Introduction to ferc and federal review of natural gas projects
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Introduction to FERC and Federal Review of Natural Gas Projects. Presentation to The Northeastern Area Association of State Foresters State College, PA June 5, 2012. Energy Projects. External Affairs. Enforcement. Electric Reliability. General Counsel. Energy Market Regulation.

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Introduction to ferc and federal review of natural gas projects

Introduction to FERC and Federal Review of Natural Gas Projects

Presentation to The Northeastern Area Association of State Foresters

State College, PA

June 5, 2012


Introduction to ferc and federal review of natural gas projects

Energy Projects

External Affairs

Enforcement

Electric Reliability

General Counsel

Energy Market Regulation

Executive Director

Energy Policy & Innovation

Administrative Litigation

Administrative Law Judges

FERC Organization Chart

ChairmanJon Wellinghoff

CommissionerPhilip D. Moeller

CommissionerJohn R. Norris

CommissionerCheryl A. LaFleur

CommissionerVacant

Secretary


Who is ferc

Who is FERC?

FERC is an independent federal regulatory agency that, among other things:

Regulates the interstate transmission of natural gas (siting & rates); electricity and oil (rates only);

Reviews proposals to build interstate natural gas pipelines and liquefied natural gas (LNG) terminals, and natural gas storage fields;

Licenses and inspects non-federal hydropower projects; and

Monitors and investigates energy markets.


Electric power

Electric Power

Wholesale rates for interstate transmission

Interstate electric transmission

Reliability of high voltage systems

Siting and permitting*

Within DOE-designated energy corridors

As authorized by EPAct

*Subject to recent federal court decisions


Office of energy projects

Office of Energy Projects


Gas pipeline program

Gas Pipeline Program

  • Evaluate applications for facilities to import, export, transport, store or exchange natural gas

  • Authorize the construction and operation of facilities for such services

  • Approve abandonment of such facilities

  • Conduct inspections of LNG facilities and pipeline construction


Introduction to ferc and federal review of natural gas projects

INFRASTRUCTURE BOOM

(Certificated in the last 10 years)

  • Pipelines

    • 108.6 Bcf/day of Capacity and 16,208 Miles

  • Storage Facilities

    • 1211.5 Bcf of Capacity

  • LNG Facilities

    • 37 Bcf/day of Total Capacity


Introduction to ferc and federal review of natural gas projects

There are approximately 217,300 miles of interstate natural gas transmission pipeline.

Source: Based on data from Ventyx Global LLC, Velocity Suite, April 2012


Natural gas act

Natural Gas Act

  • The Natural Gas Act is the law that sets out FERC’s areas of responsibilities:

    • Section 1 – Identifies projects exempt from FERC jurisdiction

    • Section 3 – Allows FERC to authorize import / export projects

    • Section 7 – Allows FERC to authorize interstate pipeline projects (including storage) and grant eminent domain


Projects exempt from ferc jurisdiction

Projects Exempt fromFERC Jurisdiction

  • Local Distribution Company facilities (e.g., UGI, Philadelphia Gas Works, etc.)

  • Intrastate pipelines (where gas is produced, transported and consumed within a single state)

  • Hinshaw pipelines (gas is produced in one state, but is transported and consumed within another)

  • Gathering facilities


Natural gas act1

Natural Gas Act

NATURAL GAS ACT

Section 3 Import/Export

Section 7(c)

Interstate

Case

Specific

Blanket

Authority

Case

Specific

Automatic

Prior

Notice


Natural gas act2

Natural Gas Act

  • Case Specific Review

    • Conduct a full review of proposal including engineering, rate, accounting, and market analysis

    • Conduct an environmental review by preparing an Environmental Assessment or an Environmental Impact Statement


Project evaluation

Project Evaluation

How Does FERC Evaluate All

Of These Major Projects?

What Are The Criteria Used in

This Evaluation?


Introduction to ferc and federal review of natural gas projects

Balancing Interests


Ferc s internal review process

FERC’s InternalReview Process

  • Initial review for completeness

    (10 business days)

  • Issue Notice of Application

  • Assign review team

    • Environmental

    • Certificates

    • Rates and Tariffs

    • Attorney

    • Engineering


Certificate process

Certificate Process

  • Non-Environmental Review and Analysis

  • Engineering – GQI, storage, hydraulic flow

  • Tariff – rates, terms & conditions of service

  • Policy – precedents, rules, regulations

  • Accounting

File

Application

Issue

Order

Parallel Processing Paths

  • Environmental Review

  • Conduct scoping

  • Coordinate with agencies

  • Environmental resource review

  • End result:

  • – environmental impact statement (EIS)

  • – environmental assessment (EA)

  • Staff makes its recommendations to the

  • Commission


Project review

Project Review

  • Engineering Review

  • Environmental Review

  • Project Need (Public Interest Review)

    • Based on the Commission’s Certificate Policy Statement


Final steps of the ferc process

Final Steps of theFERC Process

  • All aspects of the review (environmental and non-environmental) are brought together into a draft Commission Order which contains staff-recommended, project-specific requirements.


