Post on 25-Dec-2015
Natural Gas Transmission Regulation in the US
Jeff Wright, ChiefEnergy Infrastructure Policy
GroupOffice of Energy Projects
Federal Energy Regulatory Commission
AtComisión Federal de
Electricidad Mexico City, Mexico
July 29, 2004
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FERC
Office of Energy Projects
What Is FERC?
• An Independent Regulatory Agency in the Executive Branch of the US Government
• Created by the Department of Energy Organization Act (1977)
• Federal Power Commission was the predecessor of FERC
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FERC
Office of Energy Projects
How is FERC Organized?
• There are 5 Commissioners– Nominated by the President, confirmed
by the Senate, President designates Chairman
– Each commissioner has a 5-year fixed term, with one term expiring each year
• The Chairman sets the triweekly Commission agenda– Orders voted out by majority rule
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FERC
Office of Energy Projects
FERC is an IndependentFederal Regulatory Agency
• Political Party– No more than 3 commissioners from one
political party• President and Congress
– No review of FERC’s decisions by President, Department of Energy or other agencies
• Industry Participants– No private discussions of open cases– Restrictions on FERC employees: stock,
gifts, future employment
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FERC
Office of Energy Projects
Program Offices
Office of Energy ProjectsNatural Gas Pipeline Construction and AbandonmentHydroelectric Projects (licensing, safety, complianceEnvironmental Reviews for Natural Gas and Hydro Projects)
Office of Markets, Tariffs, and RatesNatural Gas, Electric, and Oil Rates and Terms/Conditions of Service
Office of Market Oversight and InvestigationMarket Monitoring and Enforcement
Office of Administrative LitigationFERC Trial Staff
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FERC
Office of Energy Projects
FERCHelping Markets Work
AdequateInfrastructure
OEP
EffectiveMarket Rules
OMTR
MarketOversight
OMOI
CompetitiveMarketFERC
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FERC
Office of Energy Projects
FERC
ChairmanWood (R)
ExternalAffairs
GeneralCounsel
Markets,Tariffs, Rates
ExecutiveDirector
AdministrativeLitigation
AdministrativeLaw Judges
EnergyProjects
Secretary
CommissionerBrownell (R)
CommissionerKelliher (R)
CommissionerKelly (D)
Vacant
MarketOversight &
Investigations
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FERC
Office of Energy Projects
What Does FERCRegulate?
• Natural Gas Industry– Interstate transportation rates and
services– Interstate gas pipeline and liquefied
natural gas terminal construction and oversee related environmental matters
• Electric Power Industry – Interstate transmission rates and
services– Wholesale energy rates and services– Corporate transactions, mergers,
securities issued by public utilities
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FERC
Office of Energy Projects
What Does FERCRegulate? (con’t)
• Oil Pipeline Industry– Interstate transportation rates and
services of crude oil and petroleum products
• Hydroelectric Industry– Licensing of nonfederal hydroelectric
projects– Oversee related environmental
matters– Inspect nonfederal hydropower
projects for safety issues
OEP Organizational StructureDirector
J. Mark Robinson
Deputy DirectorRobert J. Cupina
Division of Pipeline Certificates
Director - Berne L. MosleyDeputy Dir. – Vacant
Division of Gas- Environment & Engineering
Director - Richard R. HoffmannDeputy Dir. – Lauren H. O’Donnell
Division of Hydropower Licensing
Director - Ann F. MilesDeputy Dir.- Lon R. Crow
Division of HydropowerAdmin. & ComplianceDirector - Joseph D. MorganDeputy Dir. - Hossein Ildari
Division of Dam Safety& Inspections
Director – Constantine G. TjoumasDeputy Dir. – Daniel J. Mahoney
Energy InfrastructurePolicy Group Jeff C. Wright
Assistant DirectorManagement & Operations
Thomas E. DeWitt
Certificates Branch 1Michael J. McGehee
Certificates Branch 2William L. Zoller
Gas Branch 1Michael J. Boyle
Gas Branch 2John S. Leiss
Gas Branch 3Lonnie A. Lister
Hydro East Branch 1Vincent E. Yearick
Hydro East Branch 2Edward A. Abrams
Hydro West Branch 1Jennifer Hill
Hydro West Branch 2Timothy J. Welch
Land ResourcesBranch
John E. Estep
Engineering &Jurisdiction BranchWilliam Y. Guey-Lee
Biological ResourcesBranch
George H. Taylor
Washington OfficeWilliam H. Allerton
Atlanta RegionalOffice
Jerrold W. Gotzmer
Chicago RegionalOffice
Peggy A. Harding
New York RegionalOffice
Anton J. Sidoti
Portland RegionalOffice
Harry T. Hall
San FranciscoRegional Office
Takeshi Yamashita
LNG EngineeringBranch
Chris M. Zerby
04/19/23
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FERC
Office of Energy Projects
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FERC
Office of Energy Projects
Natural Gas Act (NGA)
Natural Gas Policy Act (NGPA)
Regulation of Interstate Construction
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FERC
Office of Energy Projects
• Facilities to Transport Gas Under NGPA Section 311 May Be Constructed Without FERC Approval.
