Three major interstate natural gas pipeline projects won approval from the Federal Energy Regulatory Commission on April 21, with all five commissioners voting for certificates for the projects despite differences over climate considerations and other policy matters.
The projects included two proposed TC Energy Corp. expansions, which the company said were long-delayed while the commission performed extra environmental reviews.
FERC approved TC Energy's North Baja XPress project (CP20-27), a compressor-based expansion in Ehrenberg, Ariz., that would add 495,000 Dth/d of firm gas delivery to the Energía Costa Azul LNG export terminal that Sempra is developing on the west coast of Mexico. The project was proposed at FERC in December 2019.
The commission authorized TC Energy subsidiary ANR Pipeline Co.'s Alberta XPress project (CP20-484), a 165,000-Dth/d expansion designed to deliver gas from as far as Manitoba to markets on the U.S. Gulf Coast and other points on its interstate system. The developer had initially asked for an 11-month review period that would have allowed the project to enter service by Nov. 1, 2021.
FERC also signed off on Tennessee Gas Pipeline Co.'s East 300 Upgrade project (CP20-493). By increasing compression in New Jersey and Pennsylvania, the project would add 115,000 Dth/d of firm transportation capacity on Tennessee's 300 Line to provide firm service to Consolidated Edison Inc. in New York. Tennessee Gas is a subsidiary of Kinder Morgan Inc.
Bipartisan support
FERC's recent actions on natural gas projects have been closely watched by pipeline developers and industry observers for signs of bipartisan support that can advance interstate gas transportation infrastructure after a long lull in the review process. The question of how FERC should consider climate change remained a source of party-line division while changes to a decades-old pipeline permitting policy remain on hold.
As in March decisions, commissioners submitted concurring statements outlining their views. Commissioners Willie Phillips and Mark Christie issued joint concurring statements.
The certificate orders the commission issued April 21 included estimates of direct greenhouse gas emissions associated with projects, and in some cases downstream emissions, but shied away from determining the significance of those emissions, according to FERC Chairman Richard Glick. In Glick's view, it should have been possible to make such determinations. But the chairman said he still voted for the projects, even in a case where emissions impacts were significant.
"At some point, we need to figure this out on a commission basis, as to what our policy is going to be about addressing significance," Glick said. "How do we do it? How do we measure it? Or how do we weigh it against benefits?"
In reviewing the North Baja project, FERC had to wade through climate policy issues and questions regarding impacts on California gas supplies. The California Public Utilities Commission had warned that the expansion would export gas supplies away from a major market in Southern California.
Market constraints
The additional 495,000-Dth/d pull from Ehrenberg toward Mexico could further impact the already constrained Southern California Gas Co. distribution system, according to S&P Global Commodity Insights analytics data. Permian supply enters the SoCalGas system at Ehrenberg. For the past six months, deliveries at Ehrenberg to SoCalGas have averaged about 770 MMcf/d, or one-third of total supply entering the system.
Tennessee Gas' East 300 project was one of the few remaining demand-pull projects in the FERC dockets for the Appalachian producing region. While the expansion could help to unlock incremental takeaway capacity out of northeast Pennsylvania, the primary purpose of the project is to serve Consolidated Edison's customers. By increasing capacity through additional compression, the pipeline company avoided some of the challenges facing greenfield projects in the region.
Production growth in northeastern Pennsylvania has been largely constrained in the area served by the Tennessee Gas system, as the gas transportation capacity brought online in previous expansions filled and new pipeline development in the region slowed, according to S&P Global data. Production receipts on the system rose sharply to roughly 4 Bcf/d in late 2017 from around 3.5 Bcf/d as new capacity was placed into service, but they have remained essentially flat ever since.
Rover pipeline upgrades
In additional orders, FERC signed off on two smaller expansion projects for Energy Transfer LP's Rover Pipeline LLC. The first was a 108,000-Dth/d project that would add an interconnection to an intrastate pipeline system in Ohio (CP21-474). The second project would add an interconnection in Michigan to receive up to 1,600 Dth/d renewable natural gas from a dairy farm and provide service for up to 100 Dth/d to fuel RNG facility equipment (CP21-492).
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Maya Weber, Rachel Wiser, Anna Lenzmeier and Eric Brooks are reporters for S&P Global Platts, an offering of S&P Global Commodity Insights. S&P Global Commodity Insights is owned by S&P Global Inc.