Calhoun LNG, L.P., 092007 FERC, CP05-91-000

Docket Nº:CP05-91-000, CP05-380-000, CP05-381-000, CP05-382-000
Party Name:Calhoun LNG, L.P. Point Comfort Pipeline Company, L.P.
Judge Panel:Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff. Nathaniel J. Davis, Sr. Acting Deputy Secretary.
Case Date:September 20, 2007
Court:Federal Energy Regulatory Commission

120 FERC ¶ 61, 259

Calhoun LNG, L.P.

Point Comfort Pipeline Company, L.P.

Nos. CP05-91-000, CP05-380-000, CP05-381-000, CP05-382-000

United States of America, Federal Energy Regulatory Commission

September 20, 2007

Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.


1. On March 18, 2005, in Docket No. CP05-91-000, Calhoun LNG, L.P. (Calhoun) filed an application under section 3 of the Natural Gas Act (NGA), requesting authority to site, construct, and operate a liquefied natural gas (LNG) import terminal and associated facilities at the Port of Port Lavaca-Point Comfort in Calhoun County, Texas.1

2. On June 10, 2005, in Docket No. CP05-380-000, Point Comfort Pipeline Company, L.P. (Point Comfort) filed an application under section 7(c) of the NGA, requesting authority to construct and operate a pipeline, known as the Point Comfort Pipeline, from the tailgate of Calhoun’s proposed LNG terminal to various interstate and intrastate pipelines. In addition, in Docket Nos. CP05-381-000 and CP05-382-000, respectively, Port Comfort requests authority under section 7(c) to provide open-access firm and interruptible transportation service under subpart G of Part 284 of the regulations and for a blanket construction certificate under subpart F of Part 157 of the regulations.

3. This order grants Calhoun’s proposals to construct and operate an LNG import terminal under section 3 and Point Comfort’s proposals to construct pipeline facilities under section 7(c), with appropriate conditions, as discussed below.

I. Background

4. Calhoun is a Delaware limited partnership with Calhoun LNG GP, LLC (Calhoun LNG GP) as the general partner and Gulf Coast LNG Partners, L.P. (GCLP) as the limited partner. Calhoun LNG GP is a Delaware limited liability company whose sole member is GCLP. GCLP is a Delaware limited partnership with Gulf Coast LNG Partners, L.P., a Delaware limited liability company, and Haddington LNG GP, LLC, a Delaware limited liability company, as the general partners.

5. Point Comfort is a newly formed pipeline company that does not own any existing pipeline facilities and is not currently engaged in any natural gas operations. Point Comfort is a Delaware limited partnership with Point Comfort Pipeline Company GP, LLC as the general partner and Haddington Ventures, LLC, a Delaware limited liability company, and Gulf Coast LNG, LLC, a Texas limited liability company, as limited partners.

II. Proposals

6. The Calhoun LNG Project will receive, store, and vaporize foreign-source LNG. The vaporized LNG will then be sent out through the terminal facilities to the proposed Point Comfort pipeline at a single point within the boundaries of the terminal, for delivery to two industrial customers, as well as to nine intrastate and interstate pipelines, as described below. Calhoun and Point Comfort were formed solely to develop, construct, own, operate, and maintain the terminal and the pipeline, respectively.

A. Calhoun’s Proposal

7. Calhoun seeks authorization under section 3 to site, construct, and operate: (1) an LNG receiving facility (including docking and unloading facilities, piping, and appurtenances); (2) an LNG storage and vaporization facility (including two single containment 160, 000 cubic meters (m3) LNG storage tanks, vaporization units, and associated piping and control equipment); and (3) associated utilities, infrastructure, and support systems. The marine terminal will have the capability of receiving 75, 000 m3 to 220, 000 m3 ships. Calhoun anticipates receiving and unloading approximately 120 ships per year. The project will be designed for an installed gas send-out capacity of 1.0 billion cubic feet (Bcf) per day. Calhoun states that the vaporization equipment at the LNG terminal will be capable of regasifying the LNG to yield commercial quality natural gas for send-out and delivery into the intrastate and interstate natural gas pipeline grid.2

8. Calhoun proposes to construct the LNG terminal and associated facilities between Lavaca Bay and Cox Bay in Calhoun County, Texas (i.e., the Port of Port Lavaca - Point Comfort). The project site is on an 88.9-acre tract of man-made land owned and operated by the Calhoun County Navigation District, a political subdivision of the State of Texas, and leased to Calhoun. Construction and operation of the terminal will require approximately 73 acres.

