Skip to content

How Many Gas Pipelines Do We Need?

As demand for natural gas rises, so do questions about pipeline capacity

A natural gas pipeline yard is shown beyond a fence in Skokie, Ill., in this 2003 photo. (Tim Boyle/Getty Images file photo)
A natural gas pipeline yard is shown beyond a fence in Skokie, Ill., in this 2003 photo. (Tim Boyle/Getty Images file photo)

BY JACKIE TOTH

When coal-fired and nuclear power plants are retired, they’re usually replaced not by new renewable technologies like solar or wind, but with power plants fueled by natural gas.

And more than regulations that promote carbon-free energy sources, it is the low cost of natural gas — a cost driven down by its abundance since the U.S. fracking boom — that has pushed coal and nuclear toward the back burner of America’s energy mix.

Last year marked the first full year electric generation powered by natural gas actually edged out that from coal — 34 percent compared to coal’s 30 percent, the Energy Information Administration said.

At the same time, natural gas prices in 2016 were the lowest in almost two decades, according to the EIA.

But cheap as it is, gas has a downside: It has to be moved from production zones to power plants. And as demand for it has grown, so have questions about how much pipeline capacity is needed to keep gas-fired plants running while also meeting the demands of consumers who use gas instead of electricity to heat households, dry clothes and cook dinner.

While the gas industry, manufacturers and natural gas utilities back more pipeline construction, environmentalists say the U.S. needs to critically examine whether more pipes are needed to meet that growing demand, since the burning of gas still releases greenhouse gases and is comparatively less clean than renewables.

That supply issue is why natural gas came up short when the Trump administration’s Energy Department called for new rules to assure profits for coal-fired and nuclear plants that can keep at least a 90-day supply of fuel on-site and continually operate during a crisis.

“Unlike other fossil fuels, natural gas cannot typically be stored on-site and must be delivered as it is consumed,” the Energy Department explained in a February 2015 report that looked at potential pipeline infrastructure needs under varying demand scenarios.

The DOE’s recent grid reliability study noted that pipe capacity constraints, difficulty siting new pipes and the many ways natural gas is used “have created supply constraints in the past.”

“Supply constraints can create increased price risk and, in extreme cases, could impact reliability,” the DOE said in its study.

The ‘midstream’ challenge

Proponents of new pipelines say increasing capacity is necessary, particularly given the shift to natural gas production in the Marcellus and Utica shales across the Appalachian Basin during the current gas boom.

Those who directly benefit from the use or production of natural gas, like pipeline construction companies, gas firms and utilities, are top backers of new pipe construction.

“What we have seen with the shale revolution is that in many cases, gas is being produced in places where, at least within recent history, we did not have a lot of natural gas production,” said Donald Santa, president of the Interstate Natural Gas Association of America. “As a result of that, there is the need to tie that in via pipelines with where the markets are.”

Senate Environment and Public Works Chairman John Barrasso, a Wyoming Republican, said through a spokeswoman that additional pipes will “create jobs, grow our economy, help the environment by reducing flaring and improve America’s energy security.”

Easy access to gas also helps manufacturers, who have an almost overreliance on natural gas compared with other fuels, said Ross Eisenberg, vice president of energy and resources policy at the National Association of Manufacturers.

And the demand for gas will only grow, Eisenberg said, citing IHS Economics’ May 2016 study prepared for his group. IHS projected an increase in natural gas demand in the lower 48 states of as much as 40 percent by 2025, paired with an expected increase in gas production of 48 percent by 2025, relative to 2014.

“We don’t have a supply problem and we certainly don’t have a demand problem,” Eisenberg said. “The real challenge is the midstream,” or gas transport and storage.

Slow process

The big pipeline projects intending to cross state lines that people hear about most often require certificates from the Federal Energy Regulatory Commission. Before that happens, the projects undergo lengthy reviews of their environmental impact.

Historically, FERC has rejected few applications for such projects. In 2016 alone, it approved 38 major pipeline projects that would add over 13,800 million cubic feet of new natural gas capacity across 1,111 miles.

Construction projects still awaiting FERC’s approval have new friends in Chairman Neil Chatterjee and Commissioner Robert Powelson, both confirmed to the commission in August. Chatterjee has said he wants to cut back the environmental review timeline for pipeline projects.

“I am pleased the Trump administration is working with us to streamline and speed up the approval process for new pipeline construction,” said Barrasso, who is also a senior member of the Senate Energy and Natural Resources Committee that oversees FERC.

The House has also embraced an endeavor to streamline impact reviews for pipeline projects. On July 19, the chamber passed the Promoting Interagency Coordination for Review of Natural Gas Pipelines Act from Texas Republican Rep. Bill Flores in a 248-179 vote. Bill supporters say it will keep environmental reviews robust while tightening up environmental review timelines.

“Now that natural gas is a leading electric generation source, improving our pipeline infrastructure is vital to boosting the resilience of our nation’s power grid,” Flores said through a spokesman last month. He said the bill would bring greater transparency and accountability to the permit process for interstate pipelines.

Questioning the buildout

But many environmentalists question that more pipelines are needed, in part since existing lines are not all running at full capacity and because energy demand is essentially flat.

The 2015 DOE report projected that increased natural gas demand could be met by existing pipelines.

And because natural gas is produced in lots of places and new pipeline capacity was added from 2007 to 2015, there is less need for more pipelines going forward, the department indicated.

A report released in September from environmental groups Oil Change International and the Sierra Club and the consumer advocacy organization Public Citizen said the “gas pipeline building spree” of today means consumers are on the line to cover “long-term costs for pipeline capacity they don’t need.”

Contributing to overestimates of new pipeline needs, environmentalists say, is the weight FERC gives so-called precedent agreements. The agreements between companies and eventual gas purchasers indicate an eventual market for the gas that the proposed pipeline would move.

Sometimes, pipeline developers are directly affiliated with the future users of the natural gas the pipes will transport.

“It really becomes a kind of circular type of statement: The pipeline is needed because the developer’s affiliate says the pipeline is needed,” said Montina Cole, senior attorney with the Natural Resources Defense Council’s energy and transportation program. Affiliate contracts “are not apt to reflect actual competitive need,” she said.

FERC Commissioner Cheryl LaFleur in October cast the sole vote against two new pipeline projects that will move gas out of West Virginia, assuming they get final clearances from the states.

In a statement, she said it was “appropriate” to consider evidence besides precedent agreements in evaluating the economic need for such projects.

LaFleur was also echoing a statement by former FERC Chairman Norman Bay who, on the day of his resignation from FERC on Feb. 3, encouraged the commission to explore how it evaluates whether a pipeline is needed and how much weight precedent agreements should carry to determine need.

“It is inefficient to build pipelines that may not be needed over the long term and that become stranded assets,” Bay had argued.

Many environmentalists also put health and safety concerns over moving and burning natural gas, as do lawmakers representing areas where the public is critical of new pipelines.

Rep. Jim McGovern, for example, has a bill that would require environmental analyses of proposed pipeline projects to consider their greenhouse gas emissions.

“A city or town should know the long-term effects these pipelines will have on the environment before they make decades-long commitments and are hit with the bill for these billion-dollar energy projects,” the Massachusetts Democrat said through a spokesman.

Recent Stories

Rep. Bishop picked for No. 2 slot in Trump OMB after statewide loss

Senate Democrats air concerns about Trump mass deportation plan

McConnell suffers minor injuries in fall

Don’t count out Roy Cooper in 2026

DOJ watchdog review sparks change to policy on lawmaker records

Supreme Court sounds ready to curb environmental impact reviews