Will U.S. Natural Gas Pipelines Get a Piece of the Government’s $1 Trillion Pie?

by Christina Nagy-McKenna, Enerdynamics Facilitator

The Trump administration has sounded the horn: It wants to strengthen United States’ Washington Money.infrastructure to the tune of $1 trillion. Highway projects, bridge projects, water and energy infrastructure projects — the list of needs is long and the corresponding price is hefty. Many in the energy industry hope some of the proposed infrastructure investment money comes their way.

Gas pipeline companies are already linking shale fields to parts of the East where capacity is tight and winter supply prices are vulnerable to severe price spikes. More is needed, they say, particularly in New England where memories of the winter price spikes of 2014 and 2015 are still fresh. Clean energy advocates are hoping to see new electric transmission lines get built and integrate with renewable projects that reduce the industry’s carbon footprint. The urgency to do both of these is further driven by the closure of coal and nuclear power plants and the christening of new natural gas-fired power plants in their place.

Who pays for new natural gas and electric transmission lines is still up for debate as is exactly how the financing will come together. Officials within the new administration have mentioned tax incentives to stimulate infrastructure spending and possible public-private partnerships. In the regulated utility world, distribution and transmission companies historically have recovered costs from their utility ratepayers, however a recent Massachusetts Supreme Court ruling flatly turned down the idea that electric rate payers fund a natural gas pipeline project.

The August 2016 decision put an immediate chill on Spectra Energy’s (now Enbridge) Access Northeast pipeline project. The expansion of the Algonquin pipeline and new LNG storage was to provide enough gas to make 5,000 megawatts of power. After the Supreme Court ruling, utilities Eversource and National Grid pulled out of the project as did four additional area utilities. Enbridge will continue to try build the project, but the uncertainty of the pipeline’s funding has slowed progress.

The Access Northeast pipeline project uncovered another issue: the tension between those who believe that more natural gas pipelines are needed and those who believe that no new pipelines should be built and that demand side management (DSM) is the key. In this case, Attorney General of Massachusetts Maura Healey not only disagreed that the electric utilities interested in the Access Northeast project should pass the costs onto their customers, she also questioned the need for more natural gas pipeline capacity in the area. She commissioned a research study, “Regional Electric Reliability Options Study,” that found the region could maintain current reliability standards until 2030 without making infrastructure changes. The study also found that demand response programs and energy efficiency programs would help reduce customer demand while keeping customer risk low.

Other pipeline projects making recent headlines include:

  • TransCanada’s Keystone Pipeline and Energy Transfer’s Dakota Pipeline projects —  Both projects faced intense public protests before being issued permits by the new administration. Even though both pipelines were meant to ship oil, there is a concern in the natural gas industry that its pipelines may be subject to increased environmental scrutiny simply because they too are pipelines like Keystone and Dakota.
  • Dominion Energy’s Atlantic Coast Pipeline —  Federal Energy Regulatory Commission (FERC) staff determined this project should move forward even though it will mean impacts to the surrounding environment. Opponents do not believe that mitigation measures will make up for the damage, and others have questioned whether the 1.5 Bcf/day of natural gas is necessary. This tension between those who would build and those who would preserve the environment will likely continue.

 

Ultimately, pipeline projects that can show they are necessary and in the public interest will likely be built regardless of the new administration’s $1 trillion plan. So far in 2017, before it lost its quorum, FERC certified 7 Bcf/d of pipeline capacity. This is in addition to the 17.6 Bcf/d of pipeline capacity it certified in 2016. FERC certification does not guarantee that a pipeline will be built, thus the industry will need to continue to be aware of environmental, regulatory, and customer issues.


 

References:

Regional Electric Reliability Options Study,” The Analysis Group on behalf of Office of the Attorney General Maura Healey, 2015.

“FERC Certifies Several New Natural Gas Pipelines in 2017,” U.S. Energy Information Administration, March 7, 2017.

“NE Natural Gas Pipeline Capacity Increases for First Time in 6 Years,” Oil and Gas, February 2017, Vol. 244, No. 2.

Moran, Paul, “Northeast Natural Gas Pipelines:  Is More Capacity Needed?”, Oil & Gas, February 2017, Vol. 244, No. 2.

“P&GJ’s 2017 Worldwide Pipeline Construction Report, Oil & Gas, January 2017, Vol. 244, No. 1.

Shallenberger, Krysti, “NARUC 2017: A Little Less Climate and a Lot More Infrastructure,” Utility Dive, February 16, 2017.

Walton, Robert, “As Utilities Ramp up Gas, Enbridge Play for Spectra Highlights Increasing Value of Pipelines,” Utility Dive, September 16, 2016.

Walton, Robert, “Constitution Pipeline Court Case Could Open Path to More Challenges from Greens,” Utility Dive, November 23, 2016.

Walton, Robert, “Eversource Mulls Pipeline Funding Options Following Massachusetts Court Setback,” Utility Dive, September 7, 2016.

Walton, Robert, “FERC Staff:  Atlantic Coast Pipeline Should Move Forward Despite Environmental Impacts,” Utility Dive, January 3, 2017.

Walton, Robert, “Massachusetts Court Bars Electric Utilities from Charging Ratepayers for Gas Pipeline Construction, Utility Dive, August 18, 2016.

Walton, Robert, “National Grid, Eversource to Pull Out of Access Northeast Gas Pipeline Project,” Utility Dive, August 24, 2016.

Walton, Robert, “New Study Says Atlantic Coast, Mountain Valley Pipeline Projects Unnecessary,” Utility Dive, September 14, 2016.

About Enerdynamics

Enerdynamics was formed in 1995 to meet the growing demand for timely, dynamic and effective business training in the gas and electric industries. Our comprehensive education programs are focused on teaching you and your employees the business of energy. And because we have a firm grasp of what's happening in our industry on both a national and international scale, we can help you make sense of a world that often makes no sense at all.
This entry was posted in Natural Gas and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s