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Spectra Executive Says NatGas Pipeline Industry Needs FERC Focus

As Spectra Energy Corp. moves forward with a trio of natural gas projects in New England, a top executive said the pipeline industry should focus on meeting the demands of FERC rather than placating pipelines foes, and said a shortage of qualified contractors to build pipelines in New England could have an impact in as little as two years.

According to Bill Yardley, president of U.S. transmission, the company's Algonquin Incremental Market (AIM) project, which would carry 342,000 Dth/d of gas from the Marcellus and Utica shales to New England, is expected to be in service during the second half of 2016 (see Daily GPIMarch 4).

Meanwhile, Atlantic Bridge, which would increase capacity on the existing Algonquin Gas Transmission and the Maritimes & Northeast (M&NE) pipelines by about 133,000 Dth/d* -- is expected to be in service by the second half of 2017 (see Daily GPI,Oct. 23). A third project is  Access Northeast, a partnership between Spectra (40%), Eversource Energy (40%) and National Grid (20%), which would provide 900,000 Dth/d* to power plants by upgrading existing pipelines and utilizing local natural gas storage facilities (see Daily GPIFeb. 19).

"A big driver in all of what North America is looking at is the Marcellus and Utica shales," Yardley said during a keynote speech at the American Gas Association's (AGA) Natural Gas Roundtable in Washington, DC, on Tuesday. "It's as though we transplanted the 'big giving tree' from the Gulf of Mexico and plopped it in that very region of southwest Pennsylvania. What that's leading to for us is an entire re-plumbing of the natural gas business."

Pipeline foes won't slow Spectra, but FERC could

Yardley said he believes the process Spectra and other pipeline companies must follow with the Federal Energy Regulatory Commission for project certifications is an open one, but it probably won't change the not in my backyard, or NIMBY, mindset of environmentalists and others opposed to pipelines.

"The folks that really don't want us to succeed have been struggling to win the battle at the production end," Yardley said, and hydraulic fracturing for natural gas "is here to stay. Everybody enjoys cheap energy on the demand side, so attacking that is not a real winner. So they've got to attack the delivery mechanism, and that's who we are.

"The biggest effect on us [isn't] the sensational. Chaining yourself to our fences and our equipment is interesting, but it doesn't really slow us down. What does [slow us down] is the volume of information that we have to supply with each application."

Yardley said FERC wants to ensure that when it issues a certificate that it survives any appeal. "That puts a lot of burden on the pipeline industry, to make sure that we're submitting complete applications that really meet FERC's needs. We have got to have a lot more dialogue with FERC up front, and a lot more dialogue with local governments and counties up front, to make sure that everybody is prepared.

"We'll change routes, and alter plans and construction techniques -- within reason. We just need to be told what information they're going to require. And we'll get it."

Case in point is the West Roxbury neighborhood in Boston, where a fight with pipeline opponents over the AIM project segment brought Spectra into court. The company won an eminent domain ruling last month (see Daily GPISept. 10).

"Of all the construction and all the permitting we're doing on the AIM project, that five miles is the most challenging," Yardley said. "Any time you do greenfield projects, you leave yourself open to probably more stakeholder issues than otherwise."

Of the Atlantic Bridge project, Yardley said the original plan was for it to be about 100 MMcf/d larger, but the company ran out of time to get the project into service for 2017, and Spectra "had to go forward with a pre-filing and a filing [with FERC] in an expeditious manner."

He added that local distribution companies (LDC), a paper mill and a refinery had all subscribed for capacity on Atlantic Bridge. That was an important development, he said, considering Nova Scotia's gas supplies have been dwindling -- with Deep Panuke going to seasonal service and Sable Island steadily declining (see Daily GPIAug. 5, 2013).

"The best conduit is to just reverse all the engines on the M&NE system and get enough gas into Algonquin, or even to the Portland Natural Gas Transmission System [PNGTS] to move gas north," Yardley said. "Because of our relationship with those customers through the M&NE pipeline, I think we've had good dialogue over the past five years when we saw this problem coming."

‘Legitimate Projects’ Set for Service in New England

Yardley said most pipeline projects scheduled to be placed into service in New England over the next three to four years are "legitimate projects" with full financial backing, and that there was no reason to believe they wouldn't be completed. But he cautioned that there was a limited inventory of pipeline contractors in the region.

"If you look at the curve and add up all of the spreads, you hit a point in 2017 or 2018 where there simply aren't enough crews to get this work done," Yardley said. "These aren't folks that you can turn in tomorrow and have them ready to build your pipeline."

He added that the changes possible under the federal government's proposed Clean Power Plan (CPP) had largely been anticipated by the pipeline industry (see Daily GPIAug. 14). As an example, he cited the collaboration between Spectra, DTE Energy and Enbridge Energy Inc. to build the NEXUS Gas Transmission system, which would take Marcellus and Utica gas to the Midwest (see Shale DailyJan. 9).

"I think a lot of what's on the drawing board today anticipates [the CPP], or has anticipated something like it in the past," Yardley said, adding that DTE "is looking at this like they had to have another conduit to the Marcellus and Utica shales for some of these bulk conversions [to gas] to take place.

"In the Southeast -- again where you see a lot of coal, everyone from the TVA, to Southern Company to Duke Energy -- there are probably three major projects on the drawing board to get gas in. [The CPP] certainly doesn't slow those down, and if anything we'll probably see the next generation of enhancements if that gathers momentum."

In the natural gas sector, Spectra currently has more than 19,000 miles of transmission pipelines, 70,000 miles of gathering lines and 39,900 miles of distribution lines. It also controls 1,700 and 1,500 miles of transmission pipeline for crude oil and natural gas liquids (NGL), respectively, as well as about 300 Bcf of natural gas storage capacity.

*Correction: In the original version of this story, NGI incorrectly stated that the Atlantic Bridge project would increase capacity on existing pipelines by about 133 Dth/d. The correct figure is 133,000 Dth/d. Also, NGI incorrectly stated that the Access Northeast project would provide 9 MMcf/d to power plants. The correct figure is 900,000 Dth/d. NGI regrets the errors.

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