The Federal Energy Regulatory Commission is likely to initiate a generic rulemaking addressing natural gas interchangeability and quality standards if industry sectors fail to achieve a consensus on these separate yet related issues, said Commissioner Suedeen Kelly last Tuesday.

“It’s likely that we would approach it that way” with a rulemaking if an industry agreement proves to be elusive, she said in her debut appearance before the Natural Gas Roundtable in Washington, DC.

But the Commission is hoping that a rulemaking won’t be necessary. So far, “industry has been very responsive,” Kelly noted. It already has established a broad coalition to explore both interchangeability and gas quality issues. Coalition members include pipelines, producers, local distribution companies (LDC), municipals, power utilities, equipment and appliance manufacturers, gas research groups and other interests. The coalition is scheduled to meet next on Tuesday (March 2) to explore a wide range of related technical and regulatory issues.

The North American Energy Standards Board (NAESB) also is expected to decide in mid-March whether to investigate the development of gas quality standards this year.

The gas industry is not under a FERC-imposed deadline to reach a consensus on quality standards, said Kelly. She noted, however, that industry will provide informal reports to the agency on the progress of its collaborative efforts.

Interchangeability, or the ability to replace conventional gas with Btu-enriched regasified gas in pipelines without affecting the performance of the fuel, is fast becoming a high-profile issue within the industry and at FERC as the market focus turns to liquefied natural gas (LNG).

The introduction of more Btu-enriched regasified gas into the U.S. gas stream has prompted pipelines to fret about the impact of the LNG-sourced gas on the integrity of their systems and LDCs to worry about the safety of regasified gas for end-use customers, as well as the potential costs for industrial customers to modify their equipment to accept this gas.

Moreover, the increasing hydrocarbon content of U.S.-sourced gas entering pipelines has prompted a cry by some industry members, especially pipelines, for tighter gas quality specifications. A growing number of domestic producers are opting not to strip out hydrocarbons from their gas due to high processing costs.

Regardless of whether the disputes over interchangeability and gas quality issues are resolved by industry or FERC, Kelly said the end policy would be implemented through individual pipeline tariff filings.

In the meantime, she noted that FERC will continue to act on gas quality cases that come before it. “The issues are too important to gas safety to be able to wait for generic solutions that might be put forward.”

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