September 2013, Vol. 240 No. 9


Senate to Consider Pipeline Permitting Reform, Too

The Senate may consider some form of pipeline permitting reform but the bill may not look like the one the House was expected to pass. Sen. Ron Wyden (D-OR), chairman of the Energy and Natural Resources Committee, released a broad statement on natural gas issues July 25.

Fleshing out the details in a speech hosted by the Bipartisan Policy Center Wyden laid out four areas – infrastructure, transportation, exports and shale development – where he is working to find bipartisan agreement. With regard to infrastructure he said he wants to speed pipeline development while plugging methane leaks that threaten the climate advantage that natural gas provides. “I’m going to look for ways to not just build more pipelines, but to build better pipelines,” Wyden said.

Sen. Lisa Murkowski (R-AL), the top Republican on the committee, is also interested in moving forward with pipeline legislation, but apparently is less interested in some broader natural gas bill. “We are doing our due diligence and seeing whether legislation is needed or whether the Federal Energy Regulatory Commission (FERC) can improve the permitting process administratively,” says Robert Dillon, spokesman for Murkowski. “Sometimes legislation leads to unintended consequences.”

Keith Chu, a spokesman for the Senate Energy Committee, says there isn’t a hearing scheduled for H.R. 1900. He adds, “Chairman Wyden is interested in talking to colleagues about whether there is interest in speeding up permitting while also addressing methane emissions, but it’s too soon to say whether there would be legislation.”

Any Senate bill may contain some of the provisions in the Natural Gas Pipeline Permitting Reform Act (H.R. 1900) passed by the House Energy & Commerce Committee 28-14 on July 17. But there wasn’t much Democratic support for that bill in the House. That means Wyden is likely to either modify many of H.R. 1900’s provisions and add new ones, especially given his interest in seeing pipelines reduce methane emissions.

Wyden may accept some elements of H.R. 1900 since its sponsor, Rep. Mike Pompeo (R-KS), agreed to changes in the bill to appease the FERC. Those changes clarified that the expedited approval process endorsed by the bill would only be available to pipeline sponsors who put projects through the pre-filing process. That 12-month limit on how long FERC could take to either approve or reject a project after completion of a final environmental impact statement would begin after the commission received a completed application from the sponsor. Even after those changes were made, 14 Democrats voted against the bill and only two voted for it, meaning the legislation has a GOP stamp on it, clouding prospects in the Democratic-controlled Senate.

Markey Reports Gas Pipeline Leaks Costing Consumers

Sen. Edward J. Markey, (D-MA) has released a report concerning gas distribution pipeline leaks in that state, using it as a case study for the country as a whole. The report, prepared by congressional staff, found that $1.5 billion worth of natural gas was lost in Massachusetts from 2000-11 and blamed leaky distribution pipelines for most of the loss. Extrapolating from the Massachusetts data, the report estimated nationwide costs at $20 billion from 2000-11 for gas that was unaccounted for.

“Consumers are already paying expensive energy bills. They shouldn’t have to pay for billions of dollars in fuel that never even makes it to their homes,” stated Markey. “Every leaky pipeline is like a hole in consumers’ pockets. We need to speed up the replacement of old natural gas infrastructure to reduce accidents, pollution, and waste.”

Markey blamed pipeline infrastructure in bad condition for the losses and referenced the infrastructure replacement programs already in place in Massachusetts and 32 other states, calling for their expansion to allow companies to recover costs for pipeline replacement programs, especially replacing cast iron and bare steel pipe. He said companies might not take advantage of the programs, however, since they were passing on the cost of lost gas to consumers.

AGA President and CEO Dave McCurdy said in response: “According to data from the Energy Information Administration (EIA) and the Environmental Protection Agency (EPA), less than 1.5% of natural gas is emitted as it travels from where it is produced to your home. Natural gas utilities are committed to lowering this number even further by continually upgrading and modernizing the natural gas pipeline network. In the past decade, natural gas utilities have installed modern plastic lines at a rate of 30,000 miles per year, connecting new customers or replacing older pipeline infrastructure with more cutting-edge pipeline technology.”

His statement continued, “The top priority for natural gas utilities is safety and according to the Pipeline and Hazardous Materials Safety Administration (PHMSA), our domestic abundance of natural gas is delivered via the safest energy delivery system in the nation. With natural gas prices at historic lows, America’s natural gas utilities are using this opportunity to advance upgrades to our nation’s 2.4 million miles of natural gas pipelines, and they are working with local regulators to develop innovative rate models for making these capital investments possible.”

“If we plug some of the regulatory and consumer protection holes, we’ll get more of these money-wasting leaks plugged as well,” said Markey, who is drafting legislation to encourage speeding up cost-recovery programs for companies. “Natural gas is too valuable of a domestic resource to just allow it to float away, and it is too volatile a gas to allow these risks to continue.”

Hazardous Liquids Pipelines Worry About Tier III Proposal

Hazardous liquids pipelines upset about an EPA proposal requiring a reduction in the amount of sulfur in gasoline. This would pressure pipelines to cut sulfur in pipelines as petroleum travels through the distribution system. The purpose of “Tier III” is to reduce automobile tailpipe emissions of hazardous pollutants such as carbon monoxide, nitrogen oxide and particulate matter. Part of the rationale is to bring federal tailpipe emission standards into alignment with California’s LEV III program which begins in 2015. California’s air emission limits are stricter than the EPA’s current Tier II program.

Sulfur in gasoline degrades effectiveness of a car’s catalytic converter. The EPA proposed two options. The first maintains both the current 80-ppm refinery gate sulfur cap and 95 parts per million (ppm) downstream sulfur cap. In the second approach, the refinery gate cap would be reduced to 50 ppm and the downstream cap to 65 ppm, in other words, a 30-ppm reduction in the caps to go along with a 20-ppm drop in the average standard, i.e. reduction from the current 30 ppm per gallon annual standard to a new 10 ppm standard. If chosen, the 50-ppm refinery gate cap would take effect Jan. 1, 2020 when the small refiner, small volume refinery, and early credit use provisions would expire.

In comments submitted to the EPA, Keith Buchanan and John Harkins, Sunoco Logistics, said, “We support maintaining the current 95 ppm downstream per gallon gasoline sulfur cap to enable the current practices of pipeline interface handling. Pipeline and terminals will continue to be constrained by interfaces of gasoline with jet fuel or home heating oil. Interfaces with 3,000 ppm sulfur product are unavoidable, thus increasing the sulfur of the gasoline. Even small volume interfaces with 3,000 ppm sulfur jet fuel can significantly increase the gasoline sulfur.” Other refiners such as Mid-Continental Energy and Shell Oil Products have brought up morer potential pipeline consequences.

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