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Monday, March 23, 2015 8:41 AM ET
FERC Chair LaFleur sees trouble ahead for gas pipeline permitting
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Environmental and public resistance to natural gas pipelines will make it more difficult to build the infrastructure that helped smooth energy deliveries this winter, Cheryl LaFleur predicted at the last FERC meeting she led as chairman.

LaFleur discussed opposition to pipelines following FERC's March 19 meeting, after SNL Energy asked about challenges such as a push by the White House Council on Environmental Quality to have federal agencies do more on climate change, and recent court decisions affecting FERC approvals of gas pipeline projects.

"We're still assessing what the impact of the new CEQ guidance would be, but we are certainly prepared to work with any CEQ guidance," she told SNL Energy at a news briefing. "We've always tried to take into account in our [National Environmental Policy Act] work all the reasonably foreseeable outcomes of a project."

"But I do see additional challenges in permitting pipeline infrastructure given the increased opposition and controversy surrounding pipeline infrastructure, particularly in the Northeast," she continued.

"We are in a situation where we are increasingly reliant on natural gas as a generation fuel in order to meet some of the environmental objectives of the Mercury and Air Toxics Standards and the Clean Power Plan," she said. "At the same time, natural gas exploration, production and transportation, the part we regulate, have their own environmental issues. We try to take them very seriously but I don't think this controversy will end."

When the commission next meets on April 16, Commissioner Norman Bay will be the new FERC chairman.

When LaFleur spoke, FERC had seen some of the controversy over gas projects at its meeting that morning. A group of protestors wearing red T-shirts with the letters "BXE," the initials of the group Beyond Extreme Energy, disrupted the meeting during its early minutes. Security guards and police escorted the people from the building while they chanted "stop construction at Cove Point," referring to the Dominion Resources Inc. LNG export project in Maryland.

During the meeting, the FERC Office of Enforcement staff gave an overview of U.S. energy markets in which they reported the markets had performed well this winter, with natural gas prices "lower and less volatile." The Henry Hub spot price averaged $2.91/MMBtu during January and February, down 44% from the same period in 2014. This was the case despite the fact that demand was 2% higher this year, driven by a jump in gas used for power generation.

"The contrast between last year's and this year's winter cannot be understated," staff said.

Among other things, the staff said this was the result of new gas infrastructure projects — including EQT Midstream Partners LP's Equitrans LP Jefferson compression station expansion, Spectra Energy Corp's Texas Eastern Transmission LP Team 2014 project and NiSource Inc.'s Columbia Gas Transmission LLC West Side expansion project — and FERC-led efforts to coordinate the gas and electric industries. LaFleur highlighted these factors after the presentation, but said "we're hardly declaring victory." She said FERC and the industries would have to continue such efforts to maintain reliable energy deliveries.

FERC Commissioner Tony Clark said low energy prices in a period of low temperatures highlighted both the unpredictable nature of the market and the importance of FERC's work, including the permitting of gas transportation projects.

"The work of the commission really is important," he told staff, "when you think about what happened with regard to some of the siting cases that you noted brought new resources into constrained areas of the country — that was a factor that resulted in a positive outcome for consumers."

Clark also praised ISO New England Inc.'s preparations, including its winter reliability program.

Commissioner Philip Moeller thanked the staff and welcomed the news, but he said the past year was not a true test of the energy market under the U.S. EPA rules. Efforts to comply with the rules "could be made more difficult when the economy is booming," he said, which will increase demand for electric power generation and for natural gas.

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