This post is the first part of our 3 part pipeline series. Learn more by reading::
The Keystone XL pipeline was dealt a death blow when President Obama rejected it in early November. While it was a setback for that project’s developers, it hardly represents a halt to the development of all transmission pipeline infrastructure projects. As of September of 2015, U.S. Industrial Info, a leading provider of global market intelligence with a specialization in energy markets, was tracking 72 active oil and gas pipeline projects across the country. More are surely to come.
The main takeaway from the Keystone XL decision should not be that future pipeline projects are doomed, but rather that the process to get to the final decision took far too long. The example serves as a call to regulatory bodies in the energy industry to take a look at how they might make improvements to any and all review processes. Prominent among the regulatory reviews is the Federal Energy Regulatory Commission’s (FERC) interstate pipeline review process which could be refined to become more efficient.
To understand how the FERC process could be revised, it’s first important to look at the differences between interstate pipeline projects that cross multiple state lines and intrastate pipeline projects, those located entirely within a single state. FERC has authority at the federal level to review and approve the need and siting for interstate pipeline projects. Meanwhile, intrastate pipeline projects are subject to whatever process state authorities have established for review and approval. In some states, such as New York and Ohio, there is a clear state review process for obtaining authorization to construct certain types of intrastate pipelines. In contrast, Pennsylvania currently has no intrastate transmission pipeline siting process and no review of the need for such a project, except under very limited circumstances.
Interstate pipeline projects can both impact and benefit local communities, especially the local production, gathering and distribution components of the gas industry. This local impact is one of the reasons why much of the opposition to interstate pipeline projects originates at the state and local level. While FERC technically has complete authority over the interstate pipeline siting and approval process, it would be hard to argue that local voices do not have any influence.
Local impacts can vary widely based on the specifics of a project. For instance, a project taking natural gas liquids from Pennsylvania to a gulf coast processing area may have minimal service impact on the states in between. But a regional dry gas transmission project in three adjoining states, while technically an interstate project, can significantly affect and improve local services available in each of those states.
Similarly, intrastate projects can impact interstate service. An intrastate gas transmission pipeline project can connect with interstate facilities and improve services available in other states. For example, an intrastate pipeline project could relieve excessive demand for use of a nearby interstate pipeline, eliminating costly congestion and inefficiencies.
All of this is to say that, regardless of whether a pipeline is interstate or intrastate, it has understandable and necessary impacts on local, state and national constituencies. In fact, FERC often requires that pipeline projects obtain necessary federal, state and local construction-related approvals and permits in addition to FERC approvals.
The conflict between those wanting to harness the full benefits of the country’s vast natural gas resources and local activists and environmentalists often opposing infrastructure projects presents an opportunity, not just a challenge. The pipeline industry, the public and regulatory agencies must work together to establish a transmission pipeline review process that delivers timely, evidenced-based decisions and considers all reasonable stakeholder input at the local, state and federal level. Sound projects that impact multiple states should not fail to be developed or proposed out of fear that the siting process is too expensive or too long.
For additional information visit: http://www.marketwired.com/press-release/top-10-us-pipeline-project-kickoffs-fourth-quarter-regulatory-issues-low-oil-prices-2056248.htm