FERC Chairman Curt L. Hebert told a House panel last week thatthe Commission was “fully committed” to moving quickly onapplications for new interstate pipeline capacity to California andfrom the North Slope of Alaska to meet the nation’s unquenchabledemand for natural gas.
“.[I]n response to the present situation in California, theCommission is responding as quickly as possible to any applicationsto construct new capacity. In the last seven months, the Commissionhas issued certificates for three projects with total capacity ofalmost 119 MMcf/d of capacity that could benefit the West. Severalmore certificate applications are pending, and the Commission iscommitted to moving quickly on these projects as well,” he told theHouse Energy and Air Quality Subcommittee during a hearing lastWednesday examining the role of natural gas in a national energystrategy.
The tight demand for pipeline capacity to California wasunderscored in the recent open season that El Paso Natural Gasheld, Hebert said (see related story this issue). Shippers placedtotal bids for 14.4 Bcf/d of capacity, but only 1.22 Bcf wasavailable. “So you see what’s chasing what. Many of the pipes arerunning full.” The tight capacity demand isn’t just confined toCalifornia, either. It also can be found on pipelines in theSoutheast, Northwest and in New England, he noted.
FERC “is prepared to adopt additional procedures for expeditionif they will help to alleviate the present emergency” in Californiaand elsewhere, Hebert said. But the Commission’s actions, hecautioned, “can only be effective if there is available local[distribution] capacity to deliver gas downstream of the interstatepipeline.” The adequacy of intrastate pipe capacity is under thejurisdiction of the states.
He believes a “constrained” intrastate transportation system insouthern California has been at least partly responsible for thehuge run-up in natural gas prices there. “I urge the state ofCalifornia and its leadership to expedite its consideration ofproposals to relieve those constraints and provide relief toCalifornia customers.” He noted FERC “will cooperate with thestates in order to ensure that new facilities subject to statejurisdiction are properly integrated in the grid.”
While Congress in the past has been very wary of increasing theCommission’s authority over energy markets, last week the lawmakersappeared to be in a giving mood, asking Hebert if FERC neededadditional authority to move pipeline projects more quickly throughthe certificate process (especially a line from Alaska), morestatutory authority to police abuses between transporters and theiraffiliates, and any clarification on issues related to liquefiednatural gas (LNG) facilities.
In order to assure adequate gas supplies for the entire nation,”I strongly support the construction of a natural gas pipeline fromthe North Slope of Alaska to the Lower 48 states,” Hebert toldlawmakers on the panel. “If constructed, an Alaska pipeline wouldprovide unprecedented economic, energy security and environmentalbenefits by bringing a very large supply of additional gas to thedomestic market. I’m fully committed to acting on any request forthe construction of pipeline infrastructure to deliver this gas tothe North American consumer.”
An Alaskan pipeline is needed to meet the long-term energy needsof the nation, he said. “I think it is clear that, especially ifyou start looking at five to 10 years out, we need additionalsupply, without exception.”
In addition to greater cooperation with states, Hebert said hewas “eager to engage in a team effort with executive agencies thatwill play a major and coordinated role in the environmental reviewof any proposals” to minimize regulatory overlap.
Gas supply and transportation have evolved into competitive,transparent markets during the past decade, Hebert said, but “it iscritical that we continue to develop the same type of competitivemarkets for electric energy and transmission” as well. “…[T]hepeople of America need a one-stop shop to facilitate their energyneeds.”
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