Charges that the U.S. pipeline industry is building far more natural gas pipelines than it needs are being fueled by a new report showing that the capacity of lines approved by federal regulators over the last two decades was more than twice the amount of gas actually consumed daily in 2016.
The report by the independent Analysis Group for the Natural Resources Defense Council said the Federal Energy Regulatory Commission has approved more than 180 billion cubic feet a day (bcf/d) of new pipeline capacity since 1999, when it began its current policy on approving interstate pipelines. The new capacity compares with the average daily consumption of only 75.11 bcf/d last year, the report said.
Even during the Polar Vortex of 2013/14 when exceptionally cold temperatures in the Northeast boosted the need for heating fuel, consumption of 137 bcf/d was still significantly lower than the combined capacity additions, the report said, citing data from the federal Energy Information Administration. In January 2017, national consumption was 93.1 bcf/d, even further below the capacity of the additional pipeline network, the report said. The data on additions to pipeline capacity are from FERC.
“The report underscores very real concerns that we are overbuilding the natural gas pipeline system,” said Montina Cole, an attorney with NRDC’s ‘Sustainable FERC’ project.NRDC, in the report issued Nov. 6, said the overcapacity is being driven by the profits that can be earned by pipeline builders; by FERC’s willingness to accept builders’ assurances that there is a need for the additional gas, and by the regulator’s existing application policy that does not recognize big changes in the natural gas market since the policy began.
Cole told StateImpact that an increasing number of pipeline builders are justifying their projects with so-called affiliate agreements in which buyers of the gas are commercially linked with the carrier. When the buyer is an electric utility, that means ratepayers end up paying the cost of the pipeline, she said.
StateImpact – Jon Hurdle – 11.13.2017
Posted by: Nelson Bailey
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