Midweek Energy Updates: September 27, 2017

The full version of these articles will appear in The Foster Report No. 3167, published on September 29, 2017.


Sierra Club Seeks Rehearing on FERC Approval of NEXUS Gas Transmission

September 26, 2017

The Sierra Club on September 21, filed a request for rehearing of the recent FERC order approving the NEXUS Gas Transmission project (CP16-22), asking the Commission to stay the ruling and rescind it and the underlying environmental impact statement (EIS) within 30 days.

On September 22, NEXUS filed a request for clarification, asking FERC if it can calculate the supply zone rates based on the quantity of capacity created by the Texas Eastern Appalachian Lease Project that will be available in the supply zone for transportation services under the pipeline’s FERC gas tariff, rather than calculating it based on the maximum daily quantity under the Texas Eastern lease.[1]

NEXUS says the clarification is necessary so that it can assess supply zone rates that accurately reflect the design capacity that will be made available to shippers, and so that the pipeline has a reasonable opportunity to recover its cost of service.

Sierra Club. The group argued that with the primary shippers affiliated with NEXUS owners DTE Energy and Spectra Energy, FERC’s August 25 order[2] ignored the incentive to have DTE utility companies subsidize the pipeline and failed to consider less expensive and environmentally preferable alternatives.

The Sierra Club filed the request for rehearing because it states that the order and the EIS violate the Natural Gas Act (NGA) and the National Environmental Policy Act (NEPA) because FERC did not properly consider alternatives to the project and it did not properly evaluate the impacts of increased greenhouse gas (GHG) emissions.

[1]   The certificate order granted Texas Eastern’s application to abandon by lease to NEXUS the capacity created by the Texas Eastern Appalachian Lease Project.

[2]   For past story, see, Finding No Affiliate Concerns, FERC Approves $2 billion NEXUS Project, FR No. 3164, pp. 11-13.


Veresen Files New Application for Jordan Cove LNG Project, Related Pipeline

September 22, 2017

With new applications for its planned LNG export project in Coos Bay, Oregon, and related Pacific Connector Gas Pipeline LP project to deliver gas for exports, Veresen Inc. is hoping that FERC can approve the facilities by November 2018 so the company can reach a final investment decision (FID) in 2019.

The Jordan Cove Energy Project LP (JCEP) LNG export terminal and Pacific Connector pipeline previously was rejected by FERC for a lack of evidence of market demand when the developer failed to produce contractual commitments for the gas to be exported. After reaching deals with customers for about 75% of the pipeline capacity and 50% of the LNG project’s initial design capacity, the developers sought rehearing of the ruling, but FERC declined to reopen the record and accept the evidence of market support for the projects, rejecting rehearing requests.

The rejection was one of the few the Commission has made regarding gas infrastructure applications, though in its 12/9/16 rehearing order FERC said the developer could file a revised application and use portions of the existing record, such as the final environmental impact statement from September 2015, in a future application.

Veresen, based in Calgary, Alberta, since then has shored up its balance sheet with the sale of generation assets, is in the process of being acquired by fellow Canadian firm Pembina Pipeline, used FERC’s pre-filing process (PF17-4) to address environmental issues and landowner requests and made a few changes to the JCEP facility and pipeline route.

The company also may benefit by the thinning out of a potential competitor after Pacific Northwest LNG in July said it would not develop the LNG export project in Port Edward, British Columbia after years of effort due to tough market conditions. Financial analysts and others pointed to the project’s $36 billion price tag as being too large in comparison with other planned LNG export facilities in Canada and the U.S.


Ohio EPA, Rover Extend Spat on Compliance, Permit After Another Incident

September 26, 2017

The bickering and compliance issues among the Ohio Environmental Protection Agency (Ohio EPA) and Rover Pipeline LLC have continued following an incident involving the discharge of soap wastewater at a horizontal directional drilling (HDD) site in Carroll County, Ohio.

The incident at a Rover construction site came only a few days after FERC authorized Rover to resume HDD activities at certain locations after halting such work for several months.

Ohio EPA Director Craig Butler blasted Rover for its construction activities in a September 22 statement, while Rover asserted that Butler privately praises Rover for its compliance with Ohio EPA requests, then grandstands publicly about alleged violations.

In a September 25 letter to Butler, Rover President and Chief Operating Office Matthew Ramsey took issue with Butler proposing a $2.3 million penalty against Rover for not obtaining a stormwater runoff permit from the Ohio EPA, when the agency in August approved Rover’s stormwater pollution protection plan.

Rover and parent company Energy Transfer Partners (ETP) does business in 38 states and works cooperatively and effectively with regulatory agencies in those states, where they experience “transparency, consistency and fairness. We have struggled to find those qualities in our relationship with you,” Ramsey told Butler. “You have privately praised us for our cooperation, yet you lambaste us in the press. You have insisted that we comply with legal and regulatory requirements that are outside your jurisdiction, and you propose to fine us when we refuse,” Ramsey said.

The jurisdictional issue stems from Ohio EPA’s insistence that Rover needs to obtain a stormwater runoff permit under Section 402 of the Clean Water Act. Butler said Rover is not in compliance with July 7 orders from the agency and refused to comply with the directive or pay the civil penalty. He has referred the case to the Ohio Attorney General.



These articles will appear as published in The Foster Report No. 3167, being issued on September 29, 2017

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