Daniel B. Markind, Esq.
Weir and Partners, LLP
Unfortunately, the FERC decision to deny an Oregon pipeline will have nationwide consequences; Cuomo will surely try to stall the Constitution Pipeline.
On Friday, the Federal Energy Regulatory Commission, for of the rare times in its history, rejected a proposed gas pipeline. The proposal for the Jordan Energy Cove Project and Pacific Connector Pipeline in southern Oregon, has been around for over a decade. In August, FERC reported that most of the environmental impacts could be reduced to “less-than-significant levels”. But on Friday, FERC’s official decision stated that the project’s developers, Williams Partners and Veresen Inc. of Calgary, had not shown the need for the project. They had not acquired many easements for the project route or signed contracts with suppliers.
The FERC decision on Coos Bay, Oregon can’t help but impact New York Governor Andrew Cuomo’s calculation on the Constitution Pipeline. Governor Cuomo must approve or deny the application for a 401 Clean Streams Permit by April. Unlike Coos Bay, FERC already has approved the Constitution Pipeline.
Still, Governor Cuomo may see the Oregon FERC decision as consistent with his party’s overall position on natural gas and oil heading into the 2016 election. Already, the Constitution’s scheduled opening has been delayed again until 2017. Under these circumstances, the New York Governor may deem it in his interest to maintain this as a political issue through the Presidential election season.
The Democrats’ political position on energy was further exemplified on Wednesday at their Presidential debate in Florida. Bernie Sanders publicly called again for a nationwide ban on fracking. Hillary Clinton, while not as direct, said that “..by the time we get though all of my conditions, I do not think there will be many places in America where fracking will continue to take place.” Contrary to all the hopes of the Democratic National Committee when they tried to stack the deck for Secretary Clinton, Senator Sanders has pulled her so far left that the Democrats have completely ceded the energy issue in the upcoming election, with its corresponding foreign policy and national security implications.
Ironically, the Sanders/Clinton exchange came on the same day that Sunoco Logistics announced that for the first time natural gas is being exported out of Marcus Hook, Pennsylvania, using gas sent from Western Pennsylvania through the Mariner East I pipeline. Even Democratic Governor Tom Wolf called this a landmark, noting that “Sunoco Logistics is making a $3 billion investment in Pennsylvania’s energy economy by keeping Marcellus Shale resources for manufacturing right here in Pennsylvania, rather than sending this business, revenue and jobs to other states.” It will be fascinating to see how the Wolf Administration, never a friend of the industry, works with Sunoco Logistics for Mariner II, which could increase export capacity fivefold.
Over the next few months, energy politics will be center stage. Two weeks ago, Maine Governor Paul LePage urged FERC to speedily approve the proposed Northeast Direct Pipeline from Northeastern Pennsylvania to New England. Maine, along with the rest of New England, has some of the highest natural gas prices in the nation for no reason other than lack of infrastructure. Republican Governor LePage’s position is contrary to that of New Hampshire Democratic Governor Maggie Hanson, who asked FERC to reconsider the need for the pipeline project(?!). With the latest FERC decision, current Administration policy and the energy position of the Democratic Presidential candidates, who knows what FERC might decide? The decision could impact New England’s energy supply for a decade.
Finally I provide another example of shortsighted thinking. The Government of Israel decided recently to close its Consulate in Philadelphia to save money. Through sheer dumb luck, the Consulate serviced Israel’s interests in Pennsylvania, Ohio, West Virginia and Kentucky. In other words, the entire Marcellus Shale basin was within the jurisdiction of one entity, and this for a country that is becoming a player in natural gas. Israeli technology and business interests, certainly to be increased by the Leviathan and Tamar Fields, could go to one Consulate that had the entire Marcellus (and Utica) within its jurisdiction. Now, at a time when countries are trying to centralize their energy marketing, Israel is splitting its up among consulates with no energy experience. It’s hard to imagine a more penny-wise, pound-foolish move. Somehow, that country succeeds in spite of itself.