• Facilities can only be used to transport on behalf of an intrastate or LDC
• Must comply with environmental requirements
• If cost of facilities exceeds $7.5 million, FERC must be notified 30 days prior to construction
NGPA
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FERC
Office of Energy Projects
Natural Gas Act
NATURAL GAS ACT
Section 3 Import/Expor
t
CaseSpecific
CaseSpecific
BlanketAuthority
Automatic PriorNotice
Section 7(c)Interstate
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FERC
Office of Energy Projects
• Automatic Authorization• Cost of facilities is less than $7.5 million
• Facilities are “eligible” facilities
• Prior Notice• Cost is between $7.5 and $21 million
• 45-day notice period prior to construction
• Facilities are “eligible” facilities
Natural Gas Act
• Blanket Certificate
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FERC
Office of Energy Projects
• 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
Natural Gas Act
• Case Specific Section 7(c) Certificate
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FERC
Office of Energy Projects
NGPA OR NGA?
• NGA Certificate Grants a Right of Federal Eminent Domain
• NGPA Does Not Confer Any Rights of Federal Eminent Domain; Pipeline May Seek State Eminent Domain
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FERC
Office of Energy Projects
Imports/Exports
• Any entity that proposes to site, construct and operate or modify facilities used to import or export gas must file an application pursuant to Section 3 of the NGA and file for the issuance of a Presidential Permit.– In order to obtain a Presidential Permit,
the Commission must "consult" with the Secretaries of State and Defense prior to its issuance.
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FERC
Office of Energy Projects
Imports/Exports
• The owner of the gas must apply to the Office of Fossil Energy, Department of Energy (DOE/FE) for Section 3 authority as well.
• Jurisdictional pipelines that filed for Section 3 authorization to site, construct, and operate border facilities will not be the same party that applies for Section 3 authority from DOE/FE.
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FERC
Office of Energy Projects
Major Pipeline Projects Certificated (MMcf/d)
January 2002 to July 2004
11.3 BCF/D Total2,778 Miles
Transco(323) Southern (330)
Kern River
(886)
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North Baja (500)
Tuscarora(96)
Northwest(162,113)
Kern River (282)
Iroquois(70)
TETCO(250)
Northwest(224)
NFS/DTI(150)
GeorgiaStraits (96)
1. Algonquin (285) 2. Islander East (285) 3. Iroquois (85) 4. Columbia (135,270)
SCG Pipeline (190)
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3
4
Northwest(191)
East Tennessee (510)
Tennessee (320)
TETCO (197)
Greenbrier (600)
El Paso (320)
WBI(80)
ANR(220,107,143)
El Paso (140)
TETCO(223)
Office of Energy Projects
Cove Point(445)
Ocean Express(842)
6 CheyennePlains (560)
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5. CIG (282,92) 6. CIG (118) 7. TransColorado (125) 8. WIC (116)
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Calypso(832)
Discovery (150)
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FERC
Office of Energy Projects
Major Pipeline ProjectsPending (MMcf/d)
July 2004
11.2 BCF/D Total153 Miles
Trunkline(1,500)
Cheniere Corpus Christi(2,600)
CheniereSabine(2,600)
Mill River(800)
McMoRan(1,500)
CompassPass
(1,000)
Algonquin(140)
Algonquin BG LNG(500)
San Juan Expansion(Transwestern)
(600)
CheyennePlains (170)
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FERC
Office of Energy Projects
How Does FERC Evaluate All Of These Major Projects?
