Don Santa, president and CEO of the Interstate Natural Gas Association of America (INGAA), summed up the feelings of many in the natural gas sector Dec. 9 when he said, “It’s nice being Number 1, but all of a sudden others are gunning for you.”
Speaking at a crowded meeting of the Pipeliners Association of Houston, Santa, whose organization represents the interests of the natural gas transmission industry in the nation’s capital, said while he had no doubt the industry itself can keep pace with the growing demand for infrastructure, much of the true challenge will come from Washington, DC.
“Dysfunctional government is not good for business and, consequentially, not good for energy,” Santa said, adding while there is now widespread acceptance of the shale revolution in Congress, issues on the regulatory front are not so simple to sort out.
The Columbia University law graduate cited the unprecedented failure of Ron Binz as President Obama’s nominee to head the Federal Energy Regulatory Commission (FERC) and the troubled regulatory path of the Keystone XL pipeline as examples of the muddled picture the pipeline industry often faces.
“Five years ago, you would not have thought the Keystone debate was possible,” Santa said. “The real concern is that this places focus on the regulatory process.”
He applauded the passage of U.S. Rep. Mike Pompeo’s (R-KS) legislation to improve the natural gas transmission pipeline permitting process, which provides for enforcement of permitting deadlines.
However, he also pointed to the shortcomings of a regulation that authorizes pipelines on federal lands, but fails to mention gas infrastructure. As a result, gas pipelines “each require a separate law of its own.”
A bill to authorize the Interior and Agriculture departments to issue permits for rights-of-way, temporary easements, or other necessary authorizations to facilitate natural gas, oil and petroleum product pipelines and related facilities on eligible federal lands is in the House Agriculture Committee.
In the area of cybersecurity, Santa said INGAA supports Rep. Michael McCaul’s, (R-TX) bill to advance research, development and technical standards. He added, however, “the furor over (former NSA employee Edward) Snowden makes moving forward very difficult.”
That the federal Pipeline and Hazardous Materials Safety Administration (PHMSA) is expected to address guidelines governing gas pipelines as “one consolidated effort” could also be problematic for the industry. According to Santa, “implementing the final rule is going to be a monumental task.”
Additionally, he said developments concerning the Department of Energy (DOE) conditional approval for Freeport LNG shipping point to the possibility “the DOE, at some point, may turn off the spigots.”
In the Freeport LNG case, the partial approval falls 1 Bcf/d short of the Houston company’s export plans, allowing 400,000 MMcf/d to be exported from the Quintana Island facility to countries that do not have free trade agreements with the United States. About 20 similar applications from other companies are pending.
Santa described laws that limited coal use and helped give natural gas “the upper hand” as something of “a double-edged sword,” because the limits placed on coal also affect natural gas compression and related emissions.
He said some in Congress have shown interest in limiting methane emissions associated with natural gas production. While no action is expected in the current session, “the topic is not going away.”
On the brighter side, Santa cited FERC data showing 12,400 miles of pipeline were built in the U.S. between January 2003 and March 2013, saying the robust natural gas transmission system is “the envy of the world.”
He pointed to increased U.S. exports to Mexico as a development that has not gotten a lot of attention, but one that “of course, is going to involve pipelines.”
That building boom for gas infrastructure is already underway with both TransCanada and Sempra Energy subsidiaries selected to build several billion dollars’ worth of new transmission pipelines, and Kinder Morgan’s El Paso Natural Gas Co. providing an added link that will connect its Southern System, running through Arizona, with part of the Sempra work.
In the last quarter of 2012, TransCanada won bidding rights to build a $1 billion, 329-mile, 30-inch transmission pipeline and a $400 million, 257-mile, 24-inch pipeline. At the same time, San Diego-based Sempra Energy was awarded the contract on a 500-mile, two-phase pipeline project in northwest Mexico that will be linked to Kinder Morgan’s El Paso Southwest interstate system.
Sempra affiliates already have several gas infrastructure projects valued at more than $2.4 billion operating in Mexico. (See, North America: An Energy Rocket Ship If Mexico Gets Aboard, Pipeline & Gas Journal, May 2013.)
“U.S. gas, NGL and crude continue to grow, and opportunities abound,” Santa said. “None of this would be happening without pipelines.”