Pipeline Task Force Comes Up Short

Governor Wolf’s announcement last summer that he was assembling a pipeline task force came with certain assurances. The Pipeline Infrastructure Task Force (PITF) would not masquerade as a pretext for burying the oil and gas industry under more regulations. Rather, it was understood that the PITF would identify best practices for expediting the needed lines, and streamline the pre-construction regulatory and permitting process that, along with battling citizens’ groups, can take four to five times as long as the actual construction.

Less than a year and 185 recommendations later some industry officials say the PITF has proven itself to be little more than a bloated redundancy -- most of the recommendations in its final report are already realized in federal and state law.

“All we kept hearing is what a bad job we were doing and that we have to do better,” said one oil and gas official that attended the PITF hearings. “Nothing about how to remove the impediments to getting the pipeline we need faster.”

This reaction is especially troublesome as the anti-fossil fuel lobby feels more emboldened than ever with the activation of an environmental clause in the state Constitution used, with other arguments, to reject parts of Act 13 - the 2012 law that regulated drilling in the Marcellus Shale. Most recently, the state Supreme Court heard oral arguments on the drawn-out case on Wednesday, March 9. Prior rulings on the law have effectively stymied a provision in the law whereby the Public Utility Commission (PUC) determines whether a local government is overreaching its authority by outlawing drilling within its governing jurisdiction.

The lack of an overarching policy to streamline the pipeline construction process will only result in needless, costly delays in getting the affordable gas to homeowners and businesses. Manufacturers in particular, depend on the affordable dry and liquid gas to remain globally competitive. To make matters worse, under current market constrictions, when there is a high demand for gas the priority is given to residential and institutional markets – leaving industry to find alternative fuel sources that are often much more expensive.

“Our natural gas revolution is giving our manufacturers new momentum with abundant cost-competitive energy,” said PMA President David N. Taylor. “But to fully realize the potential of shale gas, Pennsylvania needs robust infrastructure for transmission, especially more pipeline. With that goal in mind, the Governor’s Task Force is a huge disappointment.”

Affordable gas is simply not getting to market because Pennsylvania lacks a sufficient pipeline network. According to the Marcellus Shale Coalition (MSC), of the 9048 wells in Pennsylvania that reported to the Department of Environmental Protection as of last December, 6618 are producing gas. That leaves 2430 that are in some in-between status: not completed, shut in, and inactive over the past year. Specifically, there are 562 wells inactive and 806 listed as “drilling not completed”, while 997 are shut-in.

“There is not a specific category for ‘waiting on pipeline’ in the DEP reporting because some wells that are not hooked up to a pipeline are no longer in any hurry due to low prices,” Patrick Henderson, Director of Regulatory Affairs for MSC, wrote in an email. “I believe it is fair to say that the infrastructure focus since Aug 2014 (when with the Corbett Administration he estimated of the 8000 wells then in Pennsylvania 1000 to 1500 were idle because of lack of pipeline) has been less about gathering pipelines from the well heads and more about large scale interstate transmission lines – this renewed focus driven largely by the plummet in gas prices and need to access existing markets asap.”

New lines take time even when they go according to plan. The $1 billion PennEast line, with UGI Energy Services as the project manager, will begin in Luzerne County, PA and end in Mercer County, New Jersey, and will bring affordable gas to thousands of households and businesses in Pennsylvania and New Jersey. Actual construction of the line will take seven months to a year, according to a spokesperson for the project. Total project time, including a year of pre-filing, will take four to five years.

Along the way the project needs the approval from some 20 agencies, including the Departments of Environmental Protection in both states, the Army Corps of Engineers, the Susquehanna River Basin Commission, the Delaware River Basin Commission, and others, all under the oversight of Federal Energy Regulatory Commission (FERC).

Work on another major transmission line, the Constitution Pipeline, was recently delayed for the Northern Long-Eared Bat. The Williams Companies 124-mile 30-inch line from Susquehanna County, PA to Schoharie, NY, is being designed to carry enough natural gas every day to serve three million homes. In a statement just last week, the pipeline owners said they will not be able to complete the necessary tree cutting in New York prior to March 31, a key deadline to avoid the patterns of migrating birds.

"Constitution anticipates beginning limited mainline construction in the summer of 2016," the company wrote. "Full mainline construction would continue after October 1 to minimize and avoid adverse impacts to migratory birds and the Northern Long Eared Bat."

Sunoco Logistics Mariner East project is a showcase for what’s possible. Mariner East 1 from western Pennsylvania to the Marcus Hook refinery began moving propane in December 2014, and added ethane in February 2016. Mariner East 2 is scheduled for completion the first half of 2017; it will require 75,000 tons of steel all to be made in America

Besides resurrecting the Marcus Hook site, until recently an idle artifact of rust belt America, the projects will inject an estimated $4.2 billion into the Pennsylvania economy, adding 30,000 jobs during construction and 300 to 400 permanent jobs once operational.

Abe Amoros, Legislative Director for the Laborers’ International Union of North America, said the work generated by the Mariner projects is unprecedented.

“We’re pushing for this industry as hard as possible,” Amoros said. “We’re talking about thousands of full time, well paying jobs done with the highest safety standards at work. It’s generational.”

Still, citizen groups and landowners have battled the projects along the way, including multiple challenges to the company’s eminent domain status. Sunoco has won each time in Common Pleas Court but the rulings take unnecessarily long as the courts don’t take into account earlier decisions by other courts.

Last month, four business groups sent an eight-page letter to members of the PITF offering additional recommendations and listing some of their concerns. One of the top recommendations from the Pennsylvania Chamber of Business and Industry, the Marcellus Shale Coalition, Associated Petroleum Industries of Pennsylvania, and the Pennsylvania Independent Oil and Gas Association was supposedly the premise for the task force in the first place: “The final PITF report should include a discussion regarding why more pipelines are needed in Pennsylvania, how pipelines are critical to economic development, and what benefits the increased use of natural gas will bring to the environment and our economy.”

The PITF had a great opportunity to begin work with local, state and federal agencies, citizens’ groups, and landowners to expedite the process needed for pipeline construction, and still uphold the highest environmental standards and the rights of landowners. It simply didn’t happen.  

For additional information on the need for pipelines in Pennsylvania, visit the Pennsylvania Energy Infrastructure Alliance.

 

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