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High-profile push against gas infrastructure, exports adds fuel to anti-gas fire

A push in the U.S. Senate aimed at blocking energy infrastructure tied to natural gas exports presents a new concern for an industry already unsettled by a rising tide of anti-gas measures.

No stranger to pipeline project opposition, the gas sector has recently come under increasing attack from a policy perspective. The latest volley comes from 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.

The industry is already contending with city ordinances to accelerate building electrification and ban natural gas hookups in new structures as well as efforts to block gas pipeline development. 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. Warren is locked in a statistical tie for first place in the Democratic presidential primary race. The front-runner has released detailed plans to transition the nation to 100% renewable energy and finance zero-emissions power overseas.

Pivotal pieces of infrastructure

The strategy of blocking infrastructure to prevent fossil fuel development is not new, but targeting specific equipment such as compressor stations to prevent gas from reaching new markets is a novel approach. It comes as new LNG terminals are facilitating growing U.S. exports and opening markets for record-high domestic output.

"This latest proposal by Senator Markey fails to recognize the environmental benefits — both domestically and internationally — made possible by natural gas," the Interstate Natural Gas Association of America, or INGAA, said in an email.

INGAA noted that the Markey-Warren plan would limit energy trade not only with emerging partners through LNG exports but also within the tightly integrated North American market.

"It also fails to acknowledge the important trading relationship we have with our friends to the North and how the interconnected energy delivery system between the United States and Canada benefits consumers and manufacturers on both sides of the border," INGAA said.

U.S. gas exports to Canada totaled nearly 836 Bcf in 2018, surpassed only by shipments to Mexico, data from the U.S. Energy Information Administration shows. Meanwhile, Canada shipped 2.8 Tcf of gas over the border in 2018, representing 97% of U.S. imports and virtually all Canadian exports of the fuel, according to the EIA. Most of the southbound gas comes from western Canada and supplies western and Midwest U.S. markets.

Mass. focal point

Warren and Markey's approach would affect a compressor station planned for Weymouth, Mass. The station is part of Enbridge Inc.'s Atlantic Bridge project to expand gas capacity along two pipeline systems and increase supply to New England and Canada's Maritime provinces. Markey and Warren said their constituents should not be subjected to pollution from the station for the sake of expanding gas markets and enriching energy companies.

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While the compressor station planned for Weymouth is part of a project that would increase shipments to Canada, the station itself is not strictly designed as an export project, said Steve Dodge, executive director of the Massachusetts Petroleum Council.

"Enbridge's planned compressor station in Weymouth is part of the Atlantic Bridge project that will deliver a net increase in natural gas flow into Massachusetts of 72 million cubic feet per day," Dodge said. "That's enough natural gas each day to meet about 1,200 homes' annual heating demand, according to state Department of Energy Resources Data, and is a meaningful increase in natural gas supply for Massachusetts and elsewhere in New England, where consumers have been hurting for natural gas."

The densely populated and liberal-leaning Northeast has historically been a difficult place to lay pipe. The limited gas infrastructure means New England often turns to power plants that burn fuel oil during cold snaps.

Yet environmentalists said investing in new infrastructure is potentially wasteful in places such as New England, where each state has adopted renewable energy targets and belongs to a regional program to cap carbon emissions. Installing new pipe could also stall the transition to zero-emissions energy and risks locking in future carbon emissions, climate activists said.

"Instead of continuing our fossil fuel addiction, we need a Green New Deal that transforms our economy to create millions of jobs and protects our communities that have been historically most harmed by fossil fuels," Markey said in a news release.