Conflicting court decisions about federal authorities over natural gas pipelines, as well as recent state actions impeding water permits, create an unstable regulatory climate that could chase away investment, a top gas pipeline executive has warned.
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Those comments came as Trump administration officials this renewed talk of speeding pipeline permitting and as Energy Secretary Rick Perry Tuesday questioned whether national security questions were raised by states like New York blocking interstate projects.
Speaking at a Tuesday evening forum at the Canadian Embassy in Washington, Stan Chapman, TransCanada executive vice president, began by detailing huge opportunities for the midstream gas sector in North America amid mounting estimates of technically recoverable reserves and the industry's ability to offer low cost energy.
"We should be celebrating that," Chapman said. "Instead, we're fighting headwinds -- headwinds that we see manifesting themselves on the regulatory, legal, [non-governmental organization] and judicial front."
Chapman lamented a recent "judicial ping pong" match over what happens when states don't issue regulatory permits within statutory timelines.
"You have situation where on one day you go to the DC Circuit Court [of Appeals] and the DC Circuit Court says that [the US Federal Energy Regulatory Commission] is the arbiter of disputes between the pipeline companies and the state." Weeks later, he said "you go to the 2nd Circuit in the Constitution [Pipeline] case and that [court] says no, states have the right to trump FERC."
'A DISCUSSION WE NEED TO HAVE'
Adding to that, Chapman pointed to the DC Circuit ruling, in Sierra Club v FERC( 16-1329), that recently vacated a pipeline certificate on the ground that information was lacking on greenhouse gas emissions -- as well as to recent actions by West Virginia and New York withdrawing or blocking water permits for projects.
"That's a wobble. That's an unstable regulatory climate," Chapman said. "That's not going to attract private capital investments that we need" for energy infrastructure going forward.
Trump administration officials also decried regulatory hurdles for pipelines this week.
Perry singled out New York state, which has rejected water permits for several major gas pipeline projects. Speaking at a separate, clean energy forum Tuesday, he posed a hypothetical about someone seeking to build a gas-fired plant in Maine who cannot get gas to their location "because they got to go through a state that has a political, philosophical problem with building a pipeline across their state.
"How do we deal with that?" Perry asked. "Is it in the national interest? Is it a national security issue?" he asked, questioning whether amid a polar vortex, a state should have the right to block a project that could force others to choose between being able to turn on their lights or keep their families warm.
"That is a discussion we need to have in this country," he said.
ENBRIDGE SEES NEW ENGLAND RENEWABLES OPPORTUNITIES
Bill Yardley, Enbridge executive vice president, agreed that infrastructure is taking longer to permit, but was somewhat more optimistic about the regulatory environment in light of the headwinds.
"We have entered a time when the current administration is trying to make things a little easier, one ruling at a time, one commissioner at a time, one state at a time," he said at the Canadian Embassy Tuesday. He noted that projects are still getting done, the opportunities exist tied to exports and a high level of coal-to-gas conversions is still to come.
In New England, a difficult area for pipeline permitting, he saw opportunities for Enbridge in partnering with renewables. Goals set for cutting carbon emissions 80% by 2050 are hard to reach at the current pace with renewables substitution alone, he said.
The company also may need to look more toward modernizing its current pipelines rather than greenfield projects in New England, he said on the sidelines of the meeting. The Access Northeast pipeline, which the company pulled from FERC review, could be revised to pare back greenfield components, he said.
Chapman saw room for TransCanada to expand in areas "where we are not today." He said he would like to better link his existing pipeline network to demand centers in the Southeast.
"One hole in our pipeline network is Texas," he said, adding "We almost can take a molecule of gas from the western Canadian sedimentary basin and deliver it to Mexico City. We don't have infrastructure out of the Permian per se."
--Maya Weber, firstname.lastname@example.org
--Edited by Richard Rubin, email@example.com