Midweek Energy Updates: October 18, 2017

The full version of these articles will appear in The Foster Report No. 3170, published on Oct. 20, 2017.


With LaFleur Dissenting and State Approvals Pending, FERC Approves ACP

October 16, 2017

In a 2-1 vote with Commissioner Cheryl LaFleur dissenting, FERC on October 13 approved the $5 billion Atlantic Coast Pipeline LLC (ACP) project (CP15-554) to move about 1.5 million Dth/d of natural gas to markets in Virginia and North Carolina, with most of the capacity to be used for power generation facilities.

In her dissent, which also accompanied a dissenting vote on the Mountain Valley Pipeline LLC project (CP16-10), LaFleur said FERC should re-examine how it determines the need for new pipeline facilities and look beyond the existence of precedent agreements with shippers. “In my view, it is appropriate for the Commission to consider as a policy matter whether evidence other than precedent agreements should play a larger role in our evaluation regarding the economic need for a proposed pipeline project,” she said in a statement attached to both orders.

State approvals from environmental regulatory agencies in North Carolina and Virginia are pending for ACP, with North Carolina officials seeking more information recently from ACP sponsors regarding an erosion and sedimentation plan.

“We fully expect to receive all remaining approvals in time to begin construction by the end of the year,” a spokesman for Dominion Energy said. If those state approvals are received as planned, Dominion and the other ACP sponsors expect the project to be in service in late 2019, he said.

ACP and the related Supply Header Project of Dominion Transmission Inc. have been challenged by various entities concerned about landowner and environmental issues, the need for the project in light of limited electricity demand, the precedent agreements reached with affiliates of the project owners, and sufficient examination of alternatives to the new pipeline facilities.

It was the latter element that LaFleur focused on in her dissenting statement. She recognized that both projects involved years of work in the pre-filing, application and review process, and said “I take seriously my decision to dissent.”


Chatterjee, EBA Speakers Address Grid NOPR, Pipeline Project Reviews and CPP Repeal

October 17, 2017

FERC Chairman Neil Chatterjee on October 17, laid out several priorities for the Commission to pursue, with improvement in hydropower and natural gas pipeline project reviews among those he listed in a speech at the Energy Bar Association (EBA) Mid-Year Energy Forum in Washington, D.C.

He said he strongly disagrees with the notion that FERC needs to re-examine how it reviews the need for pipeline projects as expressed in the recent dissent by FERC Commissioner Cheryl LaFleur in the Commission’s approval of the Atlantic Coast Pipeline and Mountain Valley Pipeline projects. In her dissent, LaFleur said FERC should re-examine how it determines the need for new pipeline facilities and look beyond the existence of precedent agreements with shippers.

Chatterjee said he respects LaFleur’s position but he strongly disagrees that FERC should look beyond the contracts signed by market participants as an indicator of need for new facilities.

Touching on possible ways to improve the pipeline and hydropower project review process, Chatterjee noted that many delays are not the result of FERC activities, stemming from incomplete applications, involvement of other agencies and the sheer number of comments FERC receives. While much of the work is out of FERC’s control “there may be room for improvement” or the ability to make the review process more efficient at the Commission, he said.

The amount of time taken to review projects is getting longer, with pipeline reviews taking up to 18 months, and delays in project reviews discouraging infrastructure investment, Chatterjee said.

FERC has issued more than 200 orders since it regained a quorum after being without the minimum number of commissioners for much of the first part of 2017. “We are well on our way to getting through the backlog” of orders and pending issues stemming from the extended period without a quorum, he said.


FERC’s Interpretation of Water Quality Application Timeframe, Application of Court Decision Questioned for Valley Lateral  

The Commission doesn’t have to consider the environmental impacts of upstream natural gas production for Millennium Pipeline Co. LLC’s Valley Lateral project (CP16-17), Competitive Power Ventures (CPV) said in an October 12 response to a group of intervenors.[1]

The intervenors attempt to misapply the U.S. Court of Appeals for the D.C. Circuit’s recent holding in Sierra Club v. FERC,[2] said CPV, about upstream environmental effects.

The intervenors also responded to Millennium’s opposition to the New York State Department of Environmental Conservation’s request to reopen the record in the proceeding in light of Sierra Club v. FERC, but CPV alleges that NYSDEC failed to meet the standard for reopening a record. Also, said CPV, NYSDEC’s alternative request for rehearing of the certificate order was untimely. NYSDEC waited nine months before requesting rehearing, said CPV, and provided no reason for the untimely request. The 30-day deadline applies to all parties, including governmental agencies, said CPV.

[1]     The intervenors include Pramilla Malick, Protect Orange County, and Burns and King.

[2]     867 F.3d 1357 (D.C. Cir. 2017).


AGA’s Winter Outlook Sees Higher Natural Gas Prices

October 18, 2017

Natural gas prices for consumers could increase by as much as 5% this winter compared to last year according to the American Gas Association’s (AGA’s) Winter Outlook.  In addition, residential customers are likely to use 3% more natural gas this year due to expected colder temperatures this winter and may have slightly larger energy bills.

AGA released these findings during its annual Winter Outlook event on October 17.  The Winter Outlook, which is based on a survey of 42 local gas utilities around the U.S., provides an analysis of natural gas supply, demand, temperature, weather events, and pipeline capacity. The findings of the Winter Outlook were presented by AGA’s Vice President for Energy Analysis and Standards, Chris McGill.

McGill began the presentation by stating that natural gas prices in 2017 have continued to stay in the $3/MMBtu range and that gas production has increased over 2016 levels.  Natural gas storage levels are in line with other years, and consumption has increased from 122.2 Bcf/d in 2016 to 134.9 Bcf/d in 2017.

Exports of natural gas have increased due to more pipeline capacity between the U.S. and Mexico and increased LNG exports.

McGill went on to discuss the factors that are likely to increase natural gas prices for consumers this year.  He said that the National Oceanic and Atmospheric Administration (NOAA) is forecasting that the 2017-2018 winter season will be colder than last year, but not cold as the 2013-2014 winter season.  He also noted that Henry Hub average spot prices have increased from $2.53/MMBtu in 2016 to $3.07/ MMBtu in 2017, which is a 21% increase.

Although natural gas prices are likely to increase, it will continue to be the most affordable option for home heating in the U.S.  Because it is such an affordable option, consumption of natural gas may increase slightly.

McGill said that “utilities work all year to prepare for the possibility of extreme temperatures and employ a portfolio approach to help ensure that they can meet the needs of their consumers at affordable prices on the coldest days of the year.”

McGill ended the presentation by noting AGA’s presentation differs from the Energy Information Administration’s (EIA’s) estimates for 2017-2018 which forecasted a 9% increase in consumption for natural gas, a 2.5% increase for the residential cost of natural gas, and a 12% increase in heating bills.

The EIA released its Winter Fuels Outlook for the 2017- 2018 season on October 11.[3]

[3] See EIA Winter Fuels Outlook Forecasts Higher Energy Costs, FR No. 3169, pp. 25-27.


For more information on how to access the full articles, please contact Gina Smith at Concentric Energy Publications.

Gina Smith





These articles will appear as published in The Foster Report No. 3170, being issued on October 20, 2017

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