El Paso Corp.’s push to secure approval for its proposed Ruby Pipeline, which would carry natural gas supplies from the Rocky Mountains to West Coast markets, appears to be coming at an opportune time environmentally, and in certain respects, politically.

The Houston-based company on Tuesday asked the Federal Energy Regulatory Commission for approval to construct and operate the west-to-east pipe (see Daily GPI, Jan. 28). Subsidiary Ruby Pipeline LLC’s designs call for a 675-mile, 42-inch diameter interstate pipe that initially would transport up to 1.5 Bcf/d from Rockies basins to Nevada, California and Pacific Northwest markets. If El Paso obtains approval to begin construction in early 2010, the pipeline could be in operation by 2011.

The pipe’s capacity is still being marketed, but already, precedent agreements have been secured for more than 1.1 Bcf/d in binding 10- to 15-year contract commitments, including a 15-year, 375,000 Dth/d contract with Pacific Gas and Electric Co. (see Daily GPI, Nov. 7, 2008; June 26, 2008).

Ruby will do more for El Paso than expand its gas pipeline system. The pipeline, when completed, would be the jewel in El Paso’s company-wide efforts to lower its carbon footprint by eliminating greenhouse gas (GHG) emissions.

“To El Paso’s knowledge, the Ruby project is the first major natural gas pipeline to incorporate GHG mitigation efforts in its plans,” spokesman Richard Wheatley told NGI. “It was a top management decision to make Ruby a first of its kind project on carbon neutrality. Because these issues are vitally important to the states where Ruby will traverse — and to California, where gas will be flowing for Pacific Gas and Electric Co. — we had the opportunity to take the extra step in designing Ruby to be the best possible project of its kind regarding greenhouse gas emissions.”

The company, which bills itself as “the place to work, the neighbor to have, the company to own,” reviewed several design options before completing the scope of the $3 billion project, said Byron Wright, vice president of corporate development.

“It was an effort to do, what I call, ‘doing well by doing good,'” Wright told NGI. “We were able to get an agreement with our [pipeline] customers,” which was a primary effort, because using best-of-class technology and systems added to the incremental costs. “Our customers understand that in the long run, we are going to be in a carbon-constrained environment…” Because El Paso made a front-end decision to mitigate Ruby’s GHG impacts, there were “not a lot of incremental costs,” and the company was able to ensure it would have a smaller carbon footprint.

Another bonus: the plan “has been a positive in all of our stakeholder meetings at the state and local level,” said Wright.

El Paso can’t claim any new research and development breakthroughs in Ruby’s design. “What we’ve done is basically put a lot of expertise and design choices together,” he said. “It’s not something other people couldn’t do…” However, in the “absence of a regime” that gave El Paso an idea of what the costs versus benefits would be, it used “a whole suite of programs to increase efficiencies across the pipeline.” In other words, El Paso didn’t give an inch on quality to lower GHG emissions.

With no single solution to mitigate all GHG emissions, Ruby will be built using a “portfolio” approach to mitigate carbon emissions that extends across all aspects of the pipeline:

Ruby Pipeline also plans to purchase emission offset credits, renewable energy credits or similar options to mitigate the remaining emissions generated during the operation of the facilities.

What El Paso officials learn from Ruby’s design and operations will carry over into other projects, said Wright.

“As conditions change…as regulatory, legislative mandates come down about climate, we think we’ll be able to respond more effectively, more competitively…than our competitors,” said Wright. “We will understand it at the technical level…It’s really ‘Management 101.’ You can’t manage what you can’t measure.”

Whether competitors will adopt some of El Paso’s GHG initiatives in their future pipelines isn’t clear. But Wright is certain that the project — and similar ones in the future — will give El Paso a competitive advantage.

“Let me put it this way…there are other options for producers to take their gas…other places for California to get its gas,” but “the primary reason for us to be successful is the way we design the system to make it carbon-neutral…It will become a factor in the future.” Depending on the pipe, its location and the customers, Wright admitted that El Paso might not be able to build all of its infrastructure as environmentally friendly as Ruby. “Maybe not all of the time, but we will use it where we can.”

The El Paso executive admitted that he was surprised by how quickly industry is adapting to climate change initiatives.

“The whole climate change area has really had exponential growth in the last couple of years,” he said. “I’m surprised by it. It was not in my rear view mirror five years ago.”

Thursday the private nonprofit California Climate Action Registry (CCAR) — the gold standard for public reporting of GHGs — announced that it had approved and registered El Paso’s total emissions for all applicable GHG pollutants in the United States. The distinction, which requires certification by independent third parties to ensure compliance, makes El Paso the first natural gas company to obtain a complete CCAR-approved GHG emissions inventory.

“The certification of our total U.S. emissions is a major milestone,” said El Paso CEO Doug Foshee. “It is the culmination of a rigorous, three-year emissions inventory program that highlights our continuing commitment to being the neighbor to have. We believe natural gas will play a critical role in the nation’s efforts to reduce greenhouse gas emissions, and El Paso will be at the forefront of the development of needed natural gas infrastructure-associated climate change policies.”

CCAR President Gary Gero noted that El Paso had “once again…demonstrated its national leadership on climate change policies and programs as it impacts natural gas.” The company, he said, “is a pioneer in the area of carbon accounting for the natural gas industry.”

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