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Atlantic Sunrise Pipeline Issued Final EIS From FERC

 

delaware riverkeeper - Jim Willis reports

Jim Willis
Editor & Publisher, Marcellus Drilling News (MDN)

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FERC has issued its final environmental impact statement for the Atlantic Sunrise Pipeline bringing this project one step closer to being in full service.

On the last business day of 2016, the Federal Energy Regulatory Commission (FERC) issued a favorable final environmental impact statement (EIS) for one of the major pipeline projects in the Marcellus/Utica: the $3 billion Williams Atlantic Sunrise Pipeline project. The FERC EIS for Atlantic Sunrise (see full copy below) said that although there may be some adverse environmental effects from the project, those effects can be “reduced to less-than-significant levels” by Williams via the plans submitted.

atlantic sunrise pipeline

Click to view full report

FERC considered five alternative routes and chose to stick with the preferred route proposed by Williams. However, FERC did ask Williams two make minor tweaks to four locations along the route of the pipeline.

Cabot Oil & Gas, the main customer for the 1.7 billion cubic feet of capacity, was positively giddy with the announcement. Cabot released their own press release to say that although they previously gobbled up 850 million cubic feet (MMcf) of capacity along the new pipeline, they are adding another 150 MMcf to that number, giving the company a grand total of 1 billion cubic feet (out of 1.7 Bcf) of capacity along the pipe when it’s built. Holy moly! That will be 1 Bcf per day of Cabot’s gas going from Susquehanna County, PA to other states, outside the region. VERY smart move by Cabot. Below we have the news and feedback/analysis about the announcement.

Federal regulators said Friday that the proposed Atlantic Sunrise natural gas pipeline would result in some adverse environmental impacts but that those could be “reduced to less-than-significant levels” via mitigation efforts agreed to by its builders.

The final environmental impact statement issued by the Federal Energy Regulatory Commission is the next step toward a final decision on the project, which would transport about 1.7 billion cubic feet of natural gas a day through central Pennsylvania.

In addition to the roughly 200 miles of pipeline, the project calls for the creation of two new compressor stations and various other infrastructure components to help push gas from the Marcellus Shale fields to markets along the eastern seaboard.

The Atlantic Sunrise is one of several pending pipeline projects in the state that energy producers say are needed to carry the glut of new gas to market and to ensure the continued growth of the industry.

Williams, the Oklahoma-based company behind the $3 billion project, said it was “very pleased” with FERC’s findings on Friday.

“The FERC action is a key step toward the Commission’s final decision on the project, which is expected in early 2017. Following the receipt of all necessary regulatory approvals, we anticipate placing a portion of the project into service during the second half of 2017, followed by placing the full project into service in mid-2018,” the company said, in a written statement.

FERC’s report rejected an alternate route that had been proposed by several local lawmakers that would have followed existing rights of way and affected fewer private land owners. According to the report, that route would have crossed an additional 4 miles of forest land.

And this:

The Federal Energy Regulatory Commission said in a draft environmental impact statement in May that any adverse environmental impacts of the pipeline – which would pass through Lebanon County – could be mitigated to “less-than-significant” levels. It delayed the issuance of its final report from October to December in response to concerns raised by the Environmental Protection Agency and anti-pipeline advocacy groups.

But on Friday, FERC stuck to its guns, determining in its final report that “construction and operation of the project would result in some adverse environmental impacts, but impacts would be reduced to less-than-significant levels with the implementation of Transco’s proposed and our recommended mitigation measures.”

The report seems to bode well for pipeline builder Williams’ chances that FERC will officially approve the project in early 2017, moving Atlantic Sunrise closer to construction. Tulsa, Okla.-based Williams had already pushed back the estimated completion date to mid-2018 due to FERC delays. It still anticipates meeting that deadline, spokesman Chris Stockton said.

Williams is “very pleased” with the decision, Stockton said.

