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FERC quorum brings promise of activity to frozen pipeline industry

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FERC quorum brings promise of activity to frozen pipeline industry

Desperate to advance an unprecedented backlog of infrastructure projects, the natural gas industry hailed the U.S. Senate's vote to confirm two commissioners for the Federal Energy Regulatory Commission and restore a voting quorum at the agency.

Late on Aug. 3, the U.S. Senate voted to approve Republicans Robert Powelson and Neil Chatterjee and bring the five-seat commission to three members. Three is the minimum number of commissioners required to issue certificates for gas infrastructure projects and vote on other major business.

"Happy day!" tweeted acting FERC Chairman Cheryl LaFleur, the lone member of the commission left after recent turnover. "Very excited to work with new Commissioners Chatterjee and Powelson!" LaFleur in an interview in May described an unprecedented backlog of business that accumulated during the six months the commission was without quorum.

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About $14 billion in private capital for energy infrastructure projects has been held up by the lack of a FERC quorum, the Interstate Natural Gas Association of America estimated. That number would have climbed if the Senate had not moved on the two new commissioners before its August recess.

The anxiety of the gas industry leading up to this deadline could be heard in second-quarter earnings calls. Pipeline executives expressed frustration with a drought of federal permitting action. Many thought the quorum might not be restored until fall.

Dominion Energy Inc. leads pipeline development on the $5.5 billion, 1.5-Bcf/d Atlantic Coast project, which is waiting on final FERC approval. Dominion CEO Thomas Farrell made it clear in an Aug. 2 earnings call that he had his eye on the commission. "We'd like to see FERC commissioners in panel ... in September," Farrell said. "That would allow us to start construction" on schedule.

Enbridge Inc. CEO Al Monaco was unhappy with the FERC situation, which pushed the start of the 1.5-Bcf/d Nexus Gas Partners LLC pipeline project it plans to build across the Midwest with DTE Energy Co. into 2018. "Obviously, we're a little bit frustrated with the timing here," Monaco said. "It is a good project that is going to be a great economic driver for the local area."

The developers of the 1.1-MMDth/d PennEast pipeline between Pennsylvania and New Jersey have seen delays that they attribute in part to FERC. "PennEast was expected to receive a certificate of public convenience and necessity from the FERC in early summer," New Jersey Resources Corp. Chairman and CEO Laurence Downes said. "However I think, as everyone knows, the lack of a quorum at FERC has delayed the process. But once a quorum is obtained and the FERC issues the certificate, the project will move quickly to secure the remaining state permits."

With most of Williams Cos. Inc.'s big projects either early in the permitting process or already in construction, President and CEO Alan Armstrong was not as concerned. He said Williams' Transcontinental Gas Pipe Line Co. LLC needs a notice to proceed with the last stages of construction on its Atlantic Sunrise project, but it can obtain this from commission staff. Armstrong said he expects Atlantic Sunrise, which will move gas from the Marcellus Shale to markets along the Transco system, to start generating cash by September.

Gas producers, including many in the Marcellus Shale, watched FERC as well to see when more takeaway capacity might arrive. They are also focused on the pipelines going into the ground that received FERC approval just before it lost quorum in February, such as Energy Transfer Partners LP's Rover pipeline project and TransCanada Corp.'s XPress expansions.

"By year-end, we should have access to additional natural gas transportation projects to take our production out of local Appalachian markets and directed to the Midwest, Gulf Coast regions," Range Resources Corp. CEO Jeff Ventura said in an Aug. 2 call. For pipelines with in-service dates before 2018, he said, "the combination of these projects and strengthening local pricing will be drivers of our expected improvement in natural gas differential for 2018."

INGAA summed up industry relief at the news that FERC is poised to start operations again. "The commission now can get back to work thoroughly reviewing the many energy infrastructure projects of national importance that have been sidelined in recent months," INGAA President and CEO Donald Santa said in a statement.

Two more nominees to fill out the remainder of FERC's seats, Republican Kevin McIntyre and Democrat Richard Glick, were sent to the Senate on Aug. 2.