Marcellus / Shale Daily / Utica

With FERC Almost at Quorum, Nexus Urges Prompt Decision

Wasting no time following the Senate's confirmation Thursday of FERC nominees Robert Powelson and Neil Chatterjee, Nexus Gas Transmission LLC on Friday requested immediate action on its project application now that the Commission's quorum has been restored.

Nexus, a 255-mile, 1.5 Bcf/d natural gas pipeline being developed by Spectra Energy Partners LP and DTE Energy Co., was notably left behind when the Federal Energy Regulatory Commission issued a flurry of last-minute certificate orders before losing its quorum in February.

Once Powelson and Chatterjee are officially sworn in the Commission will be able to return to business and act on Nexus’s application after a six-month setback. Spectra CEO Bill Yardley on Friday petitioned FERC to make up for lost time and issue a decision on the project right away [CP16-22]. 

Nexus received a favorable final Environmental Impact Statement last November and would have been ripe for a certificate decision in February. Nexus had asked the Commission for a decision back in January when former FERC Chairman Norman Bay announced his resignation and it became clear the Commission would lose its quorum. But while other major natural gas projects like Energy Transfer Partners LP's Rover Pipeline and Transcontinental Gas Pipe Line Co.'s (Transco) Atlantic Sunrise expansion received last-minute orders, Nexus did not.

"Unfortunately, the Commission lost its quorum before action could be taken to grant the requested certificate authority to Nexus," Yardley wrote. "With the quorum now restored, Nexus urges immediate issuance” of the requested order.

Yardley said Nexus, proposed to run from eastern Ohio into Michigan, has secured voluntary easements for 93% of the project route and has submitted all requisite information to FERC. "Nexus believes that the record supporting final action on the certificate request is complete and ready for the Commission's decision," he wrote.

The request comes after management for DTE acknowledged that Nexus' scheduled start-up date has slipped from 4Q2017 to 2018 due to the delay in securing a certificate order from FERC.

But even with the Commission's quorum restored, Nexus -- like other key Northeast takeaway projects awaiting FERC action -- isn't in the clear yet, according to a weekend note from BTU Analytics LLC Energy Analyst Matthew Hoza.

Looking at key Appalachian takeaway projects like Nexus, Rover, Atlantic Sunrise, the PennEast Pipeline, the Atlantic Coast Pipeline and the Mountain Valley Pipeline, "even with an approval, the path forward for all the projects above will still be bumpy as they all face obstacles beyond a FERC approval," Hoza wrote.

"Nexus is facing limited commercial support with only two-thirds of its capacity subscribed, leaving it the only major greenfield in the Northeast not fully subscribed. In addition, TransCanada Mainline's recently discounted tariff rates will make the MichCon/Dawn market even more competitive, hurting shippers' netbacks on Nexus."

Hoza noted that many regulatory roadblocks for these projects could come at the state level.

In the case of Nexus, the project has faced pushback from Michigan regulators reviewing DTE affiliate contracts for capacity on the pipeline.

Moody’s Investors Service said in a note Monday that the Senate’s confirmation of Powelson and Chatterjee is “credit positive” for the companies behind the roughly $14 billion in natural gas pipelines waiting to begin construction.

“Natural gas pipelines only generate earnings when they become operational,” Moody’s wrote. “The six-month delay in regaining a FERC quorum raised the risk that pipeline owners” like Spectra parent and PennEast backer Enbridge Inc. “would be unable to bring their pipelines online on time, which would reduce revenues.”

Added Moody’s, “Of the five shovel-ready natural gas pipeline projects with in-service dates of 2018 and 2019 awaiting FERC approval, all but the Nexus and PennEast pipelines are likely to maintain their originally intended completion dates.”

Given that FERC has been out of commission for months, the next big question for pipeline developers will be how long it takes to get Powelson and Chatterjee sworn in and ready to start tackling the agency’s backlog.

FERC spokeswoman Mary O'Driscoll told NGI’s Shale Daily on Monday that she did not know when Chatterjee and Powelson would be sworn in, or when the Commission would hold its meetings now that a quorum has been restored.

"That decision on meetings will be made by the Commission, and that will be announced when the time comes," O'Driscoll said.

Hoza said to expect the new Commissioners to be officially sworn in sometime in the next week or two. "It will most likely be expedited as compared to previous commissioners to finally restore a quorum and begin addressing the backlog of cases up for review."

Looking at the duration of the confirmation process for the previous 10 Commissioners, Hoza said the wait for confirmation of Chatterjee and Powelson was "on par with the average time of about 150 days."

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