    certificate application for the expansion project. The Commission
    stated that the one-year limit assures that "the reservation of
    capacity occurs only as part of a realistic expansion plan" and is a
    safeguard that ensures that the pipeline is not reserving capacity
    to exercise market power.[^2] The Commission further stated that if
    Transco believes that it needs an extension of time to file the
    certificate application for a particular project for which it has
    reserved capacity, then Transco may request that the Commission
    waive the one-year tariff limit for that project and the Commission
    will evaluate the waiver request based on the circumstances and the
    support which Transco provides for the requested waiver. Transco
    states that it is submitting the instant request for waiver pursuant
    to such invitation by the Commission.

4.  Transco states that it is developing the Project to provide
    downstream firm transportation service for re-vaporized liquefied
    natural gas (LNG) from the recently certificated[^3] Gulf LNG
    Energy, LLC (Gulf LNG) LNG import terminal in Jackson County,
    Mississippi. Transco further states that the Project will include
    the construction and operation of a new pipeline and appurtenant
    facilities from a point of interconnection with the terminus of the
    proposed Gulf LNG pipeline in Pascagoula County, Mississippi (which
    will extend from the LNG import terminal) to a point of
    interconnection with the existing Mobile Bay Lateral in Mobile
    County, Alabama. Transco proposes to combine the firm transportation
    capacity on the new pipeline with its existing, unsubscribed firm
    transportation capacity on the Mobile Bay Lateral in order to
    provide seamless firm transportation service to Transco\'s Station
    85 pooling point. Transco states that it announced, on July 31,
    2007, that it has reserved 449,631 dt/day of existing unsubscribed
    capacity on its Mobile Bay Lateral for the Project. Transco asserts
    that the combination of the new pipeline and existing firm
    transportation capacity will enable Transco to provide firm market
    access for the imported LNG. Transco states that it plans to
    commence an open season for the Project on or about August 10, 2007.

5.  Transco states that the Commission has recognized that there is a
    long lead time associated with the development of LNG projects and
    provided Gulf LNG five years from the date of the order to construct
    the LNG import terminal. Transco asserts that this long lead time
    has placed considerable pressure on it to provide Gulf LNG\'s
    current customer with certainty regarding the availability of
    downstream pipeline capacity long before the commencement of firm
    transportation service through such capacity. Transco states that,
    in order to secure the participation of the Gulf LNG customer in the
    Project, Transco has already committed, in a binding precedent
    agreement with the customer, to provide firm transportation service
    that will not commence until approximately October 1, 2011. Transco
    states that it is actively reviewing the route and siting
    requirements for its new pipeline that will be constructed as part
    of the Project, but actual construction activities are not scheduled
    to begin until April 1, 2011. Consistent with that schedule, Transco
    plans to file its certificate application for the Project on or
    about July 1, 2009.

6.  Transco states that the 449,631 dt/day of reserved firm capacity on
    Transco\'s Mobile Bay Lateral is an important part of the Project
    inasmuch as it will be combined with the firm transportation
    capacity on the new pipeline to provide contiguous downstream firm
    transportation to Transco\'s Station 85 pooling point in lieu of
    building costly, duplicative facilities for such service. Transco
    further states that it will need to reserve such capacity longer
    than the one year period set forth in section 55.2 of the GT&C in
    order to ensure that such capacity remains available for the
    Project. Since the target date for filing Transco\'s certificate
    application for the Project is on or about July 1, 2009, Transco
    asserts that it will need the ability to reserve the capacity for at
    least two years prior to filing a certificate application for the
    Project. Accordingly, Transco requests that the Commission grant a
    waiver of section 55.2 to the extent necessary to allow Transco to
    reserve capacity on its Mobile Bay Lateral for the Project. Transco
    states that, while it expects to be ready to file its certificate
    application for the Project approximately two years from the date
    that the reservation of capacity was posted, Transco requests a
    30-month reservation of capacity in order to provide assurance that
    it will have sufficient time to prepare and file its certificate
    application for the Project in the event of any unanticipated
    delays.

7.  Transco states that it acknowledges the Commission\'s concern that,
    because a reservation of capacity results in a waiver of any interim
    shipper\'s right of first refusal, the Commission has been reluctant
    to allow pipelines to reserve capacity longer than one year to
    assure that the capacity reservation is for a \"realistic expansion
    plan."[^4] Transco states that it further understands that the
    Commission has limited the reservation of capacity to only one year
    before the filing of a certificate application for a project as a
    safeguard against the pipeline\'s exercise of market power. However,
    Transco argues that neither of these concerns is raised by the
    instant request, the unique circumstances of which warrant the
    granting of a waiver by the Commission.

