Carbon policy, technology pose hurdles to North American gas systems

March 26, 2018
Carbon policy and technology are two factors influencing North American pipeline infrastructure growth, panelists said at CERAWeek by IHS Markit Mar. 7 in Houston.

Carbon policy and technology are two factors influencing North American pipeline infrastructure growth, panelists said at CERAWeek by IHS Markit Mar. 7 in Houston.

According to IHS Markit, almost 11 bcfd of natural gas pipeline expansion projects are expected to come online in 2017 and 2018. There has been vocal opposition to the economic necessity, regulatory legality, and environmental propriety of the construction, and panelists from various groups met to discuss North American gas pipeline infrastructure growth challenges.

A number of pipeline projects have attracted attention in recent years, and societal frustration is building over the country's direction with regard to energy policy and climate change, Alan Krupnick, senior fellow, Resources for the Future, and Mark Brownstein, Environmental Defense Fund senior vice-president, climate and energy, told attendees.

A lack of progress at the federal level in establishing some "basic rules of the road" when it comes to articulating and crafting policy that relates to a low-carbon energy transition has resulted in such high-profile opposition because there hasn't been a productive forum to channel the discussion, Brownstein said.

"One solution in terms of getting social consensus on infrastructure is getting more serious about what our climate policy is going to be on a national level and finding a reasonable way of moving that policy forward," Brownstein said.

In its role, the US Federal Energy Regulatory Commission works well, said Donald Santa, president and chief executive officer of the Interstate Natural Gas Association of America, but look at the entire permit process and all the permits one must get before building a pipeline. What can make process more efficient while still honoring the purposes of protecting the environment, he asked.

One challenge is determining FERC's role without a clear policy. Once FERC gets data, what should be done with it, Santa asked, echoing Krupnick's sentiment that it's not FERC's role to be "climate cops."

Santa said, "Virtually all pipelines go through a very extensive prefiling process that can last even longer than the amount of time spent in the FERC's formal permit process. We really need to look at what we can do to make it better."

Technology also plays a role. CERAWeek is "dedicated to the the idea that we're reaching a critical tipping point as it relates to energy," Brownstein said. "We're seeing some fundamental changes in technologies that open up new opportunities and new competitors for what once was a market dominated by fossil fuels for generation of electricity. Some of those changes are happening because of interest in climate policy. But a lot is happening simply because the technology is changing," he said.

When evaluating the need for new gas pipeline systems, he said, a legitimate question is: "How long will we need this relative to new entrants coming into the marketplace, and indeed, do we even need them now at all?"

To some extent, the gas industry has some control over its place in its handling of its environmental footprint, he said. A leak at a Southern California Gas Co. gas storage well at the Aliso Canyon Natural Gas Storage Facility is an example of where failure can lead to the loss of market share, he said.

"Fifteen years ago, regulators would have had no choice but to work with the company and get that facility back online as quickly as possible," Brownstein said. But today, with advances such as electric storage, he said, regulators can incentivize other technologies.