In the 12 months since the invasion of Ukraine put the spotlight on American natural gas, industry observers lament a ‘missed opportunity’ for reform from DC.
Ben Werschkul
·Washington Correspondent
Sat, February 18, 2023
As far as natural gas projects go, the Mountain Valley Pipeline will be but a small piece of a U.S. gas transmission system, which currently spans roughly 300,000 miles around the country. But the 303-mile project has encountered long delays and is currently in year eight of its effort to move natural gas out of Appalachia.
The slowdown — amid a bevy of regulatory, environmental, legal, and political challenges — is emblematic of a complex approval process for pipelines around the nation that, perhaps surprisingly industry advocates say, hasn't gotten any easier in the last 12 months despite increased demand from Europe following Russia’s February 2022 invasion of Ukraine. Add to that the fact that the Biden administration vowed to ramp up liquid natural gas exports in response.
The divide is perhaps starkest around the Marcellus Shale Formation. It's there in Appalachia where an estimated 262 trillion cubic feet of natural gas sit but failed pipeline projects to get it out keep piling up. And the stakes could be close to home with growing fears the country’s chaotic energy system could lead to challenges to simply keep homes warm in New England and elsewhere in the coming years unless there is increased access to Appalachian fuel.
“All of those much needed projects suffered years of regulatory delay and lawsuits, eventually leaving them with no choice but to abandon the projects entirely,’” says Dustin Meyer, the Vice President of Natural Gas Markets at the American Petroleum Institute. “I think that’s a frustrating and frankly frightening precedent, especially given the magnitude of LNG demand that we are experiencing from our allies in Europe and around the world, and the commitments we’ve made to them.”
Lengths of pipe wait to be laid along the under-construction Mountain Valley Pipeline near Elliston, Virginia in 2019. (REUTERS/Charles Mostoller)
That's not the view of environmentalists, who aim to end projects like the Mountain Valley Pipeline. They charge that such projects are unnecessary and have, in fact, been slowed, not by regulations, but by a disregard for environmental concerns. But while the project organizers may shoulder some of the blame, industry advocates say the demand for this type of energy couldn't be clearer.
Inside the Beltway
The ongoing frustrations around projects like the Mountain Valley Pipeline comes as the conversation about changes from Washington heat up.
“LNG exports, natural-gas pipeline policy is just huge right now,” says Devin Hartman, a former energy official and currently the director of Energy and Environmental Policy at the R Street Institute.
He says the outcome of ongoing debates around natural gas end up having more impact on the prices Americans pay for energy than the much high profile issues around oil drilling. These so-called “midstream policies” (ie getting the energy from the site of production to consumers) are what to watch, he said, “as your indicator of where the Biden administration might have to true-up its conflicting political objectives.”
In a demonstration of the challenges facing these projects, a Biden official recently outlined to Yahoo Finance the sheer volume of agencies that pipeline projects like Mountain Valley work with in Washington. There’s the Department of Energy, the Fish and Wildlife Service, the National Park Service, the Army Corps of Engineers, the Forest Service, the Bureau of Land Management, the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) during construction, and the Federal Energy Regulatory Commission (FERC) for oversight once the energy is flowing.
And that’s before regulations at the state level. And, of course, the bevy of lawsuits that crop up around these projects.
A spokesman for Equitrans Midstream Corporation (ETRN), which will operate the Mountain Valley project, said it “has been subject to unprecedented regulatory review, with state and federal agencies repeatedly concluding this critical infrastructure system can be built safely and responsibly and can coexist with natural resources.”
During a House hearing last week to consider a range of GOP bills, House Energy Committee Chair Cathy McMorris Rodgers (R-WA) said her goal is changing the system toward “a predictable regulatory landscape” and that "reliable, affordable natural gas is essential for heating our homes and businesses and strengthening America's global standing."
