Transcript Intro to FERC & Federal Review of Natural Gas Projects—Doug Sipe

Introduction to FERC and Federal
Review of Natural Gas Projects
Presentation to The Northeastern Area
Association of State Foresters
State College, PA
June 5, 2012
FERC Organization Chart
Chairman
Jon Wellinghoff
Energy
Projects
Administrative
Litigation
Commissioner
Philip D. Moeller
External
Affairs
Administrative
Law Judges
Commissioner Commissioner
John R. Norris Cheryl A. LaFleur
Enforcement
Energy Market
Regulation
Electric
Reliability
Executive
Director
Commissioner
Vacant
General
Counsel
Secretary
Energy Policy &
Innovation
Who is FERC?
 FERC is an independent federal regulatory agency
that, among other things:
─
Regulates the interstate transmission of natural gas (siting &
rates); electricity and oil (rates only);
─
Reviews proposals to build interstate natural gas pipelines and
liquefied natural gas (LNG) terminals, and natural gas storage
fields;
─
Licenses and inspects non-federal hydropower projects; and
─
Monitors and investigates energy markets.
Electric Power
 Wholesale rates for
interstate transmission
 Interstate electric
transmission
─ Reliability of high
voltage systems
─ Siting and permitting*
 Within DOE-designated
energy corridors
 As authorized by EPAct
*Subject to recent federal court decisions
Office of Energy Projects
Gas Pipeline Program
 Evaluate applications for facilities to import,
export, transport, store or exchange natural
gas
 Authorize the construction and operation of
facilities for such services
 Approve abandonment of such facilities
 Conduct inspections of LNG facilities and
pipeline construction
INFRASTRUCTURE BOOM
(Certificated in the last 10 years)
 Pipelines
 108.6 Bcf/day of Capacity and 16,208 Miles
 Storage Facilities
 1211.5 Bcf of Capacity
 LNG Facilities
 37 Bcf/day of Total Capacity
There are approximately 217,300 miles of
interstate natural gas transmission pipeline.
Source: Based on data from Ventyx Global LLC, Velocity Suite, April 2012
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Natural Gas Act
 The Natural Gas Act is the law that sets out
FERC’s areas of responsibilities:
─ Section 1 – Identifies projects exempt from
FERC jurisdiction
─ Section 3 – Allows FERC to authorize
import / export projects
─ Section 7 – Allows FERC to authorize
interstate pipeline projects (including
storage) and grant eminent domain
Projects Exempt from
FERC Jurisdiction
 Local Distribution Company facilities (e.g.,
UGI, Philadelphia Gas Works, etc.)
 Intrastate pipelines (where gas is produced,
transported and consumed within a single
state)
 Hinshaw pipelines (gas is produced in one
state, but is transported and consumed
within another)
 Gathering facilities
Natural Gas Act
NATURAL GAS ACT
Section 7(c)
Interstate
Case
Specific
Section 3
Import/Export
Blanket
Authority
Automatic Prior
Notice
Case
Specific
Natural Gas Act
 Case Specific Review
─ 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
Project Evaluation
How Does FERC Evaluate All
Of These Major Projects?
What Are The Criteria Used in
This Evaluation?
Balancing Interests
People Like...
But They Also Want...
Due Process
Expedited Process
Smaller Government
Effective Government
Less Regulation
Assurance of Fair Markets
Market-dictated Outcomes
Protection from Market
Dysfunctions, Unexpected Risk,
and Unjust Rates
Protection for the Environment and
Property Interests
Ample Supplies of
Low-cost Energy
FERC’s Internal
Review Process
 Initial review for completeness
(10 business days)
 Issue Notice of Application
 Assign review team
─
─
─
─
─
Environmental
Certificates
Rates and Tariffs
Attorney
Engineering
Certificate Process
Non-Environmental Review and Analysis
• Engineering – GQI, storage, hydraulic flow
• Tariff – rates, terms & conditions of service
• Policy – precedents, rules, regulations
• Accounting
File
Application
Parallel Processing Paths
Environmental Review
• Conduct scoping
• Coordinate with agencies
• Environmental resource review
• End result:
– environmental impact statement (EIS)
– environmental assessment (EA)
• Staff makes its recommendations to the
Commission
Issue
Order
Project Review
 Engineering Review
 Environmental Review
 Project Need (Public Interest Review)
─ Based on the Commission’s Certificate
Policy Statement
Final Steps of the
FERC Process
 All aspects of the review (environmental
and non-environmental) are brought
together into a draft Commission Order
which contains staff-recommended, projectspecific requirements.
Final Steps of the
FERC Process
 The draft Commission Order is sent to the Chairman and
Commissioners for their consideration. They can reject
staff’s recommendation, accept it, and/or modify it.
