Federal regulators shot down a proposal by Kinder Morgan Inc. that the company said would bring transparency and liquidity to the nascent certified natural gas market.

TGS

FERC late last month denied Kinder’s plan to implement a certified gas pooling service along its Tennessee Gas Pipeline (TGP). The proposal, revised and resubmitted to the Federal Energy Regulatory Commission in March following discussions with interested parties, sought to offer the pooling service at locations along the 11,760-mile conduit. Ultimately, the certified gas would serve end-users, utilities, power plants and liquefied natural gas facilities connected to the pipeline.

In denying the proposal, all five FERC commissioners took issue with including the criteria used to certify the gas in the pooling service included in the tariff. In its initial filing in December, Kinder sought to include the certification criteria on its website, but amended the plan in response to protestors’ concerns.

However, FERC said “it is unclear how the Commission would evaluate Tennessee’s decision to adopt any specific proposed criteria” for producer-certified gas or propose any changes to the criteria (No. RP22-417-0030).

FERC pointed out that to date, “there are neither industry nor government-established standards that could guide the Commission’s review” for the certified gas market. “Currently, only a handful of independent verification vendors such as Project Canary and MiQ have been established” to provide voluntary certification services…” FERC said “it appears that each vendor sets its own performance rating and varies in its methodology and business model.”

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FERC also noted that the criteria outlined for the TGP pooling service establishes a specific methane emission intensity level that must be met to qualify for inclusion. However, there is no federal regulation for methane emissions in the oil and natural gas sector. Given the early stage in the evolution of responsibly sourced gas (RSG) standards, the commissioners said, “we find that it is appropriate to allow market-driven initiatives so that the development of RSG can happen organically.”

Kinder spokesperson Katherine Hill told NGI that “TGP is currently evaluating the FERC’s order and assessing the best approach for obtaining approval of this value-added service as part of TGP’s commitment to facilitating greater liquidity in the purchase and sale of responsibly sourced natural gas.”

Kinder initially wanted to begin offering TGP’s certified gas pooling service this month. FERC had no issues with any other aspect of the proposal. Commissioners said TGP “remains free to propose an alternative arrangement” that does not raise the concerns outlined with incorporating the criteria in the tariff.

Despite the setback, the industry overall expects the certified gas market to grow exponentially this year, with no shortage of initiatives taking place to date this year.

Separately, FERC is reviewing a December 2019 decision to approve a 72,400 Dth/d upgrade project on TGP. The U.S. Court of Appeals for the District of Columbia Circuit cited flaws in the agency’s greenhouse gas analysis for the project. The upgrade involved 2.1 miles of new pipeline and a new compressor station in Agawam, MA.

In sending the certificate order back to FERC, the court found that the agency had fallen short of National Environmental Policy Act requirements by not examining the downstream emissions impacts of its decision more closely. It stopped short of remanding the order, however.