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Natural Gas Transmission Networks: So You Want To Build A Pipeline?

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Presentation on theme: "Natural Gas Transmission Networks: So You Want To Build A Pipeline?"— Presentation transcript:

1 Natural Gas Transmission Networks: So You Want To Build A Pipeline?
INTRODUCTION PURPOSE OF COURSE Examine how FERC analyzes pipeline construction proposals CLARIFY New Pipeline Construction Includes: -”Greenfield” Construction - Expansion of Existing Systems Raymond James, Infrastructure Office of Energy Projects Federal Energy Regulatory Commission At Wyoming Pipeline Authority Monthly Meeting August 2003 Casper, Wyoming

2 What Does FERC Regulate?
Natural Gas Industry Interstate transportation rates and services Interstate gas pipeline construction and oversee related environmental matters Electric Power Industry Interstate transmission rates and services Wholesale energy rates and services Corporate transactions, mergers, securities issued by public utilities

3 What Does FERC Regulate? (con’t)
Oil Pipeline Industry Interstate transportation rates and services of crude oil and petroleum products Hydroelectric Industry Licensing of nonfederal hydroelectric projects Oversee related environmental matters Inspect nonfederal hydropower projects for safety issues

4 Regulation of Interstate Construction
Natural Gas Policy Act (NGPA) Natural Gas Act (NGA)

5 NGPA OR NGA? NGA Certificate Grants a Right of Federal Eminent Domain
NGPA Does Not Confer Any Rights of Federal Eminent Domain; Pipeline May Seek State Eminent Domain

6 Section 3 Import/Export
Natural Gas Act NATURAL GAS ACT Section 7(c) Interstate Section 3 Import/Export Case Specific Blanket Authority Case Specific Automatic Prior Notice

7 Natural Gas Act Blanket Certificate Automatic Authorization
• Cost of facilities is less than $7.6 million • Facilities are “eligible” facilities • Prior Notice • Cost is between $7.5 and $21.2 million • 45-day notice period prior to construction • Facilities are “eligible” facilities

8 Natural Gas Act Case Specific Section 7(c) Certificate
• Conduct a full review of proposal including engineering, rate, accounting, and market analysis • Conduct an environmental review by preparing an Environmental Assessment or an Environmental Impact Statement

9 Project Evaluation How Does FERC Evaluate All Of These Major Projects?
What Is The Criteria Used in This Evaluation?

10 PL99-3-000 Certificate Policy
Apply Threshold Test Subsidization  Incremental Rates No Subsidization  Rolled-in Treatment System improvements for existing customers  Rolled-in Treatment

11 PL99-3-000 Certificate Policy
Develop Record Adverse Impacts on Existing Customers and Pipelines Landowners Communities Specific Benefits Need and Market Condemnation Impact

12 PL99-3-000 Certificate Policy
Adverse Impacts Needs and Benefits Record Balance Benefits and Impacts Complete Traditional Environmental Process

13 Commission Action on Pipeline Projects in the Rockies
Since mid-1999, the Commission has approved 17 projects to increase pipeline capacity to move gas out of the Rockies 3.8 Bcf per day of capacity 1,788 miles of pipeline 394,689 horsepower of compression

14 Major Pipeline Projects Certificated (MMcf/d) January 2002 to July 2003
Georgia Straits (96) Northwest (162) Northwest (224) WBI (80) Iroquois(70) Tuscarora (96) Northwest (175) 1 ANR (220) 2 NFS/DTI(150) 3 4 TETCO(250) CIG (272,92) 1. Algonquin (285) 2. Islander East (285) 3. Iroquois (85) 4. Columbia (165,270) Kern River (886) Greenbrier (600) East Tennessee (510) Kern River (282) North Baja (500) TETCO (197) El Paso (320) Transco (359) SCG Pipeline (190) Southern (330) 7.3 BCF/D Total 2,225 Miles Tennessee (320) 1

