Greg Harper Ready To Tackle Pipeline Issues

March 2013, Vol. 240, No. 3

Jeff Share, Editor

Every year it seems that change is the one constant we can be sure of in the natural gas business. As we continue forward with the Shale Gas Revolution, we are continuing to see opportunities develop that were little more than dreams just a few years ago.

More than ever, it takes an executive able to match a steady hand with the required flexibility to successfully manage a pipeline company. Condense that challenge into a single year and you may qualify to be chairman of the Interstate Natural Gas Association of America (INGAA), the Washington, DC-based group that represents the interests of North America’s large transmission pipeline companies.

That responsibility for 2013 is now borne by C. Gregory (Greg) Harper, senior vice president & group president of Houston-based CenterPoint Energy’s Midstream business. Harper joined CenterPoint Energy in December 2008, prior to which he was president and CEO of Spectra Energy Partners.

His other positions include manager of business development and marketing for Texas Eastern and Algonquin Gas Transmission, vice president of East Tennessee Natural Gas and group vice president of Duke Energy’s North American energy trading and merchant business. Harper started his career as an engineer for Texas Eastern Transmission Corporation.

A native of Owensboro, KY Harper received a bachelor of science degree in mechanical engineering from the University of Kentucky in Lexington. He is an honors graduate of the University of Houston’s MBA program and has also completed executive development programs at Rice University and Harvard Business School.

In this interview with P&GJ, Harper outlines his agenda for the influential association and its members.

P&GJ: What are your top priorities as chairman of INGAA?

Harper: In response to new mandates included in the reauthorization of the Pipeline Safety Act, one of my primary goals as chairman of INGAA is to help shape the supporting regulations in a way that ensures pipeline safety while minimizing customer disruptions and accomplishes Congress’ intent of being prudent and cost-effective.

We also plan to educate and advocate for a better understanding of the need for rules in electric power markets that facilitate contracting for the gas supply and pipeline transportation needed to meet the growing use of natural gas to generate electricity.

Our other main priorities are to: ensure that the statutory and regulatory framework remains positive for natural gas pipelines; promote the benefits of natural gas and especially the important role of natural gas pipelines; and continue INGAA’s leadership on pipeline safety matters.

P&GJ: Where we do now stand on the issue of gas and electric integration and what are some of the challenges that need to be dealt with?

Harper: Last year, natural gas-electric power reliability was the principal focus of INGAA’s FERC activities and we quickly established ourselves as the leading natural gas industry voice on this matter.

This issue is not just one of coordination but rather about understanding and educating stakeholders about how the choices in setting the rules in electric power markets affect the ability of electric power generators to contract for the delivery of fuel.

We also must educate the electric industry about our industry’s model for providing natural gas transportation and storage services and building new infrastructure, which has provided reliable service to our firm transportation customers for decades. Our model has been extremely successful, allowing the industry to meet its customers’ needs through timely expansion and new construction.

P&GJ: What could we look for if and when this is accomplished?

Harper: This discussion between the natural gas and electric power industry has been taking place over the past few years and will continue.

One of the most important things to remember is that each region is different based on its fuel mix, available pipeline capacity and electric market structure. Some regions face greater challenges than others. In the end, our goal is a set of market rules that enable natural gas to fulfill its potential to serve as a reliable and affordable option for fueling electric power generation.

P&GJ: Regarding cybersecurity, how are INGAA members dealing with this problem?

Harper: Thanks to the INGAA staff and many of our members who have long-standing working relationships with the Department of Homeland Security, its Transportation Security Agency and other related security agencies, last year we were able to mobilize and respond quickly to incidents in which pipeline companies were among the victims of cyber intrusions. This also enabled INGAA to educate the sponsors of cybersecurity legislation in the Senate about the effectiveness of our industry’s defenses and its collaborative working relationship with federal cyber officials.

We’ve also established a new INGAA standing committee – Pipeline Technology & Cyber Security – that will continue the effort and coordinate with these and other government agencies as well as industry organizations like AGA with whom we have an excellent working relationship.

We also are working hard to educate our members about the need for vigilance. We’ve already held cyber-information forums for INGAA members and INGAA Foundation members, and we will continue to promote educational efforts.

P&GJ: Providing we are still awaiting an answer on Keystone XL, if it ultimately is blocked, would this make future construction of natural gas pipelines more difficult?

Harper: Natural gas and liquids (crude and crude product) pipelines operate under different legal and regulatory regimes. While we hope and expect the government ultimately to approve the Keystone XL pipeline, an adverse decision would not necessarily make future construction of natural gas pipelines more difficult. Still, the Keystone XL situation is instructive in how stakeholders have turned to opposing pipelines in hopes of frustrating upstream development.

P&GJ: The latest INGAA Foundation study noted that other than FERC, pipeline operators are facing increased delays in the permitting process. How has this affected pipeline activity and can anything be done to mitigate this problem?

Harper: Generally speaking, the current U.S. system of permitting pipelines works well, and that’s proven by the number of new pipeline miles we’ve been able to put in the ground over the past five years. (FERC reports it certified 7,749 miles of pipeline and 63.93 Bcf/d of capacity from January 2007 through July 2012).