Final steps of the ferc process1

Final Steps of theFERC Process

  • The draft Commission Order is sent to the Chairman and Commissioners for their consideration. They can reject staff’s recommendation, accept it, and/or modify it.

  • If approved, the project proponent is issued a Certificate of Public Convenience and Necessity pursuant to 7(c) of the NGA, and with the right to eminent domain pursuant to section 7(h) of the NGA. Section 3 authorization does NOT provide for eminent domain.


State and local permits

State and Local Permits

  • Any state or local permits issued with respect to FERC jurisdictional facilities must be consistent with the conditions of any FERC certificate. FERC encourages cooperation between interstate pipelines and local authorities. However, this does not mean that state and local agencies, through application of state or local laws, may prohibit or unreasonably delay the construction or operation of facilities approved by the Commission.


The environmental review process

The EnvironmentalReview Process


Nepa overview

NEPA Overview

  • Is the project categorically excluded?

    • Projects with little or no impact (e.g., sale of pipe or abandonment in place)

  • Environmental Assessment or Environmental Impact Statement

    • Level of environmental impacts

      • significant (EIS) or less than significant (EA)

    • Applicant-proposed mitigation

    • Anticipated public controversy


Phases of project review

Phases of Project Review

  • Project Preparation

    • The applicant working on its own

  • Pre-Filing

    • FERC staff working with the applicant and stakeholders before the filing of an application

  • Application Review

    • FERC staff working with the applicant and stakeholders after the filing of an application

  • Post-Authorization

    • FERC staff working with the applicant and stakeholders to ensure compliance with conditions to the FERC approval


The pre filing process

The Pre-Filing Process

  • Voluntary for pipelines, required for LNG facilities

  • Used for projects requiring an EIS, or an EA where controversy is likely

  • Normally requires the applicant to hire and fund a contractor to help prepare EA/EIS

    • Staff selects contractor from list of three provided by the applicant

    • Contractor works solely under FERC staff’s direction


Goals of the pre filing process

Goals of the Pre-Filing Process

  • Early identification and resolution of environmental issues

  • More direct interaction between FERC staff and stakeholders

  • Interactive, concurrent NEPA/permitting processes

  • FERC staff are advocates of the Process, not the Project!

  • Goal of “no surprises” when application is filed


Ferc staff pre filing activities

Identify affected parties:

landowners

agencies

other stakeholders

Facilitate identification of issues

Identify study needs

Facilitate resolution of issues

Issue scoping notice

Examine alternatives

Arrange and attend site visits and meetings

Initiate preparation of preliminary NEPA document

Review draft resource reports

FERC Staff Pre-Filing Activities


The environmental report 13 resource reports

The Environmental Report(13 Resource Reports)

General Project Description

Soils

7

1

Land Use, Recreation, and Aesthetics

8

Water Use and Quality

2

Air Quality and Noise

9

Fish, Wildlife, and Vegetation

3

Alternatives

10

Cultural Resources

Reliability and Safety

4

11

PCB Contamination

12

Socioeconomics

5

Engineering and Design Material (LNG)

13

Geological Resources

6


Introduction to ferc and federal review of natural gas projects

Public InvolvementDuring Pre-Filing Review

The FERC Process

  • Project sponsor holds Open Houses; FERC staff participates

  • Issue Notice of Intent to Prepare the NEPA Document (i.e., scoping)

  • Hold scoping meetings

Public Input

  • Contact the project sponsor w/questions, concerns; contact FERC

  • Send letters expressing concerns about environmental impact

  • Attend scoping meetings


Introduction to ferc and federal review of natural gas projects

Public Involvement During Application Review

Public Input

  • File an Intervention; register for e-subscription

  • File comments on the adequacy of DEIS

  • Attend public meetings to give comments on DEIS

  • Interveners can file a request for rehearing of the Commission Order

The FERC Process

  • Issue Notice of the Application

  • Issue Notice of Availability of the DEIS

  • Hold Public Meetings on DEIS

  • Issue a Commission Order


Introduction to ferc and federal review of natural gas projects

Devonian (Ohio) Shale (244)

Cody Shale

Gammon Shale

Utica Shale

Antrim Shale(76)

Hilliard/Baxter/Mowry

Shale (265)

Niobrara

Shale (13)

Excello-Mulky

Shale

New

Albany Shale

(160)

Woodford

Shale

(101)

Mancos

Shale

Marcellus

Shale

(1,500)

Pierre Shale

Hermosa Shale

Woodford-Caney

Shale

Lewis Shale

(61)

Conasauga Shale

Bend Shale

Chattanooga Shale

Floyd - Neal Shale

Floyd - Chattanooga Shale (22)

Barnett - Woodford

Shale (265)

Fayetteville Shale (52)

Haynesville Shale (717)

Barnett Shale (168)

Eagle Ford Shale

Note: While some shale basins have been identified with reserve estimates, others have no reserve data available.

