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May 18 — New York's rejection of the Constitution Pipeline and Kinder Morgan's withdrawal of the proposed Northeast Energy Direct pipeline have highlighted the intense public debate in the Northeast over the need for natural gas and the infrastructure to deliver it.
The natural gas industry is steadfast in its position that the region, which has among the highest energy prices in the country, needs the energy and pipeline infrastructure to meet its electricity needs, reduce carbon dioxide emissions and keep its economy buzzing.
Environmental groups and others are equally firm in their position that renewable energy and energy efficiency are enough to meet the region's needs and have opposed virtually all pipeline proposals.
The Constitution and Kinder Morgan decisions could have a significant impact, given the fact that some 17 natural gas pipeline projects are being considered in the region.
The New York State Department of Environmental Conservation (DEC) denied a water quality certification permit for the Constitution Pipeline project April 22, saying the project would have an adverse impact on some 251 streams and would disturb wetlands. It also said the project application was incomplete and failed to address a number of concerns (78 ECR, 4/22/16).
The four companies that own the Constitution Pipeline Co.—Williams Partners LP., Cabot Oil & Gas Corp., Piedmont Natural Gas Co. and WGL Holdings Inc.—have pledged to “pursue all available options” to fight the state's decision (79 ECR, 4/25/16).
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The project—a 125-mile pipeline that would connect natural gas production in northeastern Pennsylvania with markets in the Northeast—received approval from the Federal Energy Regulatory Commission in December 2014.
Natural gas giant Kinder Morgan Inc. voluntarily withdrew its proposal April 20 to build a $3.3 billion pipeline to deliver natural gas from New York state to New England (77 ECR, 4/21/16).
The company, through its subsidiary, Tennessee Gas Pipeline Co., said it failed to win adequate commitments for the Northeast Energy Direct project from local gas and electric distribution companies to purchase the natural gas.
Although the two pipelines have been stymied by different actions, the natural gas industry, environmental groups and lawmakers said the decisions could have a significant impact on the region's energy future.
Martin J. Durbin, executive director of market development at the American Petroleum Institute (API), told Bloomberg BNA the decisions create uncertainty for companies that want to invest in pipelines in the region.
“It’s clearly known that the one area of major constraints for natural gas is in the Northeast,” he said, adding that the rest of the country has a fairly robust pipeline infrastructure.
Durbin said the industry, along with its supporters, needs to do a better job of making its case for pipelines by explaining the need for the energy, the benefits for reducing carbon emissions and the economic development benefits.
“Part of that responsibility is on us,” said Durbin, who led America's Natural Gas Alliance (ANGA) before it merged with API. “We’ve also got to see more of a willingness for elected officials in the region to step up.”
Christopher L. Stockton, a spokesman for Constitution Pipeline, said, “Clearly, the permitting process has been a challenge for us.”
“This is federally approved infrastructure which was determined to be needed by the Federal Energy Regulatory Commission,” he told Bloomberg BNA in an e-mail. “We intend to challenge the legality and appropriateness of the state’s decision.”
“The region needs pipeline infrastructure connecting emerging supply areas with demand centers,” Stockton said. “Until new pipeline infrastructure is installed, the region is going to be vulnerable to price volatility and gas shortages.”
Scott R. Kurkoski, chair of the energy group at the Binghamton law firm Levene, Gouldin & Thompson LLP, said rejection of the Constitution Pipeline by New York has implications for the trust that companies place in its regulatory agency.
“The New York DEC is not a regulatory agency that can be counted on to do the work it is entrusted to do,” said Kurkoski, who represents landowners in the Southern Tier region of the state. “Politics is preventing the DEC from doing its job,” Kurkoski said.
“Billions of dollars of investment in New York will be lost if the FERC-approved Constitution Pipeline is not permitted,” he said. “The risks of doing business in New York are simply too high.”
Environmental groups applauded the Constitution and Kinder Morgan decisions, viewing them as a victory and emboldening them in their fight against other pending projects.
Greg Cunningham, director of clean energy and climate change at the Boston-based Conservation Law Foundation, told Bloomberg BNA that the Kinder Morgan decision “certainly was a boost and confirmation of our advocacy.”
The foundation, which has fought against additional pipelines for some five years, believes the region's additional energy needs can be met through solar and wind power, backstopped by hydropower and on-demand deliveries of liquefied natural gas (LNG).
Conor Bambrick, air and energy director at Environmental Advocates of New York, said the Constitution and Kinder Morgan projects would have been “an environmental, health and climate disaster waiting to happen.” Those results have been avoided, he said.
“We avoid the carbon and methane emissions, the two primary drivers of climate change, from the pipelines and compressor stations along the route,” he told Bloomberg BNA in an e-mail. “It is also two less threats to the public safety and water resources for the communities that were in the path of these pipelines.”
One of the central questions in the pipeline debate is: Does the region need the energy? The two sides are sharply divided.
