The Federal Energy Regulatory Commission rejected challenges to its decision to approve Transcontinental Gas Pipe Line Co. LLC's 1.7-Bcf/d Atlantic Sunrise natural gas pipeline project, saying it had carefully evaluated the need for the project and environmental issues.
In a Dec. 6 order on rehearing, FERC dismissed or denied requests for rehearing of its order issuing a certificate to the estimated $3 billion project, as well as requests for a stay of the order.
FERC on Feb. 3 approved the Marcellus Shale-linked pipeline project proposed by Williams Partners LP's Transco. The project would include about 200 miles of new interstate pipeline and related facilities, with the bulk in Pennsylvania and other work in Maryland, Virginia, North Carolina and South Carolina. Challenges and comments were filed by the Allegheny Defense Project, the Clean Air Council, the Sierra Club, Native American tribes, state utility commissions, landowners and others.
The commission stuck by its conclusion that there is a need for the gas pipeline project, pointing to the fact that nine shippers subscribed to all of the transportation capacity. The shippers include Cabot Oil & Gas Corp., Anadarko Energy Services Co., Chief Oil & Gas LLC, Seneca Resources Corp. and WGL Midstream Inc. The commission said it had also reviewed a study by the Institute for Energy Economics and Financial Analysis submitted by the Clean Air Council. The study suggested that pipelines such as Atlantic Sunrise could help deliver lower-priced gas to high-priced markets, FERC said.
"Contrary to Allegheny's claim, the final [environmental impact statement incorporated in the approval order] explains that the purpose of the project was to provide enhanced access to Marcellus Shale gas supplies and incremental, firm natural gas transportation capacity between Marcellus Shale producing areas and Transco's existing markets," FERC said.
FERC rejected arguments that it should have considered Atlantic Sunrise with other Transco gas pipeline projects, such as the Hillabee expansion and the Northeast Supply Enhancement project, as part of a larger system upgrade. The commission found the projects to be distinct.
FERC did not second-guess its decisions on the environment, such as cumulative effects of the project when considered with other activities in the area and the indirect effects of greenhouse gas emissions tied to upstream gas production.
"Consistent with prior natural gas infrastructure proceedings, the commission found that the record in this proceeding did not demonstrate a reasonably close causal relationship between the project and the impacts of future natural gas production warranting their review under [the National Environmental Policy Act]," the commission wrote. "The commission further held that, even if a causal relationship were presumed to exist between approval of the project and additional natural gas production, the scope of impacts from any such induced production was not reasonably foreseeable." Even so, the commission said, its staff had provided estimates of upstream and downstream impacts using U.S. Department of Energy and U.S. EPA methodologies.
Similar to what FERC did in November orders upholding its approvals of Transco's Dalton and Virginia Southside II expansion projects, the commission shot down requests for rehearing of the Atlantic Sunrise approval order by the North Carolina Utilities Commission and the New York State Public Service Commission.
The state commissions had disagreed with FERC's acceptance of a pretax return of 15.34% to calculate proposed incremental recourse rates for the Atlantic Sunrise project. FERC noted that it had properly examined the Transco proposal under the Natural Gas Act's public convenience and necessity standard and that any concerned parties could participate in the next Natural Gas Act Section 4 rate case, which will be filed by the end of August 2018.
FERC also dismissed the state commissions' challenges to the federal commission's finding that lease agreements connected to the project would reduce the amount shippers would pay to move gas. FERC said it had carefully considered the matter. (FERC docket CP15-138)
The FERC decision came the day before Kevin McIntyre was sworn in as chairman, which restored FERC to its full complement of five members. Commissioner Neil Chatterjee had been serving as chairman.
Transco has started construction on the project. In November, it asked the commission for permission to work extended hours, partly to make up for weather delays.
Project opponents have challenged the FERC approval in the U.S. Court of Appeals for the District of Columbia Circuit, but the court denied a request for an emergency stay of construction work on Nov. 8. (U.S. Court of Appeals for the D.C. Circuit docket 17-1098)