“While we are still analyzing its full contents, we believe the thoroughness of this document underscores our collaborative efforts to design the Atlantic Sunrise project in a manner that minimizes environmental impacts, while fulfilling the critical need of connecting consumers all along the East Coast with abundant, cost-effective Pennsylvania natural gas supplies by leveraging our existing Transco pipeline infrastructure,” Stockton wrote in an email.

In its final report, FERC said it did consider five major alternative routes but determined that none would offer “major environmental advantages” over the proposed route.

The report did ask Williams to make four “minor” route changes. It also recommended that FERC make final approval of Atlantic Sunrise contingent on a series of mitigation measures designed to reduce the pipeline’s environmental impact.

Of course this fantastic news didn’t sit well with anti-fossil fuelers. Groups in Lancaster County and Lebanon County responded to the announcement with something that sounds to us like a veiled thread to engage in criminal activity to stop it:

Lancaster Against Pipelines, one of several groups that has opposed the Atlantic Sunrise project, issued this statement on Friday: “This is no surprise to us. FERC just mitigates the damage–they do nothing to assess and stop it–or say it is too much. This only increases our resolve to seek justice when the powers that be will not.”

And this:

The favorable findings by FERC didn’t sit as well with critics of the pipeline, who have raised environmental, water quality, and eminent domain concerns.

Lebanon Pipeline Awareness and Concerned Citizens of Lebanon County issued a joint statement Friday saying they intend to participate in a symbolic public burning of the EIS hosted by a sister organization in Lancaster County on Jan. 15.

“FERC’s EIS (environmental impact statement) is so flawed, so cursory, so deceptive, and so misguided that it is literally not worth the paper it is written on,” the advocacy groups wrote.

“Seek justice” for antis often includes the destruction of property and illegally blocking work sites with protests, a la the Dakota Access Pipeline. Is that what we can expect from Lancaster Against Pipelines and its sister organizations across the border in Lebanon County? When they can’t win with regulators, they try the legislature. When they can’t win there, they try the courts. When they can’t win in court, they simply resort to violence, which is what lawless people do. Let’s hope that doesn’t happen in Amish country.

atlantic sunrise pipeline

Cabot was tickled pink with FERC’s announcement, and issued its own press release to say they’re taking even more capacity along the pipeline:

Cabot Oil & Gas Corporation (NYSE: COG) (“Cabot” or the “Company”) today announced that the Federal Energy Regulatory Commission (“FERC”) issued its final Environmental Impact Statement (“EIS”) for Williams Partners’ (NYSE: WPZ) Atlantic Sunrise project. The issuance of the final EIS is a key step toward the FERC’s final decision on the project, which is expected in early 2017. Following the receipt of all necessary regulatory approvals, Williams Partners anticipates beginning construction in mid-2017, allowing for a full in-service of the project in mid-2018.

In addition to previously announced gas sale and purchase agreements related to Cabot’s 850,000 MMBtu per day of transportation capacity on the Atlantic Sunrise project, Cabot also reported the execution of a new definitive gas sale and purchase agreement with an undisclosed company. Under the terms of this new agreement, the Company has agreed to sell an additional 150,000 MMBtu per day of natural gas for a term of three years commencing on the full in-service of the Atlantic Sunrise project.

“Today’s final EIS issuance represents a major milestone toward the final approval of the Atlantic Sunrise project,” commented Dan O. Dinges, Chairman, President and Chief Executive Officer. “We are also excited to increase our committed sales on the Atlantic Sunrise project utilizing capacity subscribed to by Cabot or by third parties to approximately 1 billion cubic feet (Bcf) per day through the addition of this new sales agreement that is linked to the Gulf Coast market.”

Bear in mind that the next and final step from FERC is to issue a certificate that allows Williams to begin building. Even though Williams and Cabot are optimistic that construction will begin in early 2017, one analyst, whom we highly respect, cautioned that all is not yet butterflies and unicorns for Atlantic Sunrise. Richard Zeits reminds us of what happened with state permits for the Constitution Pipeline in New York–another Williams project now stalled. Could such a fate befall Atlantic Sunrise in PA?