 If approved, the project proponent is issued a Certificate
of Public Convenience and Necessity pursuant to 7(c) of
the NGA, and with the right to eminent domain pursuant
to section 7(h) of the NGA. Section 3 authorization does
NOT provide for eminent domain.
State and Local Permits
 Any state or local permits issued with respect
to FERC jurisdictional facilities must be
consistent with the conditions of any FERC
certificate. FERC encourages cooperation
between interstate pipelines and local
authorities. However, this does not mean
that state and local agencies, through
application of state or local laws, may prohibit
or unreasonably delay the construction or
operation of facilities approved by the
Commission.
FERC
10
Major Pipeline
The Environmental
Construction
Projects
Review
Process
Office of Energy Projects
NEPA Overview
 Is the project categorically excluded?
─
Projects with little or no impact (e.g., sale of pipe or
abandonment in place)
 Environmental Assessment or Environmental Impact
Statement
─
Level of environmental impacts

─
─
significant (EIS) or less than significant (EA)
Applicant-proposed mitigation
Anticipated public controversy
Phases of Project
Review
 Project Preparation
─ The applicant working on its own
 Pre-Filing
─ FERC staff working with the applicant and
stakeholders before the filing of an application
 Application Review
─ FERC staff working with the applicant and
stakeholders after the filing of an application
 Post-Authorization
─ FERC staff working with the applicant and
stakeholders to ensure compliance with conditions
to the FERC approval
The Pre-Filing Process
 Voluntary for pipelines, required for LNG
facilities
 Used for projects requiring an EIS, or an EA
where controversy is likely
 Normally requires the applicant to hire and
fund a contractor to help prepare EA/EIS
─ Staff selects contractor from list of three provided
by the applicant
─ Contractor works solely under FERC staff’s
direction
Goals of the Pre-Filing
Process
 Early identification and resolution of
environmental issues
 More direct interaction between FERC staff
and stakeholders
 Interactive, concurrent NEPA/permitting
processes
 FERC staff are advocates of the Process, not
the Project!
 Goal of “no surprises” when application is filed
FERC Staff Pre-Filing
Activities
 Identify affected parties:  Issue scoping notice
─ landowners
 Examine alternatives
─ agencies
 Arrange and attend site
─ other stakeholders
visits and meetings
 Facilitate identification
 Initiate preparation of
of issues
 Identify study needs
preliminary NEPA
document
 Facilitate resolution of  Review draft resource
issues
reports
The Environmental Report
(13 Resource Reports)
1
2
General Project
Description
Water Use and Quality
7
Soils
8
Land Use, Recreation,
and Aesthetics
9
Air Quality and Noise
3
Fish, Wildlife, and
Vegetation
4
Cultural Resources
11 Reliability and Safety
5
Socioeconomics
12 PCB Contamination
Geological Resources
Engineering and
13 Design Material (LNG)
6
10 Alternatives
Public Involvement
During Pre-Filing Review
The FERC Process
 Project sponsor holds
Public Input
 Contact the project sponsor
Open Houses; FERC
w/questions, concerns;
staff participates
contact FERC
 Issue Notice of Intent to
Prepare the NEPA
Document (i.e., scoping)
 Hold scoping meetings
 Send letters expressing
concerns about
environmental impact
 Attend scoping meetings
Public Involvement During
Application Review
The FERC Process
 Issue Notice of the
Application
 Issue Notice of
Availability of the DEIS
Public Input
 File an Intervention;
register for e-subscription
 File comments on the
adequacy of DEIS
 Hold Public Meetings on  Attend public meetings to
DEIS
 Issue a Commission
Order
give comments on DEIS
 Interveners can file a
request for rehearing of
the Commission Order
United States Shale Basins
Maximum Reported Gas-in-Place (in Tcf)
Devonian (Ohio) Shale
(244)
Cody
Shale
Gammon Shale
Utica Shale
Antrim Shale(76)
Hilliard/Baxter/Mowry
Shale (265)
Niobrara
Shale (13)
Excello-Mulky
Shale
New
Woodford
Albany
Shale
Shale
(101)
(160)
Pierre Shale
Mancos
Shale
Hermosa Shale
Lewis Shale
(61)
Barnett - Woodford
Shale (265)
Marcellus
Shale
(1,500)
Woodford-Caney
Shale
Bend Shale
Conasauga Shale
Chattanooga Shale
Floyd - Neal Shale
Floyd - Chattanooga Shale (22)
Fayetteville Shale (52)
Haynesville Shale (717)
Total Shale Gas
3,700 Tcf
Barnett Shale (168)
Eagle Ford Shale
Pearsall- Eagle Ford Shale
Note: While some shale basins have been
identified with reserve estimates, others
have no reserve data available.