Environmental groups and some lawmakers contend the region does not need the energy and that any additional capacity needs can be met through renewables and energy efficiency. In New England, pipeline opponents cite a November 2015 study from Massachusetts Attorney General Maura Healey (D), which found that the region is unlikely to face electric reliability issues in the next 15 years and that additional energy needs can be met more cheaply and cleanly through energy efficiency and demand response (222 ECR, 11/18/15).
“Everyone has to agree now that the need for natural gas is substantially less than claimed,” Cunningham said. “It’s time to look at alternatives to new natural gas build-outs.”
He said ISO New England Inc. has erred in its forecasts about how much energy the region needs and has understated the potential contribution of renewable energy, hydropower and on-demand LNG gas.
Bambrick said “energy efficiency has kept demand for electricity flat, even as the economy recovered from the Great Recession.”
“There are immense offshore wind resources that the states are actively working to develop,” he said. “In New York, the Public Service Commission is moving forward with the Clean Energy Standard, a mandate that utilities procure 50 percent of their electricity supply from renewables by the year 2030.”
The natural gas industry disagrees, and the two independent system operators in the region have pushed for additional transmission infrastructure.
According to ISO-NE, 4,200 megawatts of non-gas generating capacity has been retired or is planned for retirement across New England by 2019. An additional 5,000 megawatts from coal- and oil-fired generators are considered at risk for closure. New England is looking at the loss of 14 percent of its capacity over the next three years, ISO-NE said.
“While the resources will be there, fuel adequacy is a concern,” Marcia Blomberg, a spokesman for ISO New England, told Bloomberg BNA in an e-mail. “All the studies done for ISO New England, as well as our operational experience, show that more natural gas infrastructure is needed in New England to meet the growing demand for natural gas for both heating and power generation.”
“That infrastructure could include pipelines, or dual-fuel capability, or more liquefied natural gas storage, but it’s likely to be a combination of all,” she said.
Durbin said 25 percent of existing electricity capacity is at risk or will be retired by 2020, and 12,000 MW of natural gas capacity will be needed just to replace retiring capacity.
“I don’t think there’s any question that the region needs the energy,” he said.
Stockton said “it's not possible to meet the region’s energy needs with renewables alone.”
“New York State's ability to incorporate more wind and solar energy into their power mix is dependent on natural gas combined cycle turbines that will quickly and cost-effectively pick up the slack when the sun doesn't shine or the wind doesn't blow,” he said.
The positions of the natural gas industry and environmental groups are consistent across the region, but the political and economic conditions vary from state to state.
In New York, for example, Gov. Andrew M. Cuomo (D) has been public enemy number one to natural gas supporters since his administration banned hydraulic fracturing in June 2015 (124 ECR, 6/29/15).
“Gov. Cuomo has banned New York families and businesses from the benefits of accessing our own state's energy resources through hydraulic fracturing, and now we’re banned from building the pipelines we need to get energy from other states,” Karen Moreau, New York director of the API, told reporters during a May 10 conference call.
“The Cuomo Administration’s shortsighted decision to block the Constitution Pipeline will not only destroy construction jobs and raise utility costs; it also jeopardizes our progress in reducing greenhouse gas emissions,” she said. “While electricity and heating costs have dropped in most states, New York’s electricity prices are the eighth-highest in the nation—nearly 50 percent more than the national average—due in large part to self-imposed infrastructure constraints.”
In Massachusetts, Gov. Charlie Baker (R) “believes Kinder Morgan’s recent announcement highlights the pressing need to secure cost-effective hydropower and other renewable energy resources to meet the growing demand for affordable energy in Massachusetts and New England,” Peter Lorenz, communications director for the Massachusetts Office of Energy and Environmental Affairs, told Bloomberg BNA in an e-mail.
Moreover, a bipartisan group of nearly 100 Massachusetts state representatives sent a letter in April to House Speaker Robert DeLeo (D) expressing concern about proposed ratepayer financing of gas pipeline infrastructure. “We urge you to omit any public support for gas pipeline expansion from the omnibus energy legislation,” the legislators said in the letter.
They said they look forward to supporting legislation that would create a diversified energy portfolio and reduce the state’s “over-reliance on natural gas.”
There is greater support for natural gas in Maine, where Gov. Paul LePage (R) was perhaps the biggest champion of the Kinder Morgan pipeline among New England’s leaders.
“When people turn on the heat, that creates a tight natural gas market for electric generation,” Patrick Woodcock, Main'se energy director, told Bloomberg BNA. “The region starts moving to substitutes like LNG from overseas or coal or oil to run electricity generating plants,” he said.
House Majority Leader Jeff McCabe (D) told Bloomberg BNA that “the decision of Kinder Morgan to pull their project was bad for the mills.”
He said Maine’s paper and pulp mills use natural gas to generate electricity and for cogeneration. The cost of the gas and electricity is expensive and is blamed for driving three companies out of state in the past few years, McCabe said. Maine’s high prices are difficult to understand because 60 percent of its power is generated in-state from hydro sources, he said.
“The transmission and distribution costs are killing us here,” McCabe said.
With assistance from Martha Kessler and Adrianne Appel
To contact the editor responsible for this story: Larry Pearl at email@example.com
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