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FERC’s pipeline review process is broken

Monday, February 20, 2017 14:10
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(Before It's News)

Former chairman adds his voice to public demands for greater scrutiny

As new research refutes industry's pro-pipeline arguments, former FERC chairman Norman Bay is calling for greater scrutiny of proposed natural gas infrastructure projects.

As new research refutes industry’s pro-pipeline arguments, former FERC chairman Norman Bay is calling for greater scrutiny of proposed natural gas infrastructure projects.

It’s no secret: oil and gas pipelines have captured the nation’s attention, not to mention the new administration’s. Standing Rock’s resistance to the Dakota Access pipeline continues to put water protection, indigenous rights and environmental justice at the fore of any pipeline discussion. And not so long ago, the Keystone XL pipeline came to symbolize the United States’ willingness to lead (or not) on climate action. Now the Trump administration hopes to revive both.

The Trump administration also hopes to push through the Atlantic Coast Pipeline, which would transport fracked gas 600 miles from the Marcellus Shale in northern West Virginia through Virginia and into North Carolina. A list of the administration’s top 50 infrastructure priorities leaked in January includes the Atlantic Coast Pipeline at number 20. The document reports the pipeline’s permitting process as “done,” despite the fact that comment periods for some federal and state permits are currently open and no permits have been issued. How’s that for alternative facts?

Pipelines Not Needed

The Federal Energy Regulatory Commission (FERC), the agency with primary authority for permitting interstate gas pipelines, was generally viewed as pipeline-friendly even prior to the Trump era. The agency allows a 14 percent rate of return on investments in pipeline capital, and its environmental reviews typically fall short in analyzing both the need for additional pipelines and the projected climate impacts of new projects (in addition to many other deficiencies).

However, former FERC Chairman Norman Bay offered a surprising call for reform of the agency’s pipeline certificate process when he stepped away at the beginning of February (see the last six pages of this FERC order). Bay criticized the method FERC uses to determine whether or not there is a need for a pipeline. He pointed out that FERC usually looks to precedent agreements between pipeline owners and gas shippers as evidence of need. But this method is flawed.

According to Bay, “focusing on precedent agreements may not take into account a variety of other considerations, including … whether the precedent agreements are largely signed by affiliates.”

Norman Bay, a former commissioner and chairman of the Federal Energy Regulatory Commission.

Norman Bay, a former commissioner and chairman of the Federal Energy Regulatory Commission.

In other words, a company applying to build a new pipeline says “look, we have subscribers lined up to buy gas from the pipeline, so there must be a need for it.” But a closer examination reveals that the buyer and the seller are both affiliates of the same parent corporation.

This echoes a concern highlighted in a report from the Institute for Energy Economics and Financial Analysis published in April 2016. That report found that “in situations in which a pipeline developer contracts with an affiliate company to ship gas through a new pipeline, this is strong evidence that it is doing so because of the financial advantage to the parent company from building the pipeline, but not necessarily that there is a need for the pipeline.”

This report studied the risks of building both the Atlantic Coast Pipeline and the Mountain Valley Pipeline, a 300-mile gas pipeline that would also cut through the Appalachian regions of West Virginia and Virginia. It pointed out that for the Atlantic Coast Pipeline, five of the six companies contracted to buy gas are affiliates of the companies building the pipeline. Energy behemoths Dominion Resources and Duke Energy have a combined 85 percent ownership stake in the pipeline, and their subsidiary companies have subscribed to 86 percent of the gas shipped. For the Mountain Valley Pipeline, all six of the buyers are affiliates of the companies building the pipeline.

Another report, published in September 2016 by Synapse Energy Economics, Inc., studied conservative estimates of future gas demand in Virginia and the Carolinas. It concluded that, even under scenarios where gas use for electricity production is high, existing pipelines have more than enough capacity to provide energy to the region. That is, we can keep the lights on and businesses thriving without ever building the Atlantic Coast and Mountain Valley pipelines.

Climate Impacts of Gas Pipelines

In addition to the needs analysis, Bay also called on FERC to reform its evaluation of climate impacts. In its draft environmental review of the Mountain Valley Pipeline, FERC refused to consider that the pipeline would spur more gas production, enabling more methane leakage along the entire supply chain. Without quantifying them, FERC compared downstream smokestack emissions to global greenhouse gas emissions and concluded that the pipeline’s emissions would merely be a drop in the bucket.

In its draft environmental review for the Atlantic Coast Pipeline, FERC did attempt a rough calculation of downstream emissions but again refused to analyze upstream effects or methane leakage. FERC’s review stated that emissions from burning the Atlantic Coast Pipeline’s gas would be roughly 29 million metric tons (MMt) per year.

A new briefing published by Oil Change International puts a comparable number on emissions from gas combustion for the Atlantic Coast Pipeline, estimating 31 MMt annually. But when you add increased gas production and methane leakage along the supply chain, total emissions more than double, reaching nearly 68 MMt per year. The organization also published a briefing for the Mountain Valley Pipeline, estimating total life-cycle emissions at nearly 90 MMt annually.

To put that in perspective, emissions from the Atlantic Coast Pipeline would be the rough equivalent of adding 20 coal-fired power plants to the grid or putting 14 million more cars on the road. Emissions from the Mountain Valley Pipeline would be like adding 26 coal-fired power plants or putting 19 million more cars on the road.

While Norman Bay defended FERC’s existing climate analysis methods from a legal perspective, he also argued for change. He stated that “in the interests of good government” the agency should analyze downstream impacts and perform lifecycle analysis of greenhouse gas emissions — not just from pipelines — but from the entire Marcellus and Utica gas production region.

Other Environmental Impacts

Besides bludgeoning our atmosphere with huge amounts of new greenhouse gas pollution, the Atlantic Coast and Mountain Valley pipelines would, of course, threaten thousands of groundwater sources, surface streams and wetlands. Constructing the pipelines would force the permanent removal of trees along their routes, fragmenting habitats and spoiling views from the Appalachian Trail. The projects would threaten human health and safety, especially near powerful compressor stations used to pump gas along the line. They would disproportionately impact lower-income communities, communities of color and Native American communities, threatening important historic and cultural resources.

What Can You Do?

Unfortunately, Bay did not follow his own advice and revise the way FERC analyzes pipeline need or climate impacts while he led the agency. But here’s how you can do your part:

Mountain Valley Pipeline:

Atlantic Coast Pipeline:

Protecting the Central and Southern Appalachian Mountain Region



Source: http://appvoices.org/2017/02/20/fercs-pipeline-review-process-is-broken/

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