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Gas sector fields political resistance amid export, infrastructure opportunities


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Gas sector fields political resistance amid export, infrastructure opportunities

The U.S. gas industry is facing challenges from a current political climate that is pushing against infrastructure development and exports, highlighting a tug of war between an abundance of fossil fuel supplies in the country and the ongoing movement against climate change.

For one, the political resistance has buffeted a U.S. LNG export industry that is mostly optimistic about increasing its shipments of record-high domestic gas output to world markets. LNG industry supporters at the Gulf Coast Energy Forum in New Orleans expressed concern about an array of policy challenges that could raise the stakes for a sector that has long grappled with environmental opposition to gas infrastructure projects.

To counter these developments, the industry needs to do a better job of addressing environmental concerns and making the case for the role of natural gas in the energy mix, said Charlie Riedl, executive director of industry trade group Center for Liquefied Natural Gas.

The challenges have included a spate of efforts led by cities on the U.S. West Coast to electrify buildings and ban new natural gas hookups. Also, a push at the U.S. Senate level presents a new concern for an industry already unsettled by a rising tide of anti-gas measures.

Specifically, Massachusetts' Democratic Sens. Edward Markey, a leading climate activist, and Elizabeth Warren, a top contender for the party's 2020 presidential nomination. Their bill would ban the construction of any natural gas compressor station if that station is part of a project that will facilitate gas exports.

Stakeholders have lately expressed surprise at the swiftly spreading efforts to sideline natural gas, which has played a crucial role in reducing U.S. coal consumption during a production boom in recent years.

"The pressure on oil and gas companies is increasingly growing, and growing at a pace I would not have anticipated one year ago, [but] we can have a clear view of the challenges and of the solutions," Patrick Pouyanne, CEO of integrated energy company Total SA, said recently the Oil & Money conference in London. "If we don't want to become dinosaurs, we'll have to adapt."

The bill appears unlikely to advance; Senate Majority Leader Mitch McConnell, R-Ky., would have to bring the legislation before the Senate, where GOP control of the chamber presents a difficult hurdle. But the proposal's high-profile backers make it harder to ignore.

On a more local scale, National Grid USA's ongoing dispute with New York continues as the utility faced withering criticism from state regulators in the latest flare up over National Grid's natural gas moratorium in New York City and Long Island.

Four of five commissioners voted during an Oct. 17 meeting to adopt an order that paves the way for fines against National Grid over its denial of service to more than 1,000 customers. The order, issued Oct. 11, also requires National Grid to submit reports on how it plans to provide reliable service and accommodate disconnected customers.

The order stems from an investigation into National Grid's alleged refusal to reconnect customers who suspended service before the company put in place the moratorium in May. National Grid has said it will not process any new applications for downstate gas hookups unless New York approves a gas pipeline project to address supply constraints.