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More FERC gas pipelines certificated in 2019 despite longer reviews

Natural gas pipeline capacity approved by the Federal Energy Regulatory Commission almost doubled in 2019 from 2018 but was still dwarfed by the 30.6 Bcf/d certificated in 2017 at the peak of a Northeast buildout of pipelines moving Appalachian gas to demand centers.

According to a FERC infrastructure report released Jan. 15, the commission signed off on 16.7 Bcf/d of new pipeline capacity from January 2019 through November 2019, up from 9.2 Bcf/d in full year 2018.

Adding to the January-November totals tallied in the report, FERC approved about 1.1 Bcf/d in December 2019, including the 850-MMcf/d Adelphia Gateway project, which would carry Marcellus Shale gas to the greater Philadelphia industrial region.

While the Northeast saw numerous smaller-capacity pipelines clear FERC in 2019, the bulk of capacity comprises a handful of high-volume projects approved alongside associated LNG export terminals on the Gulf Coast.

Just two projects make up roughly half the certificated capacity: the 4.5-Bcf/d Rio Bravo Pipeline, designed to serve the proposed Rio Grande LNG export terminal in Texas, and the 3.9-Bcf/d Gator Express Pipeline, linked to the proposed Plaquemines LNG export project.

Reflecting the smaller scale of most of the recent batch, the total miles of pipelines FERC approved was 590.5, well below the 2,739 miles approved in 2017 and down somewhat from the 671.3 approved in 2018.

Shifting midstream sector

The 2019 data aligns with rapid changes in the midstream sector, which has seen a massive decline in Northeast pipeline activity as the market transitions south. The past several years witnessed major greenfield pipeline projects in Appalachia, built to unlock huge amounts of production that lacked a way out of the constrained region.

Northeast producers now show little remaining appetite for new capacity. Only a few Northeast projects are under review at FERC, and pipelines such as Rover Pipeline LLC and NEXUS Gas Transmission LLC are offering month-to-month and interruptible services rather than finding long-term shippers for their unsubscribed capacity.

LNG surge

By contrast, and not surprisingly, FERC's November infrastructure report showed a major spike in LNG project approvals in 2019.

The commission certificated 20.2 Bcf/d of LNG export capacity, a total of 11 projects, up from 20 MMcf/d associated with one project in 2019 and the most LNG import or export capacity ever approved by the commission in a year, according to FERC staff.

Those approvals come as a second wave of proposed U.S. LNG facilities, mostly along the Gulf Coast, have been racing to line up commercial contracts, clear the regulatory process and secure financing in time to capture international demand. FERC leadership has made the approvals a priority, taking steps to address overstretched staff over the last two years such as agreeing to share the workload and improve coordination with the U.S. Pipeline and Hazardous Materials Safety Administration.

Pipeline pacing

Despite the 2019 pickup in total gas pipeline capacity certificated, pipeline project review times have appeared to stretch.

LawIQ said in a recent note to clients that in 2019, "FERC took longer, on average, to issue its order following the conclusion of the environmental assessment than it has for any year over the last decade."

The time between the final environmental review and FERC decision averaged almost six months in 2019, LawIQ said, about four months longer than the average at the start of the decade.

Exact reasons for the longer time frame, even for some relatively modest projects, are difficult to pinpoint. Some industry observers suggest the divide at FERC over how to consider climate impacts has fed into delays. Pipeline industry officials recently suggested FERC appeared to be taking longer to ensure that certificate orders would survive legal challenges.

FERC Chairman Neil Chatterjee has said only that the commissioners vote on the projects when they are ready.

Maya Weber and Eric Brooks are reporters with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.