WASHINGTON, DC, June 14 -- Natural gas pipeline developers need to take a bigger role in permitting and regulatory reviews if they are to build the systems needed to meet growing US demand, a report commissioned by the INGAA Foundation concluded.
Its recommendations ranged from developing good working relationships with regulators before filing permit applications to being ready to pay for third-party information processing by otherwise overwhelmed government agencies.
The report noted that the Federal Energy Regulatory Commission has made a strong start toward streamlining its permitting process. But pipeline project proponents will need to be more willing to work with other federal agencies and regional, state, local and tribal governments, it said.
"The days of getting a permit from FERC and simply building a pipeline are gone. There are many other players now," said Mark S. Shaffer, executive director of the foundation, part of the Interstate Natural Gas Association of America.
Prompt permitting is the main goal, INGAA Pres. Donald F. Santa Jr. said.
"We don't propose that authority be taken from state and regional agencies," he said. "But we do want timely action. There are cases where a pipeline applicant has a FERC permit but can't build for years because other agencies are still conducting reviews."
The stakes are considerable. US gas demand is expected to grow by some 30 tcf by 2020, observed Gabrielle Borin of ENSR International, a Fort Collins, Colo., consulting firm that prepared the report.
More than $61 billion of investment will be needed to build the approximately 45,000 miles of pipeline and 7.8 million hp of compression to meet this additional demand, she told reporters during a briefing at INGAA's Washington headquarters.
Financial challenges include large capital requirements, uncertainty created by volatile prices, and investor hesitation stemming from environmental and siting issues, she said. But the single biggest problem is an increasingly cumbersome project approval process.
"The industry is building new infrastructure every day. But it gets slower and slower," she said.
Part of the problem is the intergovernmental conflicts that can arise.
"In Florida, for example, the state, county and local governments each have their own definition of wetlands," she said.
Delays also can appear within single agencies, according to Borin. In the western US, an interstate pipeline may cross Bureau of Land Management acreage, requiring consultation with several BLM districts and their staffs about meeting requirements of the National Environmental Policy Act and other regulations.
Overall, however, federal permitting processes have improved, Borin said.
"We've seen great strides at the federal level, especially with FERC, which usually acts as the lead agency. Work still needs to be done at the state and local levels," she said.
State, local, and tribal governments are being asked to process more applications without additional employees, she pointed out. For example, a state or local entity charged with historic preservation may only have two employees.
While some states have identified a lead agency to play a role similar to FERC's on the federal level, others have not established a single contact point.
"Natural gas pipelines are huge projects. Sadly, many state agencies are overwhelmed when they receive an application for a pipeline," Borin said.
Questions involving a project's right-of-way are fairly straightforward, said Lisa S. Beal, INGAA's environmental and construction policy director.
"It's when you get off the right-of-way with access roads and other activities that you start to encounter historic preservation and other issues on the state and local level," she said.
Borin said project sponsors should consider encouraging otherwise overburdened state, local, and tribal regulators to use third-party contractors.
Sponsors also should be prepared to pay for contractors' work if it will lead to more timely processing of their permit applications, she said.
Santa said the Senate and House energy bills try to address delays in processing permit applications, but not necessarily in ways that INGAA likes.
For example, he said the energy bill before the Senate would allow project sponsors to appeal to the president if delays mounted, an approach that potentially could politicize the process.
"We would rather have a judicial appeal, such as to the DC Circuit Court," INGAA's president said.
He said future pipeline projects will be focused either on bringing additional supplies to markets from the Rocky Mountains or integrating imported LNG into the system.
"There's somewhat of an uptick in activity but nowhere near the miniboom we saw in the early to mid-1990s," Santa said.
Contact Nick Snow at email@example.com.