Source: Ventyx Velocity Suite 2011 and Navigant Consulting’s North American Natural Gas Supply Assessment – July 4, 2008
30
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WHY SHALE GAS?
Supply Drivers



Shale gas is abundant and is becoming
increasingly cheaper to produce
Rockies gas can now easily reach markets in
the Northeast, and with Ruby, the Pacific
Coast
Deeper shale formations (e.g., Utica) are now
being considered as emerging supply
sources
31
WHY SHALE GAS?
Market Drivers
Natural gas is in demand…now more than
ever!




Firming-up Variable Power Generation (RPSs)
New Baseload Power Generation
Replacing / Converting Retiring Coal-Fired
Plants
Natural Gas Vehicles
32
Marcellus Shale: What’s the
Big Deal?
Source: GasMart 2011 Chris Tucker, Energy in Depth A Sustainable Future for Natural Gas Getting It Right with the Public
33
Corning
Tennessee’s
Station 219
Leidy
Rivervale
Linden
Lambertville
Oakford
TETCO &
Columbia
Interconnects
Appalachian
Basin
Clarington
Princeton
Transco’s
Comp Sta 195
Spectra,
Williams, & NiSource
Interconnects
Sparrows Point LNG
Approved or Pending Projects
Mid-Atlantic Express Inc.
Line 300 Exp (Tennessee)
Rockies Express Pipeline East
Northern Bridge, TIME 3, TEMAX
(TETCO)
Potential Projects
Northeast Supply (Williams)
Appalachia to Market
Expansion (TETCO)
Dominion Keystone (Dominion)
New Penn (NiSource)
REX Northeast Express (KM)
East West Connector (NFG)
34
Marcellus Shale Projects
Marcellus Shale Projects
Tennessee
Station 219
Corning
Leidy
Rivervale
Linden
Oakford
Lambertville
Appalachian
Basin
Princeton
Transco
Compressor
Station 195
Clarington
Approved or Pending Projects
Appalachian Expansion (NiSource)
Line 300 Exp (Tennessee)
NiSource/MarkWest & NiSource
N Bridge, TIME 3, TEMAX (TETCO)
Appalachian Gateway (Dominion)
Line N & N, R & I Projects (NFG)
Tioga County Extension (Empire)
NSD Project (Tennessee) &
Ellisburg to Craigs (Dominion)
Northern Access (NFG & Tennessee)
The Constitution Pipeline
Potential Projects
Sunrise Project (Equitrans)
TEAM 2012 Project (TETCO)
Northeast Upgrade (Tennessee)
Marc I (Central NY)
Low Pressure East-West (Equitrans)
NYMarc (Iroquois)
New Penn (NiSource)
Marcellus to Manhattan (Millennium)
Appalachia to Market Expansion
TEAM 2013 & TEAM 2014 (TETCO)
NJ-NY Project (TETCO & Algonquin)
Northeast Expansion (Dominion)
Northeast Supply Link (Transco)
MPP Project (Tennessee)
Blacksville Comp (Equitrans)
Ohio Pipeline Energy Network
(TETCO)
The West Side & East Side Expansions
(NiSource)
Source: FERC
Keystone (Dominion/Williams)
NiSource & UGI
Northeast Supply (Williams)*
Commonwealth Pipeline
(UGI Service, Inergy, WGL)
* Combined Transco’s Rockaway Lateral
and Northeast Connector35
Projects
Interstate Natural Gas Facilities and Shale Basins Impacting Ohio, New
York, Pennsylvania & West Virginia
Antrim
Shale
New York
Utica
Shale
Marcellus
Shale
Pennsylvania
Ohio
West Virginia
Storage
Devonian
Shale
Source: Based on data from Ventyx Global Energy Decisions, Inc., Velocity Suite, May 2012
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36
Shale Gas Estimates
12
Shale Gas Production In Bcf/d
10
8
6
4
2
0
2005
2010
2015
2020
2025
Woodford
Barnett
Fayetteville
Marcellus
Eagle Ford
All Other US
2030
Source: Based on data from ICF International and Compass Report January 2011
2035
Haynesville
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37
Gas Estimate - Appalachia
•
Growth in the
Appalachian
region of
Northeastern U.S.
is driven primarily
by Marcellus
Shale production.
•
Regional
production by
2035 -- projected
increase of over
475 percent!
Source: Based on data from ICF International and Compass Report October 2010
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Questions?
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Contact Info:
Dave Swearingen
Environmental Project Manager and Interagency
Coordinator
FERC Office of Energy Projects
Division of Gas—Environment & Engineering
[email protected]
202-502-6173