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DOE's Quadrennial Energy Review Calls For Modernization of Energy Infrastructure

The U.S. energy landscape is changing, leaning more heavily on natural gas and renewables and moving from a net energy importer to an exporter, all of which require a transformation of energy infrastructure, according to a report issued by the Obama administration Tuesday.

"Significant change" to electricity transmission, storage, and distribution (TS&D) infrastructure is needed to accommodate the changing energy landscape and to address the potential for terrorism and cyber-attacks, according to the 348-page Quadrennial Energy Review (QER).

The administration on Tuesday also unveiled two executive actions to modernize and enhance the resilience of the electric grid. The Department of Energy announced a new Partnership for Energy Sector Climate Resilience to improve energy infrastructure resilience against extreme weather and climate change impacts, and the Department of Agriculture said it would provide $72 million in loans to support six new rural electric infrastructure projects, including investments to drive solar energy.

In addition to recent changes in the U.S. energy composition, the nation’s TS&D infrastructure has for decades been the victim of a "lack of timely investment in refurbishing, replacing, and modernizing components...that are simply old or obsolete," according to the report.

"Close to 50% of the nation's gas transmission and gathering pipelines were constructed in the 1950s and 1960s -- a buildout of the interstate pipeline network to respond to the thriving post-World War II economy," according to the QER. "Analyses conducted for the QER suggest that natural gas interstate pipeline investment will range between $2.6 billion and $3.5 billion per year between 2015 and 2030, depending on the overall level of natural gas demand. The total cost of replacing cast iron and bare steel pipes in gas distribution systems is estimated to be $270 billion."

On the natural gas side, the QER recommends establishment of a competitive program to accelerate pipeline replacement and enhance maintenance programs for gas distribution systems. It also advises improving quantification of emissions from natural gas TS&D infrastructure.

The first-ever QER also calls for efforts to improve measurements of methane emissions, improve workforce training and coordination of energy products shipped by rail, and reassess the release authorities of the Strategic Petroleum Reserve.

Modernizing the nation's TS&D infrastructure "presents the opportunity to enhance U.S. competitiveness in a global economy," according to the administration. "By making smart investments, there is the potential to support 1.5 million additional energy sector jobs for the transmission, storage and distribution segment alone."

The administration received unusual support for the QER from a pair of powerful House Republicans: Fred Upton (R-MI), chairman of the House Energy and Commerce Committee, and Ed Whitfield (R-KY), chairman of the Energy and Power Subcommittee. "The QER's findings underscore the urgent need to update our nation's energy policy and modernize our energy infrastructure. The current energy policy written in a time of scarcity just isn't cutting it in today's era of abundance," they said.

"While we share our differences with this administration regarding energy policy, when it comes to the transmission, storage, and distribution of our resources, we can all agree that targeted changes to our laws and policies are necessary. We need a modern and resilient energy infrastructure that will meet tomorrow's energy challenges. We are reviewing the administration's full recommendations, but we have already found areas of common ground where we will work together."

Earlier this year, Upton's committee released an Architecture of Abundance" plan, a five-part proposal designed to address modernizing infrastructure; maintaining diverse electricity generation; permitting a manufacturing renaissance; harnessing energy efficiency and innovation, and unleashing energy diplomacy (see Daily GPI,Feb. 11). The plan calls for building more domestic, cross-border and transmission pipelines and for reducing "red tape in the permitting process." It also calls for enacting policies and procedures to protect energy infrastructure through improved emergency coordination and information sharing, ensuring robust and transparent energy markets, and bringing more accountability to decision-makers.

In early 2014, President Obama ordered his administration to conduct a review of the nation's energy infrastructure, an effort designed to not only address the age and capacity of the system, but also to meet the challenges posed by climate change, and cyber and physical threats (see Daily GPI, Jan. 10, 2014). A task force co-chaired by the director of the Office of Science and Technology Policy and the director of the Domestic Policy Council would spend four years conducting the review, the administration said. The task force included 23 key government officials, including the heads of the departments of State, Interior, Commerce, Transportation, Energy and the Environmental Protection Agency. The task force was ordered to "gather ideas and advice" from state and local governments, the energy industry and other stakeholders and issue multiple reports. Tuesday’s was the first of these reports.

From the start, the natural gas industry has voiced strong support for the review.

"With today's release of the QER, the Obama administration reaffirmed the role natural gas will play in ensuring energy security, economic growth and environmental improvement," Marty Durbin, CEO of America's Natural Gas Alliance, said Tuesday. "An expanded and modernized energy infrastructure is critical to realizing those benefits. We are pleased to see the recognition and importance of certainty in the permitting process to enhance our nation’s energy infrastructure and support efforts to improve these processes. We will work with Congress and the administration to ensure our energy infrastructure allows us to achieve the economic, environmental and security benefits that our abundant natural gas resources will bring."

Dave McCurdy, CEO of the American Gas Association (AGA), said significant work to modernize infrastructure is already underway. "Every natural gas utility is focused on upgrading and modernizing its infrastructure using risk-based integrity management programs, and 38 states now have specific rate mechanisms that foster accelerated replacement of pipelines. This is an ongoing priority for natural gas utilities and there is significant proactive work already underway by the natural gas industry, work that is benefiting customers, the overall economy, our nation's energy security and the environment…

"While I am pleased to see the continued administration support for natural gas in our clean energy future, it is critical to recognize the significant work already underway, and the contributions current industry efforts are making to our nation's energy future."

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