National, local, and back

Feb. 9, 2009
US President Barack H. Obama’s affect on the country’s oil and gas pipeline industry is still in the earliest stages of being defined.

US President Barack H. Obama’s affect on the country’s oil and gas pipeline industry is still in the earliest stages of being defined. As part of his administration’s Comprehensive New Energy for America plan, Obama has prioritized construction of a natural gas pipeline from Alaska, at least in part to help create the jobs needed to fuel an economic recovery (OGJ, Jan. 26, 2008, p. 20).

This same economic downturn, however, has also placed pressures on the project that could little have been imagined as recently as last summer, when Alaskan Gov. Sarah Palin, while campaigning as the Republican nominee for vice-president, trumpeted the line’s construction as one of her crowning achievements. The capital needed for a project of this scale is simply harder to access now than it was even 8 months ago.

The economic pressures on an Alaskan gas line become even more acute when combined with sharply lower energy prices, surging shale gas production in the Lower 48, and underused capacity for importing LNG into the US. But proponents, including TransCanada Pres. Russ Girling, note that the long timelines of an Alaskan gas pipeline project coincide well with the still-upward sloping demand curve projected through at least 2030. TransCanada was awarded a license to build the project by the state of Alaska in December 2008.

Obama’s cabinet

The president’s cabinet also has so far had scant opportunity to influence oil and gas pipelines. New Transportation Secretary Ray LaHood, a former 14-year Republican representative from Illinois, didn’t comment directly on pipelines during his confirmation hearing, but did stress the need for his department to increase the safety of all modes of transportation.

As a US representative, LaHood voted “Yes” on the Renewable Energy and Energy Conservation Tax Act, voted “Yes” on criminalizing oil cartels like the Organization of Petroleum Exporting Countries, and “No” on retaining the moratorium on OCS drilling. He did, however, also vote to remove oil and gas exploration subsidies.

New Department of Homeland Security Secretary Janet Napolitano also is responsible for the security of US pipelines as part of the country’s critical infrastructure.

Napolitano issued five action directives in her first official day in the position, all of which have potential effects on the pipeline industry. The directives sought to update the status of:

  • Critical infrastructure protection, including plans to enhance both the protection itself and private sector participation in the protection.
  • Risk analysis, including enhancing risk management as the basis of decision-making.
  • State and local intelligence-sharing.
  • Transportation security (encompassing air, surface, and maritime transportation).
  • State, local, and tribal integration, designed to more fully integrate these governmental levels into the security process and including an acceleration of the input process from these levels.


These federal initiatives come at the same time that local resistance to new pipeline projects is emerging, particularly in areas surrounding the Barnett and Haynesville shales. Republican legislators in Texas—one from Burleson, just south of Fort Worth, and the other from Houston—have introduced two bills increasing landowner rights when faced by condemnation for a pipeline right of way.

The city council of Lewisville, Tex., also in the Dallas-Fort Worth area, is one of 30 Texas municipalities, including Fort Worth itself, to have passed a resolution asking the Texas legislature to give cities more authority in pipeline matters.

The resolution urges the legislature to revisit the continued appropriateness of preempting municipalities from regulating the practices of midstream gas utilities and requests it confer additional authority upon municipalities to “safeguard the interests of the public and the long-term economic viability of private property.”

From the president down to the city council of 95,000 person towns like Lewisville, everyone is trying to make sure domestic energy development doesn’t just happen, but happens in a way congruent with the country’s overall needs and wants.

A large circle is formed. The development of the Barnett shale near Fort Worth is one of the factors weighing against prompt development of a pipeline to bring gas from Alaska to the Lower 48. At the same time, efforts to restrict pipeline infrastructure inside and from the Barnett shale may slow its growth, refocusing attention on the need to develop as many different resources as possible.

Obama, his cabinet, and the pipeline industry itself all have their work cut out for them.