January 2015, Vol. 242, No. 1


Tighter Regulations Push Environmental Concerns To Front Burner

Ryan Slack and Dan Maltese

Natural gas production and pipeline construction thrive on predictability. They depend on reliably meeting milestones and deadlines in order to connect new sources of energy into supply lines.

Anything short of predictable can be disruptive and expensive, even a show-stopper on certain projects. As a result, improved understanding of potential sources of schedule disruption has become a key success factor for companies.

Consider three examples of the growing importance of environmental considerations in pipeline construction planning:

Growth Of HDD For Stream Crossings
– Tighter regulations designed to protect aquatic habitats demand longer and costlier environmental studies when a stream or its banks are to be disturbed.

Experience has shown that, as a result, over the past year or so, increasing numbers of companies have decided against causing in-stream impacts due to trenching across watercourses. Rather, these companies opted to use horizontal directional drilling (HDD) beneath streams that cross their pipeline routes.

For these companies, the higher construction cost of HDD vs. conventional, open-cut trenching is more than offset by lower permitting costs, fewer legal liabilities, less time needed to meet environmental regulations, and less project timeline uncertainty from environmental regulators challenging the company’s application.

Protected Bat Species, Tree-Cutting – The spread of a disease deadly to some bat species, called white-nose syndrome, is resulting in increased regulatory concern about severely declining bat populations.

The need to protect listed species means for an increasing number of projects that a bat survey must be completed in the areas to be affected such as proposed wellpad locations and pipeline routes. Because bats are active only during warmer months, there is a narrow window (typically mid-May through mid-August) during which the studies can be conducted.

This means project proponents must make sure qualified professionals will be available to complete the required studies during those time frames. This may require planning further ahead to lock in qualified professionals prior to the bat survey season.

Another planning consideration is the increased focus on seasonal tree-clearing restrictions by resource agencies. Early coordination with any resource agency having the authority to affect scheduling is always prudent, especially if the project is located within an area where tree clearing could be limited by weather from late fall until early spring.

Rise of third-party mitigation banks – To respond to the growing need to mitigate environmental impacts, a relatively new type of enterprise has developed, the mitigation bank, in which habitat is created or set aside, with “shares” in the bank made available, at a price, as compensation. In this matter, companies can balance the effects of projects that are subject to regulatory approval.

While traditional mitigation banks have mainly offered the sale of wetland credits, newly formed banks are beginning to offer stream credits and credits to offset impacts to at-risk wildlife species.

For example, mitigation banker Environmental Banc & Exchange-EBX has established three endangered species conservation banks in the Southeast, totaling about 4,500 acres. These include one in West Virginia to extend the habitat for the Cheat Mountain salamander and the West Virginia northern flying squirrel; another in North Carolina and South Carolina to preserve, enhance and restore habitat for the Carolina mussel; and a third in Bandera County, TX for the golden-cheeked warbler.

Mitigation banks have shown significant growth over the past few years and oil and gas companies need to understand how to use them in order to reduce delays permitting delays.
Environmental constraints sometimes mean that a straight line is not always the most cost-effective, due to the need to protect listed species.
Factoring In Environmental Matters
Environmental matters have grown in ability to affect the oil and gas sector, extending to the planning and development of infrastructure.

As a result, becoming more proficient in factoring environmental matters into the planning process is emerging as a key ingredient to success for the sector. Missing out or refusing to recognize this trend can result in project delays, cancellations, higher costs, the potential for regulatory sanction, greater scrutiny from regulators, fines, maybe even jail time.

Traditionally, pipeline routes and the location of facilities such as drill pads have been decided by financial factors, with routes running as directly as possible. The land team would then seek permits and licenses.

As environmental concerns became more demanding, the company’s environmental and regulatory liaison generally worked with a third-party environmental firm that determined what permits would be needed. At that point, the necessary environmental due diligence would be done to obtain those permits.

When such matters had little effect on routes or other planning decisions, the environmental review was generally left until the end of the planning process. Now with popular and political concerns about the environment front-and-center, environmental concerns need to be considered much earlier in the decision-making process. It’s increasingly common for a pipeline’s most direct route to be altered due to environmental concerns such as a wetland being located in the original path.

Accordingly, companies that make environmental matters a greater part of their decision-making process have a better chance of thriving.

In the case of bat protection, for example, this might include designing schedules to leave time to engage wildlife biologists able to carry out a bat survey along the planned route during summer months. It might also mean scheduling for winter tree clearing or possibly planning routes to avoid steep slopes where deforested lands are vulnerable to landslides during spring rains.

Thinking Ahead
In addition to bringing environmental advisors (on-staff or third-party firms) to the boardroom table more frequently, it is essential to seek their advice early in the process. In this way plans can be changed before time and money are wasted securing the use of property that will be eliminated due to environmental factors.

In many cases, it is possible to do a quick low-cost “desktop study” in which environmental professionals use readily available, often public information to check for obvious problems. These studies rely, in part, on the increasing availability of satellite imagery that shows types of vegetation, number of stream crossings and other pertinent factors.

A desktop study can be a wise investment, and when worked into the planning process, can help build reliability and cost management into the company’s plans.

One of the keys to thriving in an era in which environmental issues loom large is having access to the right professional advice. Traditionally, the oil and gas sector has relied on a combination of in-house and external sources of expertise. That combination seems likely to continue.

In seeking external counsel, it is important for companies to work with a firm that has access to the right skills and qualifications, and is able to address the issues at hand – either through their own employees or subcontracted services. It is also important to have access to firms that have the confidence of regulatory authorities so their reports are less likely to be questioned and more likely to be quickly approved.

Companies must develop relationships with their service providers so those firms will be willing to cooperate with them, particularly when a fast turnaround is required to meet a scheduling need. A good relationship with an environmental firm can be a valuable aid in keeping the planning process on track, construction crews working and the gas flowing.

Authors: Ryan Slack is project manager with Civil & Environmental Consultants, Inc., based in the Indianapolis, IN office.

Dan Maltese is vice president of Ecological Services with Civil & Environmental Consultants, Inc. (www.cecinc.com) based in the Pittsburgh, PA office.

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