Are There Any Criteria Used inThis Evaluation?
Project Evaluation
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FERC
Office of Energy Projects
Major Pipeline Projectsin Pre-filing (MMcf/d)
July 2004
3.1 BCF/D Total402 Miles
Questar(102)
Seafarer Pipeline(El Paso) (372)
Entrega(EnCana)(1,300)
Logan Lateral(Texas Eastern)
(900)
Transcontinental(105)
El Paso(Piecance
Expansion)(300)
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FERC
Office of Energy Projects
Major Pipeline Projects On The Horizon (MMcf/d)
July 2004
8.3 BCF/D Total3,640 Miles
Maritimes Phase IV (400)Blue Atlantic (El Paso)
(1,000)Transcontinental (150)
Northwinds Pipeline(NFG) (500)
Freedom Trail (Tennessee)(150)
Coronado (500)Sun Devil Project(Transwestern) (500)
Piceance to Cheyenne (KM Interstate) (500)Advantage Southern (KM Interstate) (330)
Silver Canyon Project (KM Interstate) (750)KM West Texas (KM Interstate) (300)
Wheatland Expansion (KM Interstate) (80)Western Frontier (So. Star)(540)
Kern River Expansion (500)TransColorado (750)
Panhandle Eastern (500)Bison Pipeline (Northern Border) (240)
Trailblazer (100)
Petal (500)
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FERC
Office of Energy Projects
PL99-3-000Certificate Policy
• New Certificate Policy Statement issued on September 15, 1999.
• Clarification of Certificate Policy Statement issued on February 9, 2000.
• Further clarification issued on July 26, 2000.
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FERC
Office of Energy Projects
CertificatePolicy Problems
• The reliance on percentage of capacity under long-term contracts to show demand.
• The pricing of new facilities.
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FERC
Office of Energy Projects
Policy Drawback:Reliance on Contracts
• The amount of contracted capacity is not a proxy for all public benefits.
• Requirement for long-term contracts contrasts with industry’s move to short-term contracts with marketers.
• Loss of customer choice reduces efficiency.
• Contracts don’t offer adequate justification to landowners.
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FERC
Office of Energy Projects
Policy Drawback:Pricing of New Facilities
• Rolled-in pricing bias leads to:– Subsidization by existing
customers– Overbuilding of facilities– Aggravate adverse environmental
impacts– Distortion of competition between
pipelines
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FERC
Office of Energy Projects
n Foster Competitionn Consider Captive Customersn Avoid Unnecessary Physical Impactsn Achieve Optimal Amount of Facilitiesn Encourage Complete Recordn Expedite Review Time
Goals
PL99-3-000Certificate Policy
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FERC
Office of Energy Projects
PL99-3-000Certificate Policy
• Apply Threshold Test
– Subsidization Incremental Rates
– No Subsidization Rolled-in Treatment
– System improvements for existing customers Rolled-in Treatment
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FERC
Office of Energy Projects
PL99-3-000Certificate Policy
• Develop Record– Adverse Impacts on
• Existing Customers and Pipelines• Landowners• Communities
– Specific Benefits– Need and Market– Condemnation Impact
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FERC
Office of Energy Projects
Adverse Impacts
NeedsandBenefitsRecord
n Balance Benefits and Impactsn Complete Traditional Environmental Process
PL99-3-000Certificate Policy
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FERC
Office of Energy Projects
Opportunities for Public Involvement
The FERC Process:
• Issue Notice of the Application
• Project Sponsor Sends Landowner Notification Package
• Issue Notice of Intent to Prepare the NEPA Document (i.e., scoping)
• Hold Scoping Meetings
Public Input:• File an Intervention;
register for e-subscription
• Contact the project sponsor w/questions, concerns; contact FERC
• Send letters expressing concerns about environmental impact
• Attend scoping meetings
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FERC
Office of Energy Projects
Opportunities for Public Involvement
The FERC Process:• Issue Notice of
Availability of the DEIS
• Hold Public Meetings on DEIS
• Issue a Commission Order
Public Input:• File comments on the