8.  Transco states that the Project is a real pipeline project and that
    it executed a binding precedent agreement with a customer (not
    affiliated with Transco) of the Gulf LNG import terminal for the
    entire amount of Transco\'s firm transportation capacity proposed
    under the Project. On August 10, 2007, Transco announced a binding
    open season for the Project, from August 10, 2007 to September 7,
    2007, to see whether there are additional shippers interested in
    subscribing to such firm transportation service. Transco asserts
    that it has taken other steps in the development of the Project,
    including environmental and landowner review of the proposed route
    for the new pipeline and the commencement of application preparation
    for the various permits required for the Project.

9.  In support of its assertion that it is not exercising market power
    by reserving the Mobile Bay Lateral capacity for the Project,
    Transco states that it has been actively attempting to market the
    449,631 dt/day of available firm transportation capacity on the
    Mobile Bay Lateral. Transco asserts that this capacity was made
    available in an open season held from July 1, 2004 to August 13,
    2004 and has remained posted as unsubscribed capacity since that
    time. Transco states that, despite such efforts, the capacity
    remains unsubscribed except for a few month-to-month deals at deeply
    discounted rates, the last of which terminated in October 2006.
    Transco further states that it will be offering the combination of
    new and existing capacity to all interested shippers in its August
    10, 2007 open season and will be offering the existing capacity on
    an interim basis prior to the in-service date of the Project.
    Therefore, Transco argues, no shipper will be denied service as a
    result of the waiver requested herein. Transco states that, if the
    Project is terminated for any reason prior to being placed into
    service, it will promptly cancel its reservation of the existing
    Mobile Bay Lateral capacity for the Project.

10. Transco argues that allowing it to reserve the capacity for the
    Project will minimize facility construction and associated
    environmental impacts and will encourage fuller utilization of
    Transco\'s existing pipeline.

11. In order to help offset the longer period applicable to Transco\'s
    reservation of the Mobile Bay Lateral capacity, Transco also
    requests a waiver of section 55.2 to the extent necessary to allow
    any shippers subscribing to the reserved capacity during the interim
    period (i.e., the period of time between the date the capacity is
    reserved and the in-service date of the Project) to have a right of
    first refusal to that capacity during such interim period under
    section 48 of its GT&C. Transco states that no firm transportation
    service agreement for capacity subscribed during the interim period,
    including any capacity subject to such right of first refusal, will
    extend beyond the end of the interim period.

12. The Commission hereby grants waiver of the maximum one-year capacity
    reservation period prior to filing a certificate application
    contained in section 55.2(a) of Transco's GT&C in order to permit
    Transco to reserve capacity on its Mobile Bay Lateral for the
    Project for up to 30 months prior to filing a certificate
    application for the Project. Transco has persuaded the Commission
    that granting the requested waiver will not result in capacity being
    withheld from the market and is part of a realistic expansion plan.
    The capacity that Transco will reserve has not been utilized, except
    for a few month-to-month deals, since Transco held an open season
    for the capacity in 2004, even though the capacity has remained
    posted as unsubscribed since that time. Further, Transco commenced
    an open season for the Project on August 10, 2007.[^5] Also, Transco
    states that it has executed a binding precedent agreement with the
    Gulf LNG customer to provide firm transportation service.

13. In view of the length of the reservation period permitted by the
    instant waiver, the Commission also grants waiver of that portion of
    section 55.2(b) of Transco's GT&C, which provides that a service
    agreement for capacity available on an interim basis will not be
    eligible for a right-of-first-refusal, in order to permit Transco to
    allow any shippers subscribing to the reserved capacity during the
    interim period to have a right-of-first-refusal during the interim
    period.

By direction of the Commission.

Nathaniel J. Davis, Sr.,

Acting Deputy Secretary.

[^1]: *Transcontinental Gas Pipe Line Corp.*, 118 FERC ¶ 61,234 (2007)
    (March 22, 2007 Order). On March 28, 2007, Transco filed tariff
    sheets, in Docket No. RP07-178-001, to comply with the March 22,
    2007 Order and on May 21, 2007, the Commission issued an unpublished
    order accepting the tariff sheets tendered in Docket No.
    RP07-178-001.

[^2]: *Id.* at P 10.

[^3]: *Gulf LNG Energy, LLC, et al.*, 118 FERC ¶ 61,128 (2007).

[^4]: Transco's August 3, 2007 Filing at 3 (citing March 22, 2007 Order,
    118 FERC ¶ 61,234 at 62,167).

[^5]: *See* August 10, 2007 *Foster Natural Gas Report* at page 23.