FERC approves New York/New Jersey Pipeline

The Federal Energy Regulatory Commission (FERC) approved a Spectra pipeline project which will bring new natural gas supplies to New York City. Spectra subsidiaries Texas Eastern and Algonquin will combine to build the new capacity, which will involve about 20 miles of pipeline, among other construction, such as compressor stations, with the total project weighing in at about $850 million. Texas Eastern and Algonquin hope to have the gas flowing into Manhattan by November 2013.

Currently, only Transcontinental Gas Pipe Line Company delivers gas to New York City. The driver behind the project has been ConEdison. The company has argued that interstate pipeline competition will lower prices for city users and will provide additional natural gas supplies which will be needed, theoretically, as residential and commercial users switch to natural gas as a result of a New York City 2011 dictate phasing out Nos. 4 and 6 fuel oil.

Texas Eastern has already signed binding precedent agreements for the full 800,000 Dth/d firm transportation capacity of the proposed NJ-NY Project with Chesapeake Energy Marketing Inc. for 425,250 Dth/d, Statoil Natural Gas for 204,750 Dth/d, and ConEd for 170,000 Dth/d. Chevron opposed the project because the new construction will cross its 44-acre property in Bayonne, NJ. But the FERC said its final environmental impact statement “adequately takes into account the potential for construction-related contamination and measures to ensure the integrity of a slurry wall proximate to the approved route.”

More broadly, the FERC attached a number of mitigation requirements to its approval. For example, Texas Eastern has also agreed to use a thicker-walled pipe than is required by the Department of Transportation (DOT), and in many locations will bury the pipe much deeper than required by the DOT regulations.

Gas credits for electric utilities at issue in new Senate bill

Introduction of a new clean energy standard bill in the Senate has set off a debate on how to treat natural gas. The Clean Energy Standard Act (S. 2146) introduced in May by 11 Democrats, including Sen. Jeff Bingaman (D-NM), retiring chairman of the Senate Energy Committee, would require that, beginning in 2015, the nation’s utilities sell a percentage of their electricity from clean energy sources – including renewable energy, nuclear power, biomass, coal with carbon capture and sequestration and natural gas.

The legislation gives “credit values” to various forms of non-coal inputs. Zero-carbon sources such as new nuclear and renewables would get a full credit per kilowatt-hour produced.

Advanced coal technologies, such as oxyfuel combustion, will get partial credit. Natural gas would get about a half-credit. Utilities that sell electricity at retail will acquire and use those credits to meet a standard that, overall, will start off being fairly easy to meet.

But at hearings in the Bingaman committee on May 17, Keith Trent, group executive and president of Duke Energy’s commercial businesses, said, “We have concerns with the concept of including natural gas in the program since it could lead to an overreliance on this single fuel.”

Duke is the third-largest operator of coal-fueled and nuclear-powered generation in the country. Trent said it is projected that between 30,000 and 60,000 megawatts of the country’s aging coal-fueled generation fleet will be retired by 2015 or shortly thereafter to meet existing and new environmental regulations. “Construction of new nuclear units – which we know are highly competitive in the long run – and zero-emission wind and solar power plants will suffer if Congress gives natural gas another leg up,” Trent added. Duke is pursuing a license with the Nuclear Regulatory Commission to build a new nuclear power plant in South Carolina.

Short-term, the Senate bill has no chance of passage. Long-term, the bill could have wings should Democrats reclaim the House in the 2012 elections and President Obama wins a second term. If Trent’s position on natural gas characterizes the view of the entire electric utility industry, gas producers and pipelines will have a major political fight on their hands.

Industry concerned about PHMA leak, valve Studies

The Pipeline and Hazardous Materials Safety Administration (PHMSA) is about to embark on two studies which will be used by Congress to tee up (or not) new safety requirements related to leak detection and automatic and remote controlled shut-off valves (ASV/RCV). But gas transmission, distribution and hazardous liquid pipeline companies and their trade associations are uncomfortable with some of the parameters the PHMSA wants to set. For example, Jeffrey L. Maples, director, Gas Operations, Paiute Pipeline Company, argues that PHMSA has broadened the two studies to include gas distribution pipelines.

The leak and valve studies were mandated by Section 8 of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 that Congress passed last December. Section 8 requires the Pipeline and Hazardous Materials Safety Administration (PHMSA), a DOT agency, to prepare a report to Congress on leak detection systems and the Government Accountability Office to submit a second study on automatic and remotely-controlled valves. It appears, however, that PHMSA has decided to also do a study on valves. PHMSA held a public workshop on March 27-28 to gather industry input on how to structure the parameters of the two studies on which the report will be based.

Philip Bennett, managing senior counsel, operations safety, American Gas Association, calls the workshop “useful.” But he adds, “they provide little opportunity for technical discussion and no opportunity to resolve complex technical issues. Most of the substantive discussions that occur on technical issues in the pipeline industry occur in the meetings held within the consensus development organizations like GPTC, ASME, API, AGA, NACE and ASTM.”

In addition, Terry Boss, senior vice president of safety, environment and operations at INGAA, says some of the comments made at the March workshop were conflicting. For example, one person argued real-time transient flow/pressure models were essential to internal leak detection systems and should be employed. Another opinion was these models may be almost useless on natural gas transmission systems. “INGAA believes that these leak detection models do not reduce risk or reliably detect leaks on natural gas transmission systems due to the compressible nature of natural gas, the complexities of pipeline systems and transient gas flow, and the inherit, industry-available tolerances within measurement and other transducers that provide input into such models,” explains Boss.

The congressional language calls for PHMSA to look at two things:
• The technical limitations of current leak detection systems utilized by operators of hazardous liquid pipeline facilities and transportation-related flow lines, including the ability of the systems to detect ruptures and small leaks that are ongoing or intermittent, and what can be done to foster development of better technologies; and
• Analyze the practicability of establishing technically, operationally and economically feasible standards for the capability of such systems to detect leaks, and the safety benefits and adverse consequences of requiring operators to use leak detection systems.

The PHMSA appears to be expanding the study beyond hazardous liquid lines to include gas transmission and distribution lines. “Paiute is unclear whether this is an oversight or if PHMSA truly intends to include gas distribution and transmission pipelines in the study,” says Maples. “Gas distribution and transmission pipelines are very different from liquid pipelines and should not be evaluated under the same study/criteria.”

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