1340972306Introduction to FERC and Federal Review of Natural Gas Projects _Sipe_

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					Introduction to FERC and Federal
 Review of Natural Gas Projects

 Presentation to The Northeastern Area
     Association of State Foresters

            State College, PA
              June 5, 2012
                 FERC Organization Chart

           Chairman          Commissioner        Commissioner Commissioner           Commissioner
        Jon Wellinghoff      Philip D. Moeller    John R. Norris Cheryl A. LaFleur      Vacant

           Energy         External       Enforcement          Electric       General      Secretary
           Projects        Affairs                           Reliability     Counsel

Administrative        Administrative      Energy Market         Executive       Energy Policy &
  Litigation           Law Judges          Regulation            Director         Innovation
               Who is FERC?
 FERC is an independent federal regulatory agency
  that, among other things:
  ─   Regulates the interstate transmission of natural gas (siting &
      rates); electricity and oil (rates only);
  ─   Reviews proposals to build interstate natural gas pipelines and
      liquefied natural gas (LNG) terminals, and natural gas storage
  ─   Licenses and inspects non-federal hydropower projects; and
  ─   Monitors and investigates energy markets.
Electric Power
 Wholesale rates for
  interstate transmission
 Interstate electric
   ─ Reliability of high
     voltage systems
   ─ Siting and permitting*
          Within DOE-designated
           energy corridors
          As authorized by EPAct
 *Subject to recent federal court decisions
Office of Energy Projects
Gas Pipeline Program
 Evaluate applications for facilities to import,
  export, transport, store or exchange natural
 Authorize the construction and operation of
  facilities for such services
 Approve abandonment of such facilities
 Conduct inspections of LNG facilities and
  pipeline construction
 (Certificated in the last 10 years)

 Pipelines
    108.6 Bcf/day of Capacity and 16,208 Miles
 Storage Facilities
    1211.5 Bcf of Capacity
 LNG Facilities
    37 Bcf/day of Total Capacity
There are approximately 217,300 miles of
interstate natural gas transmission pipeline.

       Source: Based on data from Ventyx Global LLC, Velocity Suite, April 2012   8
Natural Gas Act
 The Natural Gas Act is the law that sets out
 FERC’s areas of responsibilities:
    ─ Section 1 – Identifies projects exempt from
      FERC jurisdiction
    ─ Section 3 – Allows FERC to authorize
      import / export projects
    ─ Section 7 – Allows FERC to authorize
      interstate pipeline projects (including
      storage) and grant eminent domain
Projects Exempt from
FERC Jurisdiction
 Local Distribution Company facilities (e.g.,
  UGI, Philadelphia Gas Works, etc.)
 Intrastate pipelines (where gas is produced,
  transported and consumed within a single
 Hinshaw pipelines (gas is produced in one
  state, but is transported and consumed
  within another)
 Gathering facilities
Natural Gas Act
           NATURAL GAS ACT

      Section 7(c)           Section 3
       Interstate          Import/Export

     Case       Blanket        Case
    Specific   Authority      Specific

          Automatic Prior
Natural Gas Act
 Case Specific Review
  ─ Conduct a full review of proposal including
    engineering, rate, accounting, and market
  ─ Conduct an environmental review by
    preparing an Environmental Assessment or
    an Environmental Impact Statement
Project Evaluation

    How Does FERC Evaluate All
    Of These Major Projects?

    What Are The Criteria Used in
    This Evaluation?
Balancing Interests
        People Like...                   But They Also Want...

           Due Process                       Expedited Process

        Smaller Government                 Effective Government

          Less Regulation

     Market-dictated Outcomes
                                         Assurance of Fair Markets

                                           Protection from Market
                                       Dysfunctions, Unexpected Risk,
                                              and Unjust Rates
 Protection for the Environment and          Ample Supplies of
          Property Interests                 Low-cost Energy
FERC’s Internal
Review Process
 Initial review for completeness
  (10 business days)
 Issue Notice of Application
 Assign review team
  ─   Environmental
  ─   Certificates
  ─   Rates and Tariffs
  ─   Attorney
  ─   Engineering
              Certificate Process
              Non-Environmental Review and Analysis
              • Engineering – GQI, storage, hydraulic flow
              • Tariff – rates, terms & conditions of service
              • Policy – precedents, rules, regulations
              • Accounting

   File                                                         Issue
Application             Parallel Processing Paths               Order

              Environmental Review
              • Conduct scoping
              • Coordinate with agencies
              • Environmental resource review
              • End result:
                   – environmental impact statement (EIS)
                   – environmental assessment (EA)
              • Staff makes its recommendations to the
Project Review

 Engineering Review
 Environmental Review
 Project Need (Public Interest Review)
  ─ Based on the Commission’s Certificate
    Policy Statement
Final Steps of the
FERC Process

 All aspects of the review (environmental
 and non-environmental) are brought
 together into a draft Commission Order
 which contains staff-recommended, project-
 specific requirements.
Final Steps of the
FERC Process
 The draft Commission Order is sent to the Chairman and
  Commissioners for their consideration. They can reject
  staff’s recommendation, accept it, and/or modify it.

