Rising Tide of Landowner Protests Cut Future Deliverability
While the sheer number of pending and projected natural gas
pipeline projects may be staggering, that's not what sets them
apart from projects that preceded them. Rather, the distinguishing
factor is that they're coming at a time when the "complexity and
volume" of environmental issues and the level of landowner
anti-project sentiment have reached unparalleled heights, says a
top FERC official.
In a nutshell, FERC has authorized about 13 Bcf/d, or just over
4,000 miles, of new pipeline capacity during the past three years.
Still pending at the Commission is another 8 Bcf/d, or 4,000 miles,
of new pipeline projects. And in the next year or so, it expects
the industry to file projects totaling more than 7 Bcf/d, which
represents about 1,200 additional miles of pipe facilities, said
Randolph E. Mathura, director of the Division of Pipeline
Certificates for FERC's Office of Energy Projects, at GasMart/Power
2000 in Denver last week.
If you add all of the projects that were certificated in the
past three years, as well as those pending and anticipated, to the
Energy Information Administration's estimate for current pipeline
capacity (123 Bcf/d), "you can see that's an increase of system
capacity [of] about 23% in just a few years time," he noted.
For the longer term, the Interstate Natural Gas Association of
America (INGAA) projects an average of 1,500 to 3,000 miles of pipe
will have to be built each year between now and 2010 to reach that
"magic 30 Tcf" demand number, Mathura said. That's an additional
16,000 miles of new pipeline, which would be an 180% increase over
the construction activity of the past five years. At the same time,
the National Petroleum Council anticipates an estimated 30,000
miles of new and replacement pipelines must be built by 2015 to
meet projected requirements of 150 Bcf/d.
"Now historically speaking, I would agree that this expected
level of activity is not unprecedented. But what is significant
about it is the increasing complexity and volume of environmental
issues we're dealing with. Moreover, these issues are being
championed by more different types of parties than you've ever seen
at FERC proceedings," Mathura said.
FERC at one time thought the Kern River and Iroquois pipeline
projects were "highly controversial," but that's nothing compared
to "what we see in the ANR Independence [and] Transco cases." The
Independence Pipeline project elicited more than 6,000 letters of
opposition last year, mostly from landowners.
The majority of the new intervenors at the Commission are
private landowners. "Not only are the issues that they're raising
difficult and complex, but the folks are emotional and intense
about these issues, and are willing to do whatever it takes to
pursue them," Mathura told the energy executives at the conference.
The landowners also are becoming more organized and aren't
afraid to ask their political leaders for help, he said.
".....[W]e're seeing more and more citizen groups being formed and
actively participating. We're seeing a lot of involvement in our
cases by local, state and U.S. congressional representatives."
The landowners, Mathura noted, "are demanding recognition of
their private property rights. They want some assurance that it
[the taking of their property] is really in the greater public
interest of the nation. And they want to see hard evidence of this
in our cases....."
Jamie Craddock of Williams Gas Pipeline-Transco, sole sponsor of
the proposed MarketLink expansion and co-sponsor of Independence,
knows first-hand about landowner opposition. Both projects are in
limbo at the Commission, awaiting rehearing of December's interim
order and/or final certificates, due in large part to the rising
mettle of private landowners.
In the interim order, FERC conditionally approved the
interrelated, multi-state SupplyLink, Independence Pipeline and
MarketLink projects, but withheld certificates until further market
showing for the projects could be furnished. Craddock said
MarketLink already has enough market support to justify its
project, and is awaiting Independence and SupplyLink, which Mathura
said haven't provided any information to FERC yet.
"We have to date not separated our MarketLink" project from
SupplyLink and Independence, said the manager of project
development for Transco. "We were really kind of invited to do so
in the Commission's interim order. But we've been holding, waiting
to see what [will happen on] rehearing."
In the event "we don't get some relief in rehearing on some of
the conditions" imposed by FERC on MarketLink, "we will have to do
[just] that" - sever MarketLink from the other two projects.
"MarketLink on its own can provide service without some of the
upstream pieces," Craddock noted. While the SupplyLink and
Independence projects "complement" MarketLink, they "[are] not
fully necessary" to MarketLink's survival.
As initially proposed, the SupplyLink expansion and greenfield
Independence projects were supposed to transport competitive
Canadian gas supplies from the Chicago market to MarketLink to
satisfy the growing demand on the East Coast.
Even if MarketLink would be severed, the opposition to the
project still runs high. Landowners in Pennsylvania and New Jersey,
where the MarketLink expansion of Transco's existing system would
occur, don't want any part of it and the New Jersey governor has
threatened to go to court to stop MarketLink if FERC approves it.
But Craddock and Williams remain convinced of the need for
MarketLink in the Northeast market. Even during summer Transco is
allocating its Northeast capacity for firm and non-firm service,
she said. "It used to be if you needed non-firm capacity in the
summertime [it was] no big deal," but that has changed over the
past two summers.
The situation is much worse in the winter. "By no means was this
year a record winter. We had [only] 18 days where it acted like
winter." Still, delivered prices in the Northeast during this past
January and February were 106% higher than a year ago, she said. In
the New York market, delivered prices shot up to the $17 range on
Transco's system. Such prices show there's a "delivery
infrastructure problem" in the Northeast region.
Craddock also let it be known that she's not too happy with
FERC's new policy statement on pipeline construction, which she
said requires project sponsors to "balance" the disparate interests
of landowners, their existing shippers and pipeline competitors in
order to obtain certificates for their proposed projects.
"I feel it stands to delay the needed pipeline infrastructure,
takes away customer choice, removes incentives for existing
pipelines to find efficiency and it's going to increase pipeline
risk and potentially project costs," she said.
Susan Parker, Denver