adequacy of DEIS
• Attend public meetings to give comments on DEIS
• Interveners can file a request for Rehearing of a Commission Order
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FERC
Office of Energy Projects
Comments and Protests
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Kern River/Mojave 1990
Iroquois 1990
USG Pipeline1997
Independence1999
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FERC
Office of Energy Projects
Traditional vs. Pre-Filing Process
AnnounceOpen
Season
AnnounceOpen
Season
Develop
StudyCorrido
r
DevelopStudy
Corridor
Conduct
Scoping
Conduct
Scoping
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Review DraftResource Reports& Prepare DEIS
IssueDraftEIS
IssueDraftEIS
FileAt
FERC
IssueOrder
IssueOrder
FileAt
FERC
Prepare ResourceReports
Prepare ResourceReports
IssueFinalEIS
IssueFinalEIS
(months)
Traditional - Applicant
Traditional - FERC
Pre-Filing - Applicant
Pre-Filing - FERC
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FERC
Office of Energy Projects
Benefits of Pre-Filing
• More interactive NEPA process, no shortcuts
• Earlier, more direct involvement by FERC, other agencies, landowners
• Goal of “no surprises”
• Time savings realized only if we are working together with stakeholders
• FERC staff is an advocate of the Process, not the Project!
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FERC
Office of Energy Projects
PROPOSED PIPELINE LOOPING
An Example:Kern River Expansion
XPROPOSED COMPRESSOR STATION
• 716 miles of pipeline looping through CA, NV, UT, WY
• 3 New Compressors• $1.2 Billion • 885.6 MMcf/day of additional
capacity– Doubles Kern River’s
capacity from 845.5 MMcf/day to 1.7 Bcf/day
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FERC
Office of Energy Projects
Kern River Expansion Environmental Highlights
• Environmentally Acceptable– New pipe parallels initial right-of-way.– Mitigation measures minimize potential impacts.
• First Major Project to utilize NEPA Pre-Filing– Order issued less than 1 year from initial filing
date - Final EIS completed in June 2002 which was 11 months from filing date.
– In comparison, FEIS and certificate for Gulfstream required 16 months from initial filing date; Kern River’s initial greenfield project required 30 months for the FEIS.
– Interagency cooperation contributed to meeting Federal and state environmental requirements.
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FERC
Office of Energy Projects
Issues/Initiatives
Timely Business Decisions Preliminary Determinations (1988)
Staff Resources Environmental Third-Party Contractors (1994 and 1998)
Staff Accountability/Incentive
GPRA Compliance (1999)
Policy Guidelines Certificate Policy Statement (1999)
Effective Regulations Certificate Rule (1999)
Issue Initiative
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FERC
Office of Energy Projects
Issues/Initiatives
Due Process and Reroutes
Landowner Notification Rule (1999)
Administrative Procedures
Ex Parte Communication Rule (1999)
EIS Process Concurrent Order and EIS (2000)
Staff Resources OEP = Gas/Hydro Synergy (2000)
Staff Accessibility Outreach (2000)
Rehearing Timing 30-Day Deadline (2001)
Issue Initiative
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FERC
Office of Energy Projects
Interagency Agreements
• IA for Environmental Review of Natural Gas Pipelines– Signed May 2002
– Working Group Established
– FERC chairs working group
– Each participating agency developed internal agency guidance
– Group working on survey to get feedback on implementation experiences/success
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FERC
Office of Energy Projects
Interagency Agreements
• IA for LNG Safety and Security– Signed January 2004 by FERC, USCG, DOT
– Defines roles and responsibilities
– Establishes FERC as lead for NEPA review
– Stresses coordination, seamless review
– Coordination continues from initial review through construction and operation
– Includes terminal facilities and ships
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FERC
Office of Energy Projects
FERC Infrastructure Conferences
• Five Conferences Held– Seattle– New York City– Orlando– Chicago– Denver
• Purpose– Bring together experts to discuss infrastructure issues in region