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Experts Don’t Expect Keystone XL Decision to Impact Natural Gas Pipeline Buildout

Though it had become a lightning rod in the debate over the nation’s use of fossil fuels, the rejection of TransCanada Corp.’s Keystone XL is unlikely to have any meaningful impact on the nation’s natural gas infrastructure buildout, according to industry officials.

But President Barack Obama’s decision to reject the oil pipeline, which came amid increasing political attention to the issue of climate change (see Daily GPI, Nov. 5), does send “a bad signal to the energy sector and the economy at large” that regulation of infrastructure development could be influenced by politics, according to Scott Segal, partner at Washington, DC-based law firm Bracewell & Giuliani.

“The [Obama] administration’s major plans for new energy sources -- from bringing natural gas to market to developing alternative renewable energy to enhancing the benefit of shale development -- requires a commitment to overcoming obstacles to new infrastructure,” Segal said. “But the lesson of Keystone is that support for infrastructure in certain circles extends only as far as the politics of the moment.

“The case against against Keystone has always been weak, with little to no actual relationship to climate change. Indeed, failure to embrace energy infrastructure makes it harder to do the hard work necessary to address environmental challenges.”

Frank Macchiarola, executive vice president of America’s Natural Gas Alliance, said the Keystone XL project represents “a shift in opposition to energy infrastructure projects” as environmental advocates concerned about the impact of burning fossil fuels have zeroed in on pipeline projects.

“I think opposition to energy in the U.S., those groups have changed their strategy. I think very clearly Keystone is a sign of that,” Macchiarola said. “I think before Keystone, you didn’t see national groups come into local areas and protest projects that were really for both the local and national benefit, like Keystone. I think that’s changed.”

With the massive production increase from unconventional drilling, numerous pipeline projects have been proposed, especially around the prolific Marcellus and Utica shales. Environmental groups have risen up to oppose these projects, citing concerns over the cumulative impact of so many pipelines and on increasing the nation’s dependence on fossil fuels.

Last month, a coalition of more than 30 environmental groups wrote to FERC asking the agency to prepare a programmatic environmental impact state examining, encouraging a comparative review of the proposed pipelines (see Shale Daily, Nov. 2).

While it’s possible that the Keystone rejection may have emboldened some of these pipeline protesters, Macchiarola said he believes the public, for the most part, “is positive about these types of projects, and they understand what the projects are about.”

Ultimately, Macchiarola said he’s hopeful the Keystone decision won’t lead the Federal Energy Regulatory Commission (FERC) astray of its traditional review process of examining each project application on its own merits, basing approval on the needs of the market.

Aaron Ruby, a spokesman for Dominion, which owns the largest share of the Atlantic Coast Pipeline joint venture, said the company doesn’t anticipate the Keystone decision -- coming under a completely separate review process -- having any impact on FERC’s decision-making.

“Under the FERC process, projects have to demonstrate a clear public need and that they’ve selected a route with minimal impacts on the environment and cultural and historic resources before they’re approved,” Ruby said. “As long as projects meet those criteria and work in good faith with landowners and communities, we’re confident that natural gas infrastructure will continue to be approved and built to meet the nation’s critical energy needs.”

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