 If approved, the project proponent is issued a Certificate
  of Public Convenience and Necessity pursuant to 7(c) of
  the NGA, and with the right to eminent domain pursuant
  to section 7(h) of the NGA. Section 3 authorization does
  NOT provide for eminent domain.
State and Local Permits
  Any state or local permits issued with respect
   to FERC jurisdictional facilities must be
   consistent with the conditions of any FERC
   certificate. FERC encourages cooperation
   between interstate pipelines and local
   authorities. However, this does not mean
   that state and local agencies, through
   application of state or local laws, may prohibit
   or unreasonably delay the construction or
   operation of facilities approved by the
             Major Pipeline
        The Environmental
          Construction Projects
         Review Process

10                    Office of Energy Projects
 NEPA Overview
 Is the project categorically excluded?
   ─   Projects with little or no impact (e.g., sale of pipe or
       abandonment in place)

 Environmental Assessment or Environmental Impact
   ─   Level of environmental impacts
           significant (EIS) or less than significant (EA)
   ─   Applicant-proposed mitigation
   ─   Anticipated public controversy
Phases of Project
 Project Preparation
  ─ The applicant working on its own
 Pre-Filing
  ─ FERC staff working with the applicant and
    stakeholders before the filing of an application
 Application Review
  ─ FERC staff working with the applicant and
    stakeholders after the filing of an application
 Post-Authorization
  ─ FERC staff working with the applicant and
    stakeholders to ensure compliance with conditions
    to the FERC approval
The Pre-Filing Process
 Voluntary for pipelines, required for LNG
 Used for projects requiring an EIS, or an EA
  where controversy is likely
 Normally requires the applicant to hire and
  fund a contractor to help prepare EA/EIS
  ─ Staff selects contractor from list of three provided
    by the applicant
  ─ Contractor works solely under FERC staff’s
Goals of the Pre-Filing
 Early identification and resolution of
  environmental issues
 More direct interaction between FERC staff
  and stakeholders
 Interactive, concurrent NEPA/permitting
 FERC staff are advocates of the Process, not
  the Project!
 Goal of “no surprises” when application is filed
  FERC Staff Pre-Filing
 Identify affected parties:  Issue scoping notice
   ─ landowners               Examine alternatives
   ─ agencies                 Arrange and attend site
   ─ other stakeholders         visits and meetings
 Facilitate identification    Initiate preparation of
  of issues                     preliminary NEPA
 Identify study needs          document
 Facilitate resolution of  Review draft resource
  issues                        reports
    The Environmental Report
    (13 Resource Reports)
     General Project         7   Soils
1    Description
                                 Land Use, Recreation,
                             8   and Aesthetics
2    Water Use and Quality
                             9   Air Quality and Noise
     Fish, Wildlife, and
3    Vegetation
                             10 Alternatives

4    Cultural Resources      11 Reliability and Safety

5    Socioeconomics          12 PCB Contamination
                                Engineering and
6    Geological Resources    13 Design Material (LNG)
 Public Involvement
 During Pre-Filing Review
    The FERC Process                  Public Input

 Project sponsor holds        Contact the project sponsor
  Open Houses; FERC             w/questions, concerns;
  staff participates            contact FERC

 Issue Notice of Intent to    Send letters expressing
  Prepare the NEPA              concerns about
  Document (i.e., scoping)      environmental impact

 Hold scoping meetings        Attend scoping meetings
Public Involvement During
Application Review
    The FERC Process                  Public Input
 Issue Notice of the         File an Intervention;
  Application                  register for e-subscription
 Issue Notice of             File comments on the
  Availability of the DEIS     adequacy of DEIS
 Hold Public Meetings on  Attend public meetings to
  DEIS                         give comments on DEIS
 Issue a Commission          Interveners can file a
  Order                        request for rehearing of
                               the Commission Order
             United States Shale Basins
        Maximum Reported Gas-in-Place (in Tcf)

                                                                                                         Devonian (Ohio) Shale
                             Shale                Gammon Shale
                                                                            Antrim Shale(76)                                      Utica Shale
            Shale (265)                       Niobrara    Excello-Mulky
                                              Shale (13)      Shale
           Mancos                                    Woodford
            Shale                                     Shale
                                         Pierre Shale                   (160)                                                            Marcellus
       Hermosa Shale                                                                                                                       Shale
                                                                             Woodford-Caney                                               (1,500)
                       Lewis Shale                                               Shale
                          (61)                                                                          Conasauga Shale
                                             Bend Shale
                                                                                                      Chattanooga Shale
                                                                                                       Floyd - Neal Shale
        Barnett - Woodford                                                                        Floyd - Chattanooga Shale (22)
            Shale (265)                                                         Fayetteville Shale (52)
                                                                       Haynesville Shale (717)
                                                             Barnett Shale (168)
                                                             Eagle Ford Shale                          Note: While some shale basins have been
Total Shale Gas                       Pearsall- Eagle Ford Shale                                       identified with reserve estimates, others
     3,700 Tcf                                                                                         have no reserve data available.