While Democrats are dismissive of unilateral House GOP efforts, there is some optimism that a bipartisan effort around permitting reform could be in the offing which could address some of the issues. Powerful figures like Sen. Joe Manchin (D-WV) have spoken in support of the Mountain Valley Pipeline. The West Virginia Senator pushed a permitting reform effort last year which included a provision to fast-track completion of the project. It was scuttled in 2022 amid bipartisan opposition.
Manchin is trying again in 2023 and may team up with fellow West Virginia Senator Sen. Shelley Moore Capito (R-WV), who recently talked about her priorities on permitting reform with the Mountain Valley Pipeline atop the list.
“Canada can do it in 18 months,” Capito said of the timeline elsewhere for these types of projects.
Sen. Joe Manchin (D-WV) speaks Sen. Shelley Moore Capito (R-WV) at the US Capitol in 2022. (STEFANI REYNOLDS/AFP via Getty Images)
Meanwhile Democrats like Sen. Tim Kaine (D-VA) represent the state where the pipeline will end and has been opposed to any efforts to fast-track. “I agree with the need to reform our broken process for permitting energy infrastructure [but] green-lighting the MVP is contrary to the spirit of permitting reform,” he said in a recent statement, saying fast tracking one project undermines a transparent process for all.
The stakes
Meyer said that - so far at least - a worse outcome for Europe has only been narrowly averted thanks to a few lucky breaks—especially an abnormally warm winter and a willingness of major LNG producers in Asia to redirect some cargo to Europe.
But that lucky streak isn't guaranteed to be repeated. The natural gas system's fragility was further highlighted when Vladimir Putin's invasion of Ukraine began on February 24, 2022, and sanctions cut off Russia’s ample natural gas exports to Europe and the West. (A herculean effort has ensued with a push by the Biden administration to supercharge U.S. liquid natural gas exports and provide billions of cubic meters of gas in 2022 “with expected increases going forward.")
Meanwhile, getting natural gas to the northeast currently is constrained by a lack of pipelines as well as a quirk stemming from a 1920 maritime commerce law called the Jones Act. Companies currently have an easier time loading liquified natural gas onto ships and then sending the energy overseas rather than moving it up the coast to places like New Hampshire.
At the White House, there are competing impulses on the issue, says Hartman. “It's very, very conflicted right now, oil gas policy is super awkward for this administration,” he says.
Multiple Biden officials declined to say if they have plans for unilateral action that would fast-track energy projects like Mountain Valley. But Biden’s outgoing top economic advisor, Brian Deese, reiterated the administration’s support for permitting reform. He has said recently that Congress needs to help “demonstrate to the American people and the world that we can build faster, more efficiently, and more equitably than we’ve done in the past.”
Hartman, who worked at FERC during the Obama administration, has optimism that some midstream energy issues may be breaking through the bureaucracy. "A lot of FERC leadership recognizes [the difficult situation] and are really struggling with how to dance around this point.”
A landowner's sign denouncing the Mountain Valley Pipeline near Elliston, Virginia in 2019. (REUTERS/Charles Mostoller)
Others are less optimistic and argue Biden’s team has actually been more focused on adding hurdles to the process, notably through a recent proposal from the White House’s Council on Environmental Quality around greenhouse gas emissions.
Myer, of the American Petroleum Institute, remains frustrated by what he calls the administration’s mixed messaging around natural gas saying the message to him is clear of the need to increase build gas infrastructure. “Failing to recognize that would be a major missed opportunity, not just for the US, but for our allies around the world,” he said.
In the meantime, the Mountain Valley Pipeline still faces outstanding regulatory and legal issues as it tries to get over the finish line. Organizers say the pipeline is currently 94% complete with 270 miles of pipe installed but still faces an uphill effort to meet its latest deadline of completion this year.
Once the gas comes on, project organizers contend, the project could heat roughly 10 million U.S. homes per day.
Ben Werschkul is Washington correspondent for Yahoo Finance.
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