15 Interstate Pipeline Capacity Out of Wyoming
FERC Interstate Pipeline Capacity Out of Wyoming 0.2 Bcf Note: Williams Gas Pipelines Central Inc. is now Southern Star Central Gas Pipeline. Opal Hub 2.2 Bcf Capacity volumes include Kern River’s 2003 expansion project (886 MMcf/d) and Williston Basin’s Grasslands Pipeline (80 MMcf/d). Cheyenne Hub 3.1 Bcf 1 Source: RDI PowerMap and various flow diagrams on file at the FERC. 15

16 Productive Capacity vs. Pipeline Capacity
EIA shows that the Rockies could produce up to 6 Bcf per day through 2003. Wyoming Energy Commission shows that the Rockies could produce up to almost 8.0 Bcf per day by 2005 and 11.0 Bcf per day by 2010. Both of these totals are greater than the current pipeline capacity of the region. DOE’s Natural Gas Productive Capacity for the Lower-48 States – Rocky Mountain area includes the states of MT, WY, UT, CO, and ND. The Rocky Mountain Area gas production has increased from 4 Bcf/d in the mid-1990’s to the current rate of 6 Bcf/d with much of the increase coming from coal bed methane. Current conventional and coal bed methane production of 6 Bcf/d is expected to be maintained through 2003 with coal bed methane production expected to increase to 2.3 Bcf/d by 2003 from an average of 1.9 Bcf/d in 2002. From Wyoming Energy Commission’s PACE Study – Pace forecasts Rocky Mountain production potential could increase from 5.4 Bcf/d presently to almost 8.0 Bcf/d in 2005 and 11.0 Bcf/d by Production potential then holds steady until 2015.

17 Major Pipeline Projects Pending (MMcf/d) July 2003
Maritimes (400) Algonquin (200) CIG (118) Texas Eastern (223) Columbia (135) El Paso (140) Cove Point (445) Cheyenne Plains (560) Calypso (832) 4.0 BCF/D Total 580 Miles Ocean Express (842) 1

18 Major Pipeline Projects in Pre-filing (MMcf/d) August 2003
Grasslands Expansion (120) (WBI) Weaver’s Cove Energy LNG (400) Ruby Pipeline (125) Sound Energy Solutions LNG (700) (Mitsubishi) Picacho Pipeline (1,000) Pacific Texas 1.2 BCF/D Total Pipeline Capacity 1.1 BCF/D Deliverability Capacity 1,570 Miles 1

19 Planned Projects To Move Gas in the Rockies
Staff is aware of 15 projects to move Rockies’ gas that would have a potential capacity of 7.3 Bcf per day. In addition, there is a project in planning that would reverse flow on a Rockies’ pipeline, allowing for more flexibility in moving Rockies’ gas

20 NEPA Pre-Filing Guidelines
Applicant Must: File a written request Explain reasons and timing considerations Verify other major state and federal agencies support the process Describe consultations completed to date The pre-filing NEPA process will begin with a written request from an applicant for involvement by the staff.

21 NEPA Pre-Filing Guidelines
Applicant Must: Propose options for third-party contractor Agree to file complete application Preliminary route maps (if possible) Prepare a Public Participation Plan

22 You Need a Plan for Public Participation
A Plan is required for NEPA Pre-filing and is strongly encouraged in the traditional process Must be an intentional Component The Plan may include setting up a Website, a toll-free 800 telephone number, quarterly newsletter, a commitment to place all filings and information in libraries, and holding community-style “Open Houses”

23 NEPA Pre-Filing Guidelines Staff Activities
FERC will assign a PF docket number Issue a scoping notice Examine alternatives Attend site visits and meetings Initiate preparation of NEPA document Review draft resource reports

24 NEPA Pre-Filing Guidelines Staff Activities
Identify affected parties Landowners Agencies Others Facilitate: Issue identification Study needs Issue resolution “affect” should be “affected” “preliminary NEPA document” These are some of the activities that FERC staff and the third-party contractor may be involved with if the written request is accepted by the Office of Energy Projects.

