Hebert: FERC Committed to CA, Alaska Pipe Projects

FERC Chairman Curt L. Hebert told a House panel last week that the Commission was "fully committed" to moving quickly on applications for new interstate pipeline capacity to California and from the North Slope of Alaska to meet the nation's unquenchable demand for natural gas.

".[I]n response to the present situation in California, the Commission is responding as quickly as possible to any applications to construct new capacity. In the last seven months, the Commission has issued certificates for three projects with total capacity of almost 119 MMcf/d of capacity that could benefit the West. Several more certificate applications are pending, and the Commission is committed to moving quickly on these projects as well," he told the House Energy and Air Quality Subcommittee during a hearing last Wednesday examining the role of natural gas in a national energy strategy.

The tight demand for pipeline capacity to California was underscored in the recent open season that El Paso Natural Gas held, Hebert said (see related story this issue). Shippers placed total bids for 14.4 Bcf/d of capacity, but only 1.22 Bcf was available. "So you see what's chasing what. Many of the pipes are running full." The tight capacity demand isn't just confined to California, either. It also can be found on pipelines in the Southeast, Northwest and in New England, he noted.

FERC "is prepared to adopt additional procedures for expedition if they will help to alleviate the present emergency" in California and elsewhere, Hebert said. But the Commission's actions, he cautioned, "can only be effective if there is available local [distribution] capacity to deliver gas downstream of the interstate pipeline." The adequacy of intrastate pipe capacity is under the jurisdiction of the states.

He believes a "constrained" intrastate transportation system in southern California has been at least partly responsible for the huge run-up in natural gas prices there. "I urge the state of California and its leadership to expedite its consideration of proposals to relieve those constraints and provide relief to California customers." He noted FERC "will cooperate with the states in order to ensure that new facilities subject to state jurisdiction are properly integrated in the grid."

While Congress in the past has been very wary of increasing the Commission's authority over energy markets, last week the lawmakers appeared to be in a giving mood, asking Hebert if FERC needed additional authority to move pipeline projects more quickly through the certificate process (especially a line from Alaska), more statutory authority to police abuses between transporters and their affiliates, and any clarification on issues related to liquefied natural gas (LNG) facilities.

In order to assure adequate gas supplies for the entire nation, "I strongly support the construction of a natural gas pipeline from the North Slope of Alaska to the Lower 48 states," Hebert told lawmakers on the panel. "If constructed, an Alaska pipeline would provide unprecedented economic, energy security and environmental benefits by bringing a very large supply of additional gas to the domestic market. I'm fully committed to acting on any request for the construction of pipeline infrastructure to deliver this gas to the North American consumer."

An Alaskan pipeline is needed to meet the long-term energy needs of the nation, he said. "I think it is clear that, especially if you start looking at five to 10 years out, we need additional supply, without exception."

In addition to greater cooperation with states, Hebert said he was "eager to engage in a team effort with executive agencies that will play a major and coordinated role in the environmental review of any proposals" to minimize regulatory overlap.

Gas supply and transportation have evolved into competitive, transparent markets during the past decade, Hebert said, but "it is critical that we continue to develop the same type of competitive markets for electric energy and transmission" as well. "...[T]he people of America need a one-stop shop to facilitate their energy needs."

Susan Parker

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