Hope Gas provides details, updates in Red Lines abandonment case
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MORGANTOWN - Hope Gas offered some insights into its phased plan to abandon some "Red Lines" acquired from other producers in recent testimony to the Public Service Commission.
Jeffrey S. Nehr, Hope’s senior vice president of Business Development, provided the testimony in its case to abandon 32 miles of what it calls Category 1 Red Lines - with no farm tap customers and no connected producers.
Hope acquired a total 2,854 miles of lines, Nehr said, from Equitrans and Dominion Gathering. About 1,180 miles are red lines with 467 farm tap customers, 285 producers and 291 free gas customers. The Category 1 lines have 16 free gas customers.
Nehr reiterated the reasons it wants to abandon the Red Lines in phases: "Hope has an obligation to ensure that all of its customers - including its farm-tap customers - receive safe, reliable and economical gas service. In Hope's opinion as a reasonable and prudent operator of its systems, the Red Lines are not necessary or useful to serve its customers, and, worse, in their present condition, the Red Lines are uneconomic for Hope to continue to operate and maintain or replace. Furthermore, Hope does not require the supply from Red Lines, or cannot obtain economical supply on those Red Lines, in order to service Hope's gas service customers, including its farm-tap customers."
The Red Lines, he noted, make up 41% of the gathering pipeline it acquired, to serve only 467, or 3%, of the total 14,800 farm-tap customers it acquired. "This is simply not economical; particularly so given the specific operational costs attributed to the Red Lines."
The Category 1 Red Lines are located in 13 counties: Monongalia, Marion, Barbour, Braxton, Calhoun, Doddridge, Gilmer, Harrison, Lewis, Ritchie, Taylor, Upshur and Wetzel.
They are mostly 2-inch and 4-inch diameter old bare steel pipelines that primarily move production from the fringe areas of the gathering system to larger diameter pipelines that ultimately take production to gathering compressors. They gather wet marginal conventional well gas.
"Given their current condition," Nehr said, "for Hope to continue operating the Red Lines, they would need to be replaced." But replacing them with new plastic pipes would cost about $600 million, and Hope can’t justify that expense.
"Hope remains ready for any producer or interested third party to submit a request to Hope to acquire and take over any Red Line," he said.
Hope plans to address the other Red Line categories in future filings: Category 2, one producer per line (12 total) and no farm taps, 32 free gas customers, 68 miles; Category 3, 112 producers and no farm taps, 69 free gas customers, 339 miles; Category 4, 161 producers, 467 farm tap customer, 174 free gas customers, 741 miles.
Hope was not asked about and did not address what would happen to free gas customers in this testimony.
In April, in a proposed notice, Hope told free gas customers: "It is your obligation to determine if you receive free gas. A free-gas user obtains its rights to free-gas pursuant to contract with a third-party, which arrangement is not subject to the commission's jurisdiction. Hope does not have a public utility obligation to deliver gas to a free-gas user from its pipelines, including the Category 1 Red Lines that Hope is proposing to be taken out of service in its petition."
Free gas customers will be required to make their own arrangements for future energy supply.
Hope originally sought a PSC order in this case by June 30, but the PSC extended the timeline in a July order. An evidentiary hearing is set for Sept. 10, and the requested order due date for this case is Nov. 30.