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FERC approves 2 Eastern gas pipelines: Atlantic Coast, Mountain Valley

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FERC approves 2 Eastern gas pipelines: Atlantic Coast, Mountain Valley

A divided Federal Energy Regulatory Commission issued certificates to the $5.1 billion Dominion Energy Inc.-led Atlantic Coast pipeline and the $3.7 billion EQT Midstream Partners LP-led Mountain Valley pipeline, both of which would move natural gas from the Appalachian production zone to mid-Atlantic and Southeast markets.

The two large pipeline projects, frequently grouped by environmental groups opposing them, were also brought together by federal regulators. A two-of-three majority of FERC commissioners, Chairman Neil Chatterjee and Commissioner Robert Powelson, both Republicans, authorized the projects late Oct. 13 in separate orders.

The FERC majority of Chatterjee and Powelson found that the 1.5-Bcf/d Atlantic Coast project and related supply header and capacity lease projects will provide benefits to the market that outweigh any harmful effects to existing shippers, other pipelines and their customers, and surrounding communities. They also agreed with FERC staff's environmental impact statement that mitigation measures would reduce the environmental impacts to acceptable levels.

Atlantic Coast is a joint venture of Dominion, Duke Energy Corp., Southern Co. Gas and Piedmont Natural Gas Co. Inc. The 42-inch-diameter pipeline would run about 600 miles through West Virginia, Virginia and North Carolina, delivering Appalachian gas supplies to the mid-Atlantic and Southeast. The developers expect the project to be ready for service in the second half of 2019. (FERC dockets CP15-554, CP15-555, CP15-556)

The majority also found the 2-Bcf/d Mountain Valley project, a joint venture of EQT and affiliates of NextEra Energy Inc., RGC Resources Inc., WGL Holdings Inc. and Consolidated Edison Inc., and a related $172 million Equitrans LP system expansion to be in the public interest. They said the "two-pipe, one right-of-way" alternative mentioned by Commissioner Cheryl LaFleur would have had some environmental benefits, but it would also have created environmental impacts because more laterals would be built to reach receipt and delivery points.

The Mountain Valley pipeline would run about 300 miles from West Virginia to connections in Virginia with Williams Partners LP's Transcontinental Gas Pipe Line Co. LLC and TransCanada Corp.'s Columbia Gas Transmission LLC systems. FERC gave the developers three years to put the project in service. (FERC dockets CP16-10, CP16-13)

LaFleur, a Democrat, dissented from both approval orders in a rare clash on pipeline application decisions. The fracture came early in the life of the commission put together by the Trump administration and despite assurances from all three members that they would try to work together.

On Twitter, LaFleur called her dissent after years of review a "very difficult decision." In her opinion, she described projects too similar to each other to be in the public interest or to justify their environmental impacts. She favored a discarded alternative that would have merged significant portions of the proposed pipeline systems.

"In the case of the [Atlantic Coast pipeline] and [Mountain Valley pipeline] projects, my balancing determination was heavily influenced by similarities in their respective routes, impact, and timing," LaFleur said.

"ACP and MVP are proposed to be built in the same region with certain segments located in close geographic proximity," LaFleur continued. "Both the ACP and MVP cross hundreds of miles of karst terrain, thousands of waterbodies, and many agricultural, residential, and commercial areas. ... Both projects appear to be receiving gas from the same location, and both deliver gas that can reach some common destination markets."

"Given these similarities and overlapping issues," LaFleur concluded, "I believe it is appropriate to balance the collective environmental impacts of these projects on the Appalachian region against the economic need for the projects," she said. "In so doing, I am not persuaded that both of these projects as proposed are in the public interest."

LaFleur also added words of caution on the use of precedent agreements, in which pipeline customers express interest in proposed gas transportation services, as proof of demand. "In my view, it is appropriate for the commission to consider as a policy matter whether evidence other than precedent agreements should play a larger role in our evaluation regarding the economic need for a proposed pipeline project."

Her observation echoed a suggestion made by former Chairman Norman Bay as he left the commission, and it could support pipeline opponents such as the Sierra Club that have challenged contracts between affiliated pipeline and utility companies.

Chatterjee told reporters Oct. 13 that FERC would not adjust its review process after decisions by a federal court and a New York agency threatened to undermine commission approvals for other pipeline projects.