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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. 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

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  1. 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

  2. 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

  3. 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.

  4. 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

  5. Office of Energy Projects

  6. 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

  7. 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

  8. There are approximately 217,300 miles of interstate natural gas transmission pipeline. Source: Based on data from Ventyx Global LLC, Velocity Suite, April 2012

  9. 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

  10. 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

  11. Natural Gas Act NATURAL GAS ACT Section 3 Import/Export Section 7(c) Interstate Case Specific Blanket Authority Case Specific Automatic Prior Notice

  12. 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

  13. Project Evaluation How Does FERC Evaluate All Of These Major Projects? What Are The Criteria Used in This Evaluation?

  14. Balancing Interests

  15. 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

  16. 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

  17. Project Review • Engineering Review • Environmental Review • Project Need (Public Interest Review) • Based on the Commission’s Certificate Policy Statement

  18. 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.

  19. 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.

  20. 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.

  21. The EnvironmentalReview Process

  22. 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

  23. 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

  24. 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

  25. 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

  26. 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

  27. 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

  28. 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

  29. 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

  30. 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

  31. 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

  32. 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

  33. 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

  34. 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

  35. 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

  36. 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

  37. Shale Gas Estimates Source: Based on data from ICF International and Compass Report January 2011 37

  38. 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

  39. Questions? ? ? ? ? ? ? ? ?

  40. Contact Info: Dave Swearingen Environmental Project Manager and Interagency Coordinator FERC Office of Energy Projects Division of Gas—Environment & Engineering david.swearingen@ferc.gov 202-502-6173

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