What the Foundation’s report highlights is that there remain opportunities to improve the system at the margins. In this case, the report notes that agencies, other than FERC, are taking time beyond FERC deadlines before they grant permits. The report found that greater education, communication and perhaps giving FERC authority to enforce deadlines would help make the pipeline permitting process even more effective and efficient.

P&GJ: Do you expect any significant changes from Washington that could affect the pipeline industry?

Harper: With a gridlocked Congress and pressing fiscal issues, like the debt ceiling, on the table, it’s hard to forecast developments in Washington that might affect the pipeline industry this year. Cybersecurity is perhaps the one issue on which action might be enabled by an emerging consensus.

P&GJ: What are some of the key challenges that could affect the continued growth of the natural gas business? Low prices? Water availability in drought-stricken areas? Restrictions on fracking?

Harper: All of those issues could impact the pace of pipeline construction. Still, the outlook for the natural gas pipeline industry is very promising. The fact is that supply is growing because of the Shale Gas Revolution and demand is growing because of the clean-burning nature of natural gas, its domestic abundance and its affordability. The combination of stronger supply and demand means there will be a continuing need for new pipelines.

The INGAA Foundation’s 2011 report, “North American Natural Gas Midstream Infrastructure Through 2035: A Secure Energy Future” evaluated the need for additional transmission, gathering, compression, storage and processing capacity over the period 2011 through 2035. The report’s reference case, using the most likely scenario for market development, found that more than $205 billion in capital investments would be required through 2035, with average annual expenditures of $8.2 billion.

Nationwide, The INGAA Foundation estimated that nearly $98 billion in transmission mainline projects, $30 billion in lateral projects, $42 billion in gathering lines, $9 billion in compression projects, $5 billion in storage fields, and $22 billion in additional storage capacity would be needed by 2035.

While low natural gas prices and other factors may temporarily slow expansion, the long-term outlook is clear – we will need more pipelines and the industry stand ready to expand.

P&GJ: We are beginning to see the rail industry assert itself as a competitor to pipelines. Is this a concern for INGAA?

Harper: Pipelines are the safest and most efficient way to move energy. While there may be some role for the rails in transporting liquids, pipelines still are the go-to transportation method, and really the only viable method for natural gas transportation within North America.

P&GJ: What progress has been made on INGAA’s safety initiatives?

Harper: INGAA has made significant progress on pipeline safety in the past few years. We’ve committed to a goal of zero pipeline incidents, and we’ve put meat on the bones, setting a clear path to improving our performance by expanding integrity management principles to areas beyond high consequence areas and reducing our response time in the event of an emergency.

We also are committed to communicating with our stakeholders to make sure we understand their concerns and listen to their recommendations. We meet regularly with regulators, pipeline safety advocates, first responders and other interested parties. We also are working toward more efficient inline inspection tools.

P&GJ: With PHSMA adding 60 inspectors, are you concerned the government might be over-regulating the industry?

Harper: PHMSA’s primary responsibility is pipeline safety, and it’s up to them to determine how many inspectors they need to get the job done. What we need is practical and effective regulation. Our goal is zero pipeline incidents. A robust industry safety culture, combined with a collaborative regulator, will help us get there.

P&GJ: What factors will drive new pipeline construction this year?

Harper: The main drivers will be the fundamentals: increased natural supply thanks to the Shale Gas Revolution and increased demand, particularly in the electric power and industrial sectors. Pipeline construction also will be driven by the need to move more natural gas from non-traditional supply areas (i.e. the new shale plays) to the market.

P&GJ: How active do you expect to see the pipeline construction business this year, and where might we expect to see the most work?

Harper: I think it might be best to refer you to the Federal Energy Regulatory Commission for this one. FERC updates fairly regularly the projects the industry has going.

While there is a lot of discussion about relieving transmission constraints in the Northeast, there are pipeline opportunities virtually everywhere given the multitude of supply sources and the widespread use of natural gas in the United States.

P&GJ: At the end of your term, how will you measure success?

Harper: Success to me will be the adoption of pipeline safety regulations that enhance our efforts while considering cost and customer impacts.

I’d also like to see progress by several key electric markets where reliability levels are clearly established and include rules that specify fuel supply requirements. These rules would give generators incentives to hold the necessary fuel delivery capabilities to meet the specified level of reliability.

And finally, success will mean that our member companies will have realized even greater value from their participation in INGAA as a result of the committee streamlining and efforts to create more avenues for member involvement and accountability.

P&GJ: How did you get into the industry and how have you seen the business change since you began your career?

Harper: I was raised in the pipeline industry. My father was an engineer and eventually a senior executive over Engineering and Operations for an interstate pipeline company. Following in his footsteps, I started my career on the engineering construction side, until I transitioned to the commercial side, as the pipeline industry continued its progression through deregulation.

With these regulatory changes, I have seen what was once viewed by many (and still by some) as a slow and methodical industry become competitive and dynamic. Today, it’s very exciting to see that our natural gas industry is responsible for the resurgence of the U.S. industrial sector.

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