Robert Bradley, Jr.
Founder and CEO of the Institute for Energy Research.
FERC, with its new appointees, is now addressing its backlog and swiftly moving forward to greenlight much needed pipeline projects.
We aren’t counting our chickens yet, but the approvals would certainly be a net positive for midstream industry growth, and, ultimately, for producers and consumers of natural gas.
-Ethan Bellamy (managing director, Robert W. Baird & Co.) quoted in Catherine Traywick’s “U.S. Energy Agency to Take on $50 Billion Backlog as Senate Acts.” Bloomberg Politics, August 3, 2017.
The Senate recently confirmed two new appointees to the Federal Energy Regulatory Commission, or FERC, ending a seven-month dormancy due to lack of a quorum. With three members, two Republicans and one Democrat, one pick from each party remains for a full five-member commission.
This delay, on top of a fossil-fuel animus by Obama’s FERC, has created a $13 billion backlog of regulatory approvals for 17 market-ready natural gas projects. With its other business, FERC’s total project backlog represents $50 billion. FERC should begin greenlighting projects immediately.
With a $350 million budget and 1,500 employees, FERC’s mission is to promote “reliable, efficient and sustainable energy services at a reasonable cost through appropriate regulatory and market means.” Under the authority of the Federal Power Act of 1935 and the Natural Gas Act of 1938 (NGA), the primary duty of this agency is to “ensure just and reasonable rates, terms, and conditions” concerning interstate transmission of electricity and natural gas.
One can only wish. Sadly, FERC delays often impede otherwise ready-to-go projects. Section 7(c) of the NGA, in fact, was designed to allow coal and oil interests to intervene in hearings to slow the spread of (consumer-preferred) natural gas. And now, energy obstructionists want to complicate the certification process to keep natural gas (and other fossil fuels) in the ground.
The new FERC has a lot of catching up to do. Approvals are entirely consistent with President Trump’s America First energy policy. Many stalled projects are hosted by states that he won with his promises of economic revitalization.
FERC is off to a good start. In late August, it approved the NEXUS, a natural gas pipeline between Ohio and Michigan. This $2 billion project could bring 3,300 jobs to those two states as well as Pennsylvania. And just this month, FERC started fighting state-level obstructionism in places (like New York) where authorities were withholding water quality permits to stymie new pipeline construction.
The next approval could be the Atlantic Coast Pipeline, which would run between West Virginia and North Carolina. It would create 10,000 jobs for those two states and Virginia.
FERC is also expected to greenlight the Mountain Valley Pipeline across West Virginia and Virginia, which would involve almost 9,000 jobs. These projects, and three others waitlisted during FERC’s inactivity, could create more than 26,000 jobs in total.
Smaller pending pipeline projects to enhance the grid include the Driftwood Pipeline in Louisiana; the Eastern Shore Natural Gas Project set to run through Pennsylvania, Maryland, and Delaware; and the Spire STL Pipeline Project which would traverse Illinois and Missouri.
Encouraged if not empowered by the Obama Administration, radical environmentalists employed vandalism and violence against new pipelines. According to the company building the Dakota Access Pipeline, a coordinated group of environmentalists burned the pipeline with torches, and tried to hack into the company’s networks. This ecoterrorism led to $300 million in damages and over 760 arrests.
In the Trump era, an anti-energy fringe group is attempting to kill FERC’s productivity. Beyond Extreme Energy is dedicated to stopping or delaying “all fossil fuel infrastructure before the [FERC].” Their website states:
Click here and sign up to learn more about potential acts of nonviolent civil disobedience targeting senators who will be voting on FERC appointments. FERC’s permits are a form of violence. They leave our communities and the climate deeply hurt and threatened. Anything we can do to stop or delay them is something very worthwhile.
“There is no such thing as a good FERC commissioner,” the group states. “Until Congress takes steps to replace the agency with one dedicated to a just transition off of fossil fuels, the Senate should oppose all nominations.” A headline follows: “Sweet Potatoes, Not Pipelines.”
It is as if a free people cannot have both food and energy.
Environmentalists’ objections are rooted in fantasy — and they impede safety. Pipelines are the safest way to transport fossil fuels, meaning they’re less likely to damage crops than the alternatives. And based on average annual accident rates, pipelines are over three times safer for natural gas transport than rail.
With Commissioners Robert Powelson and Neil Chatterjee confirmed, FERC is free to greenlight projects that put consumers and economies first. As FERC Chairman Neil Chatterjee stated:
A reliable and resilient grid requires the development of needed energy infrastructure. FERC supports infrastructure development through its statutory responsibility to authorize the construction of certain energy infrastructure, such as interstate natural gas pipelines, liquefied natural gas terminals, and non-federal hydropower generation. While the Commission has been unable for much of this year to act on applications for such projects, the Commission is addressing the backlog and will continue to make steady progress in the coming weeks and months.
This is all well and good, but longer term, structural reforms are necessary to prevent future delays.
The sooner FERC starts greenlighting projects, the sooner consumers receive the economic benefits associated with natural gas.