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Industrials call for extra US FERC oversight of gas pipe capacity reliability


Group airs concerns about exporters locking in contracts

Seeks national vantage point on pipeline capacity impacts

Washington — Industrial energy consumers want Congress to give the US Federal Energy Regulatory Commission additional oversight powers over the reliability of existing natural gas pipeline capacity, and are warning that rising exports put capacity at risk for domestic consumers.

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The Industrial Energy Consumers of America wrote the chairmen and ranking members of the House of Representatives and Senate energy panels Wednesday, seeking "urgent bipartisan action" to add to FERC's authority in light of new energy sector realities, including a drive toward exports and increased hurdles that slow pipeline expansions.

"It is vital to know that there is sufficient natural gas pipeline capacity to serve increasing domestic and export demand, especially at peak winter and summer demand, and with consideration to aging pipelines and replacement," the group said in its letter.

It argued the gas pipeline sector, unlike the electricity market, lacks a federal authority charged with monitoring availability of capacity to ensure reliability.

IECA, which represents large manufacturers of chemical products, steel, aluminum, plastics and other products, has frequently warned about approvals of what it sees as excessive LNG export volumes, and called for congressional hearings. It also has said high LNG export volumes would cost manufacturers their competitive advantage and has directed criticism at Department of Energy studies finding higher volumes of exports to be in the public interest.


Paul Cicio, president of IECA, contended in an interview that such new FERC authority is needed now, rather than in the past, because significant and accelerating exports of gas decrease availability of capacity for domestic consumers, including power companies, manufacturing companies and homeowners. While IECA did not spell out details of how it would like to see FERC exercise new regulatory authority in the letter, Cicio suggested it is critical to have the knowledge and nationwide perspective on gas flows to examine where reliability problems may develop.

"These exporters are locking up long-term pipeline capacity to export that gas," he said. "The last thing we can afford as a country, whether it's for economic security or national security, is to have insufficient pipeline capacity at peak demand impacting natural gas and electricity supply."

In the letter, IECA told the lawmakers: "Regional shortages of natural gas pipeline capacity already exist, preventing manufacturing companies from expanding facilities and building cogeneration of power and steam for their facilities." Talking to S&P Global Platts, he suggested such problems are already emerging along the East Coast.


Charles Riedl with the Center for Liquefied Natural Gas pushed back on the IECA request, suggesting it pointed toward an approach that favors discriminatory preferences against LNG, in contrast to the open access system for gas transportation. In addition, he said, IECA's assessment runs counter to current market fundamentals, with gas prices below $3/MMBtu.

The challenge for pipeline capacity is not tied to LNG exports, but rather a political one affecting the pace at which pipelines can be built to transport the fuel to demand centers, Riedl said.