B. Point Comfort’s Proposals

1. Facilities

9. Point Comfort requests authority under section 7(c) to construct and operate approximately: (1) 27.1 miles of 36-inch diameter pipeline extending from Calhoun’s LNG terminal north to interconnects with various pipelines before ending at a connection with Tennessee Gas Pipeline Company (Tennessee) approximately three miles southwest of Edna, in Jackson County, Texas; (2) 0.25 mile of 8-inch diameter lateral pipeline from the Point Comfort Pipeline to Formosa Hydrocarbons (the Formosa Lateral), a local industry; (3) 0.25 mile of 16-inch diameter lateral pipeline from the Point Comfort Pipeline to Transcontinental Gas Pipe Line Corporation’s meter station (the Transco Lateral); (4) ten delivery points with nine interstate and intrastate pipelines; and (5) associated pipeline facilities, including pig launcher and receiver facilities and three mainline valves. No compressor facilities are planned. The pipeline facilities are designed for a maximum daily deliverability of 1.0 Bcf per day at an operating pressure of 1, 000 psi.

10. Point Comfort will receive natural gas at a metering station within the boundaries of Calhoun’s LNG terminal site. Point Comfort will transport the regasified LNG from the import terminal to two local industries (Formosa Hydrocarbons and Formosa Plastics) and to interconnections with four intrastate pipeline companies (Channel/Houston Pipe Line JV Pipeline, Kinder Morgan-Tejas Pipeline Company, Enterprise-Valero Pipeline Company, and Kinder Morgan Texas Pipeline Company) and five interstate pipeline companies (Florida Gas Transmission Company, Gulf South Pipeline Company, LP, Natural Gas Pipeline of America [Natural], Transco, and Tennessee).3

11. The construction of the Point Comfort pipeline will impact 416.6 acres of land, including construction right-of-way for the pipeline and laterals, temporary workspaces, access roads, and contractor staging areas. Once in operation, the pipeline will require approximately 99.4 acres for the permanent easement for the pipeline, 0.8 and 0.9 acre for the easement along the Formosa and Transco Laterals, respectively, 3.5 acres for meter station sites and other above-ground facilities, and 2.9 acres for access roads. Approximately 25.2 miles of the Point Comfort pipeline route will be adjacent to existing rights-of-way. The Formosa Lateral will be adjacent to existing rights-of-way for 0.2 mile and the Transco Lateral will be adjacent to existing rights-of-way for its entire length.

12. Point Comfort states that it conducted an open season from August 15, 2005 to September 14, 2005. As a result of the open season, Point Comfort asserts that Texana Marketing, L.P. (Texana Marketing) submitted a bid for 1, 050, 000 dekatherms (Dth) per day of capacity, the thermal equivalent of the fuel capacity of the line. Point Comfort states that it entered into a binding precedent agreement with Texana Marketing for all of the capacity of the Point Comfort Pipeline.

2. Rates

13. Point Comfort estimates that its proposed pipeline will cost $62, 582, 000. Point Comfort proposes to offer cost-based firm (Rate Schedule FTS), interruptible (Rate Schedules ITS), and parking and lending service (Rate Schedule PALS) transportation services on an open-access, non-discriminatory basis under Part 284 of the regulations.4] Point Comfort states that the proposed cost-based rates reflect a straight fixed-variable rate design. The cost of service is levelized by adjusting the annual depreciation expense over a 20-year period. Point Comfort states that it may offer negotiated rates as an option pursuant to section 30 of the General Terms and Conditions of its pro forma tariff.

14. The proposed FTS rate is derived using the annual levelized cost of service5 of $11, 093, 142 and the annual FTS reservation billing determinants of 12, 600, 000 Dth, based on Point Comfort’s maximum daily design capacity. The proposed maximum cost-based FTS reservation rate is $0.8804 per Dth. Point Comfort states that it currently has no variable costs, so the proposed FTS usage rate is $0 per Dth.

15. The ITS rate is derived at a 100 percent load factor of the FTS rate. Point Comfort has not identified any usage determinants associated with its proposed ITS service. The proposed maximum ITS rate is $0.0289 per Dth. The same rate is proposed for PALS service. For both its firm and interruptible services, Point Comfort estimates a 0.2 percent retainage for lost and unaccounted-for gas.

3. Requests for Blanket Certificates

16. Point Comfort requests a blanket certificate under subpart G of Part 284 in order to provide firm and interruptible transportation services for its customers. Point Comfort also requests a blanket certificate under subpart F of Part 157 in order to perform routine construction, maintenance, and operational activities related to its proposals.

III. Interventions

17. Notice of the Calhoun’s application in Docket No. CP05-91-000 was published in the Federal Register on April 5, 2005 (70 Fed. Reg. 17, 241). The parties in Appendix A filed timely, unopposed motions to intervene. Timely, unopposed motions to...

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