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Finally, FERC Can Clear the Blocked Pipeline of Pipeline Construction Projects

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Finally, FERC Can Clear the Blocked Pipeline of Pipeline Construction Projects

August 18, 2017

This article was originally published in the Washington Examiner.

The unanimous confirmation of Neil Chatterjee and Rob Powelson to the Federal Energy Regulatory Commission has finally returned a quorum to the board. It can now resume granting certifications for major interstate natural gas pipeline projects.

It's about time. The backlog of major natural pipeline projects awaiting review and a decision has been accumulating in the six months that FERC lacked a quorum. More than 30 such projects in various steps of the certification process were relegated to regulatory limbo. Other projects that may have been filed with FERC may have held off due to the regulatory uncertainty at the agency.

Acting Chair Cheryl LaFleur has been the only acting member since Commissioner Colette Honorable left when her term expired at the end of June. Commissioner Norman Bay's resignation in early February left the board without the three members it needs for a quorum.

Before Bay's resignation, FERC, off to a promising start, had certificated seven major projects. These would bring more than 7 billion cubic feet a day of new pipeline capacity to the existing network. Projects were concentrated in the eastern United States and intended to accommodate growing natural gas production in the region.

For example, the Rover Pipeline project will transport natural gas to markets from the Utica shale, spanning multiple states including Ohio and West Virginia. The Atlantic Sunrise Pipeline will provide market access to Marcellus shale production. Both of these pipelines begin construction this year and have targeted in-service dates this year or next. After the initial burst of activity, certifications and review of pipeline projects ground to a halt after the board lost a quorum.

Prompt review and certification of well-vetted projects is crucial to expanding existing energy transportation infrastructure to keep pace with domestic production that has grown and is increasingly being generated from new locations.

Pipelines offer a safe, reliable mode of transportation for natural gas, oil, and related products. As I document in a recent report, pipeline safety has improved substantially over time. Looking at annual averages over five-year periods to minimize one-year fluctuations, the average from 1997 to 2009 was 0.025 serious incidents per 1,000 miles, and about half that for the period 2012 to 2016.

From March through June, the agency certificated no additional pipeline capacity. The first order of business for the agency should be addressing projects that have completed environmental reviews and have just been waiting on a final decision from FERC.

The NEXUS Gas Transmission Project, a 256-mile pipeline that would connect natural gas produced in the Marcellus shale in Ohio to markets in Michigan, has been waiting since November 2016 when FERC issued the final environmental statement for the project, the last step before a final decision is made. The operator had initially targeted an in-service date of the end of 2017, which it will miss as it has been unable to start construction.

In total, there are 18 major pending projects before the agency that are only waiting on the final decision about certification. These projects represent billions of dollars of private infrastructure development and thousands of construction jobs. The six largest projects alone would add more than 8.9 billion cubic feet per day of pipeline capacity to the existing infrastructure network. Certificating these projects would more than double the additional pipeline that has been approved so far this year.

Many of these projects are pipelines that would open up markets to natural gas production in the Marcellus shale. Agreements with producers and end-users have already been disrupted by the lengthy delay.

With its newly-restored quorum, FERC's first step should be to promptly make a decision on these projects based on the extensive review and final environmental reviews that have already been issued. The agency can then begin to wind down the backlog of projects that have been accumulating.

Charles Hughes is a policy analyst at the Manhattan Institute. Follow him on twitter @CharlesHHughes

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