May 2013, Vol. 240, No. 5

Government

Pipeline Infrastructure Shortfalls Key To Gas/Electric Interconnection Concerns

Concern in Congress about insufficient interstate pipeline infrastructure is prompting imminent introduction of a bill to speed up construction applications at the Federal Energy Regulatory Commission (FERC).

The bill would force federal agencies required to provide input on a pipeline’s environmental impact to meet deadlines for submitting comments to FERC. An increasing reliance on natural gas by electric utilities has sparked worries about pipeline bottlenecks, particularly in New England and the Midwest. Those concerns were amply in evidence at hearings in the House Energy & Commerce Committee’s subcommittee on energy and power March 19.

Rep. Mike Pompeo (R-KS), a member of the Energy and Power subcommittee, referred to a February 2013 report from the Government Accountability Office (GAO) which reported that FERC does not track the time it takes for a construction permit to be approved because the agency believes that information has “limited usefulness.”

Doing its own research the GAO found that for those projects that were approved from January 2010 to October 2012, the average time from pre-filing to certification was 558 days; the average time for those projects that began at the application phase was 225 days.

Two FERC commissioners testified at the hearings: Philip Moeller and Cheryl LaFleur. Pompeo asked whether FERC should keep statistics on how long it takes to approve a new pipeline. Both answered “yes.” Then he asked whether they were aware that a report from the Interstate Natural Gas Association of America (INGAA) found that 20% of pipelines experience delays of at least six months after a National Environmental Policy Act (NEPA) review of the application is completed.

NEPA requires environmental impact statements on a project, which, in the case of pipelines, means that FERC must wait for input from agencies around the government, such as the Fish and Wildlife Service. Those agencies often drag their feet.

Pompeo said he is developing legislation to force agencies outside of FERC to meet strict timetables for providing environmental input. “This will allow pipelines to move forward so they can have a little more certainty, I hope my bill will have bi-partisan support.” Pompeo did not indicate when he will introduce his bill.

Moeller responded: “The challenges that you alluded to are the resource agencies typically don’t have the accountability to come back with an answer. It is the way the statute is. If you created a timeline of responsibility, I think they would be a lot more responsive.”

In addition, Pompeo criticized President Obama for suggesting in mid-March that FERC include the impact on “climate change” in any NEPA analysis it does on a new pipeline or any other project. He asked Moeller whether FERC has that authority. Moeller said he would have to review court decisions before responding. A FERC spokeswoman queried three weeks after the hearing said FERC does not yet have an answer.

Pompeo seemed to get support from one key Democrat on the issue of including climate change impact in NEPA reviews. Rep. Gene Green (D-TX) said, “I agree with my colleague that FERC is not prepared. We have problems on both sides of the aisle giving agencies responsibilities they are not ready for.”

Most of the hearing, however, was devoted to questions about what FERC could or should do to help electric utilities obtain dependable access to natural gas. Demand for natural gas has skyrocketed as coal-fired generation has been taken off the board because, in large part, of Environmental Protection Agency regulations meant to discourage its use.

FERC has been conducting technical conferences and meetings to determine whether it needs to either develop new rules on such issues as scheduling and communications or leave solutions to the regions, which have different mixes of energy inputs and pipeline infrastructures.

“The challenges are serious, very real, and somewhat urgent, especially in New England and the Midwest,” said Moeller. “Some in the industry believe nothing short of a major blackout will provide sufficient motivation to the various stakeholders to solve the problems facing us.”

After the hearings, Don Santa, president and CEO of INGAA, urged FERC to take prompt action to address the deficiencies in electric power market rules that create unnecessary and avoidable risks to electric power reliability.

“We recognize that many see the problem as one of insufficient pipeline capacity. While we agree that pipeline capacity expansion in some regions is necessary, it is important to clarify that the root cause of the problem is a structural flaw in the deregulated wholesale electric power markets,” he said. “

These markets fail to compensate for electric reliability, regardless of fuel the generator uses to create electricity. This, in turn, discourages electric generators from holding firm pipeline capacity, a prerequisite for natural gas pipeline expansion,” Santa said.

It is worth noting in passing that Rep. Bobby Rush (D-IL), the senior Democrat on the Energy and Power subcommittee, focused his opening statement on “lack of access by minorities and women” to jobs in the pipeline industry. He quoted a recent GAO report which said, according to Rush, that the levels of participation by minorities in the pipeline industry are “so small as to be negligible.” Rush did not mention any action he might be taking to address that issue.

Natural Gas Industry Allies Urge Congress To Fund NGV R&D
NGVAmerica joined with a group of NGV advocates – including the American Gas Association, the American Public Gas Association and the Gas Technology Institute – in requesting Congress provide $30 million next year for NGV research and development. In a letter to the House and Senate Committees on Appropriations, the organizations asked the committees to approve the funding for research that will reduce costs and improve efficiency and durability of advanced natural gas engines and vehicles, fuel storage and fueling infrastructure, including home fueling systems.

The funding request also seeks $100 million for research and development to create best “well-to-wheels” practices to further reduce greenhouse gases and protect the environment. Another $40 million is sought to create technologies designed to improve efficiencies in the commercial and residential sectors encompassing both waste heat recovery and combined heat and power disciplines.

“We have a huge natural gas resource base right here at home and we should capitalize on it to displace foreign oil,” said Richard Kolodziej, president of NGVAmerica. “Natural gas vehicles are the best way to do that. They are a here and now technology, but, through more research and development, natural gas vehicles will get even more efficient, more cost-effective and cleaner.”

New Offshore Safety Regulation Unveiled
The Obama administration released a new regulation designed to improve the safety of offshore drilling, including a requirement that rig workers have authority to shut down operations in case of potential emergencies.

Federal oil and gas regulator James Watson said the new regulation is a result of BP oil spill. Employees on the Deepwater Horizon rig were criticized for not recognizing serious safety threats and not taking immediate steps to shut operations before the explosion in the Gulf of Mexico. The rule also requires companies to submit their safety and environmental management systems to third-party assessments.

Under the regulation, companies can conduct their first safety and environmental review themselves. Later reviews would have to be done by outsiders, accredited auditors. The rule has support from the American Petroleum Institute.

“The finalized rule recognizes the industry’s safety-first approach by incorporating best practices recommended by both API and the Center for Offshore Safety, a joint industry effort focused on continuous improvement in safety and offshore operational integrity,” API spokesman Brian Straessle said.

The rule permits surprise inspections by federal regulators done at random or as a result of performance issues.