              Source: Ventyx Velocity Suite 2011 and Navigant Consulting’s North American Natural Gas Supply Assessment – July 4, 2008

              WHY SHALE GAS?
               Supply Drivers

   Shale gas is abundant and is becoming
    increasingly cheaper to produce
   Rockies gas can now easily reach markets in
    the Northeast, and with Ruby, the Pacific
   Deeper shale formations (e.g., Utica) are now
    being considered as emerging supply

            WHY SHALE GAS?
             Market Drivers

Natural gas is in demand…now more than
   Firming-up Variable Power Generation (RPSs)
   New Baseload Power Generation
   Replacing / Converting Retiring Coal-Fired
   Natural Gas Vehicles

  Marcellus Shale: What’s the
  Big Deal?

Source: GasMart 2011 Chris Tucker, Energy in Depth A Sustainable Future for Natural Gas Getting It Right with the Public

      Station 219


                    Oakford                                           TETCO &

     Appalachian                                                                                Princeton

                                                       Transco’s                      Williams, & NiSource
Clarington                                             Comp Sta 195                   Interconnects

                                                                         Sparrows Point LNG

Approved or Pending Projects                              Potential Projects
    Mid-Atlantic Express Inc.        Northeast Supply (Williams)             Appalachia to Market
    Line 300 Exp (Tennessee)                                                 Expansion (TETCO)
                                     Dominion Keystone (Dominion)
    Rockies Express Pipeline East                                            New Penn (NiSource)
                                     REX Northeast Express (KM)
    Northern Bridge, TIME 3, TEMAX                                                                              34
    (TETCO)                          East West Connector (NFG)
                               Marcellus Shale Projects
               Marcellus Shale Projects                                    Corning

                       Station 219                          Leidy



                                     Oakford                                                            Lambertville

                      Basin                                                                                            Princeton

              Clarington                                                        Compressor
                                                                                Station 195

                Approved or Pending Projects                                                             Potential Projects
Appalachian Expansion (NiSource)     Sunrise Project (Equitrans)                NYMarc (Iroquois)                            Keystone (Dominion/Williams)
Line 300 Exp (Tennessee)             TEAM 2012 Project (TETCO)                  New Penn (NiSource)                          NiSource & UGI
NiSource/MarkWest & NiSource         Northeast Upgrade (Tennessee)              Marcellus to Manhattan (Millennium)          Northeast Supply (Williams)*
N Bridge, TIME 3, TEMAX (TETCO)      Marc I (Central NY)
                                                                                Appalachia to Market Expansion               Commonwealth Pipeline
Appalachian Gateway (Dominion)       Low Pressure East-West (Equitrans)
                                                                                TEAM 2013 & TEAM 2014 (TETCO)                (UGI Service, Inergy, WGL)
Line N & N, R & I Projects (NFG)
                                     NJ-NY Project (TETCO & Algonquin)          Ohio Pipeline Energy Network
Tioga County Extension (Empire)
                                     Northeast Expansion (Dominion)             (TETCO)
NSD Project (Tennessee) &            Northeast Supply Link (Transco)
Ellisburg to Craigs (Dominion)
                                                                                The West Side & East Side Expansions      * Combined Transco’s Rockaway Lateral
                                     MPP Project (Tennessee)                    (NiSource)                                                           Projects
                                                                                                                             and Northeast Connector35
Northern Access (NFG & Tennessee)    Blacksville Comp (Equitrans)
The Constitution Pipeline                                                 Source: FERC
Interstate Natural Gas Facilities and Shale Basins Impacting Ohio, New

York, Pennsylvania & West Virginia

                                                                                                                        New York

                                                                                  Utica                     Shale


                                                                                    West Virginia


             Source: Based on data from Ventyx Global Energy Decisions, Inc., Velocity Suite, May 2012                       36

Shale Gas Estimates

Shale Gas Production In Bcf/d





                                     2005     2010              2015              2020              2025              2030            2035

                                 Woodford                 Barnett                          Fayetteville                     Haynesville
                                 Marcellus                Eagle Ford                       All Other US

                                             Source: Based on data from ICF International and Compass Report January 2011                    37

Gas Estimate - Appalachia

                                                                                 •    Growth in the
                                                                                      region of
                                                                                      Northeastern U.S.
                                                                                      is driven primarily
                                                                                      by Marcellus
                                                                                      Shale production.

                                                                                 •    Regional
                                                                                      production by
                                                                                      2035 -- projected
                                                                                      increase of over
                                                                                      475 percent!

       Source: Based on data from ICF International and Compass Report October 2010                   38


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Contact Info:

             Dave Swearingen
 Environmental Project Manager and Interagency
        FERC Office of Energy Projects
     Division of Gas—Environment & Engineering

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