25 Timeline Traditional vs. NEPA Pre-filing
File At FERC Announce Open Season Develop Study Corridor Prepare Resource Reports This a new version of a slide many of you may have seen before. The point we’re illustrating is that here both projects start planning at the same time and are following essentially the same path. They are starting their open seasons at the same time, developing their corridors at the same time. It is the Commission’s timeline that shifts. Note that there is no shortcut in the NEPA process. The time savings in the Commission’s decision-making process is reflective of the efforts by all the stakeholders, the applicant, and FERC staff in identifying and resolving issues at the earliest possible point. We believe this will be a benefit If the process is successful, the range of issues left for the Commission to address is a small and already well known, with no surprises. Result --quicker decisions! We currently have one project that has completed the Pre-filing portion of its review. The application was filed about 9 months after the open season; and the draft EIS was issued less than 4 month after filing. Conduct Scoping Issue Draft EIS Issue Final EIS Issue Order Announce Open Season Develop Study Corridor File At FERC Prepare Resource Reports Conduct Scoping Review Draft Resource Reports & Prepare DEIS Issue Draft EIS Issue Final EIS Issue Order (months)

26 An Example: Kern River Expansion
716 miles of pipeline looping through CA, NV, UT, WY 3 New Compressors $1.2 Billion 885.6 MMcf/day of additional capacity Doubles Kern River’s capacity from MMcf/day to 1.7 Bcf/day PROPOSED COMPRESSOR STATION PROPOSED PIPELINE LOOPING X

27 Kern River Expansion Environmental Highlights
Environmentally Acceptable New pipe parallels initial right-of-way. Mitigation measures minimize potential impacts. First Major Project to utilize NEPA Pre-Filing Order issued less than 1 year from initial filing date - Final EIS completed in June 2002 which was 11 months from filing date. In comparison, FEIS and certificate for Gulfstream required 16 months from initial filing date; Kern River’s initial greenfield project required 30 months for the FEIS. Interagency cooperation contributed to meeting Federal and state environmental requirements.

28 An Example: Greenbrier Project
279 miles of pipeline through WV, VA, and NC 2 New Compressors Stations $0.5 Billion 600 MMcf/d of new capacity Order issued 10 months after initial filing FEIS issued 8 months after initial filing

29 Benefits of NEPA Pre-filing
More interactive NEPA process, no shortcuts Earlier, more direct involvement by FERC, other agencies, landowners Goal of “no surprises” Time savings realized only if we are working together with stakeholders FERC staff is an advocate of the Process, not the Project! We think the benefits are self-explanatory. We understand the industry is waiting to see if our expectations become reality. They want a degree of certainty that is difficult to base on the experience of one project. More applicants have expressed their willingness to experiment with us, one approved, several others in discussions This will only work is all the players hold up their end of the bargain. We need a real commitment from to identifying and resolving issues to reach our “no surprises” goal. This all gets back to best communication practices. The FERC will not be a project advocate; it is the process that we must keep on track.

30 What It All Means to You Things will be perfect forevermore!
Signatory agencies stand ready to assist Consistent key agency contacts Increased need for consistent and timely information from project sponsors Good stakeholder communication is imperative, must be transparent Better project design, quicker decision process Bottom line – The agencies are ready to evaluate their roles and participate in the process. To aid communication they will establish key contacts. Try to establish relationships with these folks for the long-term. The company isn’t going away once the project’s built. Industry needs to be consistent on its end—with contacts and information. Be timely in providing information, check back to make sure it got into the right hands. Make everyone aware of the efforts being made to involve stakeholders and the applicant’s willingness to really listen. Show flexibility, make sure stakeholders receive feedback and answers. As we saw on the timeline, we’re confident that a project designed with the stakeholders concerns in mind will result in a better design and a faster decision.

31 Contact Raymond E. James


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