Total Shale Gas

3,700 Tcf

Pearsall- Eagle Ford Shale

United States Shale Basins

Maximum Reported Gas-in-Place (in Tcf)

Source: Ventyx Velocity Suite 2011 and Navigant Consulting’s North American Natural Gas Supply Assessment – July 4, 2008

30


Why shale gas supply drivers

WHY SHALE GAS? Supply Drivers

  • Shale gas is abundant and is becoming increasingly cheaper to produce

  • Rockies gas can now easily reach markets in the Northeast, and with Ruby, the Pacific Coast

  • Deeper shale formations (e.g., Utica) are now being considered as emerging supply sources


Why shale gas market drivers

WHY SHALE GAS? Market Drivers

Natural gas is in demand…now more than ever!

  • Firming-up Variable Power Generation (RPSs)

  • New Baseload Power Generation

  • Replacing / Converting Retiring Coal-Fired Plants

  • Natural Gas Vehicles


Introduction to ferc and federal review of natural gas projects

Marcellus Shale: What’s the Big Deal?

Source: GasMart 2011 Chris Tucker, Energy in Depth A Sustainable Future for Natural Gas Getting It Right with the Public


Introduction to ferc and federal review of natural gas projects

Corning

Tennessee’s

Station 219

Leidy

Rivervale

Linden

Lambertville

Oakford

TETCO &

Columbia

Interconnects

Appalachian

Basin

Princeton

Spectra,

Williams, & NiSource

Interconnects

Transco’s

Comp Sta 195

Clarington

Sparrows Point LNG

Approved or Pending Projects

Potential Projects

Mid-Atlantic Express Inc.

Northeast Supply (Williams)

Appalachia to Market

Expansion (TETCO)

Line 300 Exp (Tennessee)

Dominion Keystone (Dominion)

Rockies Express Pipeline East

New Penn (NiSource)

REX Northeast Express (KM)

Northern Bridge, TIME 3, TEMAX

(TETCO)

East West Connector (NFG)

Source: FERC


Introduction to ferc and federal review of natural gas projects

Appalachian Expansion (NiSource)

Sunrise Project (Equitrans)

Line 300 Exp (Tennessee)

TEAM 2012 Project (TETCO)

NiSource/MarkWest & NiSource

Northeast Upgrade (Tennessee)

N Bridge, TIME 3, TEMAX (TETCO)

Marc I (Central NY)

Appalachian Gateway (Dominion)

Low Pressure East-West (Equitrans)

Line N & N, R & I Projects (NFG)

NJ-NY Project (TETCO & Algonquin)

Tioga County Extension (Empire)

Northeast Expansion (Dominion)

NSD Project (Tennessee) &

Ellisburg to Craigs (Dominion)

Northeast Supply Link (Transco)

Northern Access (NFG & Tennessee)

Blacksville Comp (Equitrans)

Marcellus Shale Projects

Corning

Marcellus Shale Projects

Tennessee

Station 219

Leidy

Rivervale

Linden

Oakford

Lambertville

Appalachian Basin

Princeton

Transco Compressor Station 195

Clarington

Approved or Pending Projects

Potential Projects

NYMarc (Iroquois)

Keystone (Dominion/Williams)

New Penn (NiSource)

NiSource & UGI

Marcellus to Manhattan (Millennium)

Northeast Supply (Williams)*

Appalachia to Market Expansion

Commonwealth Pipeline

(UGI Service, Inergy, WGL)

TEAM 2013 & TEAM 2014 (TETCO)

Ohio Pipeline Energy Network

(TETCO)

The West Side & East Side Expansions

(NiSource)

* Combined Transco’s Rockaway Lateral and Northeast Connector Projects

MPP Project (Tennessee)

Source: FERC

The Constitution Pipeline


Introduction to ferc and federal review of natural gas projects

Storage

Interstate Natural Gas Facilities and Shale Basins Impacting Ohio, New York, Pennsylvania & West Virginia

Antrim

Shale

New York

Marcellus

Shale

Utica

Shale

Pennsylvania

Ohio

West Virginia

Devonian

Shale

Source: Based on data from Ventyx Global Energy Decisions, Inc., Velocity Suite, May 2012

36


Shale gas estimates

Shale Gas Estimates

Source: Based on data from ICF International and Compass Report January 2011

37


Gas estimate appalachia

Gas Estimate - Appalachia

  • Growth in the Appalachian region of Northeastern U.S. is driven primarily by Marcellus Shale production.

  • Regional production by 2035 -- projected increase of over 475 percent!

Source: Based on data from ICF International and Compass Report October 2010

38


Questions

Questions?

?

?

?

?

?

?

?

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Contact info

Contact Info:

Dave Swearingen

Environmental Project Manager and Interagency Coordinator

FERC Office of Energy Projects

Division of Gas—Environment & Engineering

[email protected]

202-502-6173


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