WGC: Politics ranks high in gas pipeline risk factors

June 26, 2018
West Virginia (R) Sen. Shelley Capito, speaking June 26 at the World Gas Conference in Washington, DC, described the recent stop-and-start nature of pipeline construction, brought about by ongoing protests, as “very problematic” regarding needed expansion of the US pipeline system. 

West Virginia (R) Sen. Shelley Capito, speaking June 26 at the World Gas Conference in Washington, DC, described the recent stop-and-start nature of pipeline construction, brought about by ongoing protests, as “very problematic” regarding needed expansion of the US pipeline system. Her thoughts were echoed on an international scale by Tatiana Mitrova, director of the Moscow School of Management Skolkovo Business School’s Energy Center, who ranked geopolitics as the second-biggest risk factor in pipeline network expansion, behind only demand uncertainty.

Azerbaijan’s Minister of Energy Parviz Shahbazov focused on the economic benefits of gas pipeline transportation in explaining why it remains crucial despite such headwinds. “LNG will be used extensively,” Shahbazov said, “but pipelines remain the cheapest way to transport gas.” His Israeli counterpart, Minister of Energy Yuval Steinitz, added that the supply security offered by pipeline transport kept it at the forefront of delivery options, especially for customers. “Whenever you can export by pipeline, it’s the better option,” he said.

Steinitz’s remarks were made in the context of Israel’s participation with Cyprus as the origin countries for the Eastern Mediterranean Natural Gas (EastMed) pipeline. EastMed would move gas from Leviathan field to Europe via subsea pipeline to Greece and Italy. It’s more than 2,000 km length, however, and subsea sections reaching depths of roughly 3,000 m, have led to doubts that the project is economically viable even if technically feasible.

Steinitz, however, maintained that the pipeline’s subsea route would reduce toll costs to customers, avoid the political pitfalls he and other panelists agreed were increasingly problematic, and offer delivery security not available via any other option. These factors combined would ensure EastMed’s long-term value even in the face of high initial costs, according to Steinitz.

Returning to North America, Sen. Capito called on the US Federal Energy Regulatory Commission to expand its definition of “national interest” when deciding whether to approve pipeline projects by including job creation and economic growth among the aspects it considers. Stanley Chapman III, executive vice-president and president US natural gas pipelines for TransCanada, meanwhile, reminded panel attendees not to forget ethylene as a driver for continued pipeline network expansion, noting that though both electricity and heat can be derived from alternative fuel sources, only natural gas could be used to produce ethylene.

Contact Christopher E. Smith at [email protected].