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FERC to re-examine natural gas pipeline review process

21 Dec 2017 19:55 GMT
FERC to re-examine natural gas pipeline review process

Washington, 21 December (Argus) — Federal Energy Regulatory Commission (FERC) chairman Kevin McIntyre wants his agency to re-examine the process his agency uses to review and approve construction of natural gas pipelines and other infrastructure.

The commission's pipeline approval process faces scrutiny in decisions by courts and state regulators. Critics have suggested that FERC does not sufficiently consider climate policy implications and effects on landowners.

McIntyre, a Republican who joined the commission and took over as chairman earlier this month, said today an internal review of pipeline approvals does not mean the current process is flawed. Internal FERC guidelines on pipeline approvals date to 1999, and "it is incumbent upon us to take another look at the way in which we assess the value and the viability of our pipeline applications," he said at the commission's monthly meeting.

The pace of pipeline approvals has picked significantly with the increase in US natural gas production in the past decade and the emergence of Pennsylvania as the second-largest producing state, after Texas. The commission in January-October approved 38 projects to build new pipelines or expand existing ones, for a total proposed capacity of 23.5 Bcf/d (666mn m³/d) — 63pc more than in the same period last year.

McIntyre said he has yet to determine the format and scope of the internal review. "It could be in a form of notice of proposed rulemaking, or any other form," he said.

The key requirement is to generate comments from all stakeholders to ensure that FERC accurately and efficiently assesses the pipeline applications it receives, he said.

FERC member Cheryl LaFleur — the longest serving commissioner — suggested amending guidelines for reviewing the climate effects to "develop a clear idea of who consumes the gas, which helps determine the downstream effects."

FERC at present reviews only direct emissions associated with construction of a pipeline project. FERC says there is too much uncertainty over how gas will be used or where it will be produced to yield meaningful data for a comprehensive emissions review.

Federal courts typically sided with FERC on that issue. But the standard faces a legal challenge brought by the environmentalists against FERC's approval of the 1.1 Bcf/d Sabal Trail pipeline in Florida, in a case pending before the DC Circuit Court of Appeals.

LaFleur, a Democrat who has been a FERC member since 2010 and served two stints as the commission's chairman, also argued that FERC should conduct its own economic analysis of whether new pipelines are needed.

FERC's 1999 pipeline policy review statement suggests weighing several factors in determining whether a pipeline is in the public benefit. But in practice the commission staff merely reviews if customers have subscribed for capacity on the proposed projects.

The other Democrat on the commission, Richard Glick, said he backed LaFleur. More and more pipelines are built in densely-populated areas in the northeast and along the mid-Atlantic coast, he said. "It is time to review how new pipelines address the public benefit."

McIntyre pushed back against the suggestions. The proposed review "should not be read as a complaint about the current policy and practice," he said. Another Republican commissioner, Neil Chatterjee, has already stated opposition to LaFleur's proposal. The third Republican on the panel, Robert Powelson, said the review hopefully will put to rest the "speculation that we rubber-stamp pipelines here."

Industry group the Interstate Natural Gas Association of America said the FERC review will demonstrate that "the 1999 policy statement has withstood the test of time quite well."

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