Today’s announcement is obviously important, as it provides certainty with regard to a major milestone in the regulatory process. I would argue, however, that the announcement was “anticipated news.” As a reminder, in October, the Federal Energy Regulatory Commission (“FERC”) modified its environmental review schedule and established December 30, 2016 as the date for its issuance of the final EIS. An upset was unlikely, in my opinion, but an element of “black swan” risk for the stock existed.

The issuance of the final EIS is a key element of the FERC review process that normally should lead to the FERC’s final decision within a few months. However, approval by the FERC is not the only category of permits that will be required for the project to go ahead. The Constitution pipeline provides a highly relevant precedent in this regard. As a reminder, Constitution did receive final approval from the FERC, but the process came to an impasse at the state level several months later. Opposition to Atlantic Sunrise in Pennsylvania is unlikely to be as severe as it proved to be to the Constitution pipeline in New York State. That said, the success of developing a greenfield project of this magnitude is never a slam dunk. Environmental opposition and NIMBY issues should not be underestimated.

Delays in receipt by Atlantic Sunrise of certain non-FERC permits required to commence construction have been reported by Williams previously (it is important to mention that construction must occur within certain required environmental windows).

Despite the delays incurred to date, Williams Partners has indicated that a portion of the Atlantic Sunrise pipeline – the expansion project along Transco’s mainline – could come in service already during the second half of 2017. Atlantic Sunrise certainly has an advantage as it relates to this part of the project. Williams Partners has an opportunity to begin providing service on this segment prior to completing the full project, in advance of putting the greenfield portion of the pipeline into service. Cabot, however, critically depends on the Central Penn North greenfield pipeline segment – from Susquehanna County to the Transco existing rights of way corridor – to be able to use Atlantic Sunrise to transport its volumes out of basin.

Assuming continued progress in receiving the remaining regulatory approvals, Williams Partners anticipates beginning construction on the expansion portion of the project in mid-2017. Once completed, the segment would create a delivery path from the northern part of the Transco system into its southeast markets. Williams Partners targets to complete the expansion in 2017, to be ready to ship natural gas volumes during the 2017-2018 heating season.

Below is the press release from Williams:

Williams Partners (NYSE: WPZ) today reported it has reached a key regulatory milestone toward obtaining federal approval to construct its proposed Atlantic Sunrise expansion project – an expansion of the existing Transco natural gas pipeline to connect abundant Marcellus gas supplies with markets in the Mid-Atlantic and Southeastern U.S.

The Federal Energy Regulatory Commission (FERC) on Dec. 30 published its final Environmental Impact Statement (EIS) for the proposed project, concluding that environmental impacts would be reduced to “less than significant levels” with the implementation of mitigation measures proposed by the company and FERC.

“The final Environmental Impact Statement underscores our collaborative efforts to design the Atlantic Sunrise project in a manner that minimizes environmental impacts, while fulfilling the critical need of connecting consumers all along the East Coast with abundant, cost-effective Pennsylvania natural gas supplies by leveraging our existing Transco pipeline infrastructure,” said Rory Miller, senior vice president of Williams Partners’ Atlantic-Gulf operating area.

The FERC action is a key step toward the Commission’s final decision on the project, which is expected in early 2017. Following the receipt of all necessary regulatory approvals, Williams Partners anticipates beginning construction on the mainline portion of the project facilities in mid-2017. These mainline facilities will create a much-needed path from the northern part of the Transco system to markets along the Eastern Seaboard for a portion of the project capacity in time for the 2017-2018 heating season. Construction on the Central Penn Line, the greenfield portion of the project, is targeted to begin early in the 3rd Quarter of 2017, which would allow for those facilities to be placed into service in mid-2018.

The FERC EIS assesses the potential environmental effects of the construction and operation of the project in accordance with the requirements of the National Environmental Policy Act. The FERC is the primary approval agency and serves in a coordinating role with other relevant agencies.

Below is a map of the pipeline, followed by a list of the work to be done, followed by the FERC final EIS:

atlantic sunrise pipelineatlantic sunrise pipeline

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