Overhauling the permitting process to build out natural gas infrastructure with less legal wrangling may be unattainable during an election year, but it has to happen soon as industrial consumption is on the rise, according to a top executive.
CEO Amy Andryszak of the Interstate Natural Gas Association of America (INGAA) discussed the need for a makeover of the permitting system during a wide-ranging interview with NGI. The trade association represents 27 interstate natural gas transmission pipeline and storage companies. These long-haul, large diameter pipelines move natural gas from areas of the country where it's produced to areas where it's going to be consumed.
Today, there appears to be “a much more realistic and pragmatic view of natural gas,” Andryszak said. “After Russia invaded Ukraine, we needed to send natural gas to our allies…The Biden administration said, ‘we need this. It can be good for national security. It's a good security tool for us. It's a great way to be able to help our allies’...
“So you saw a little awakening there. And I think there was a reality of how much trouble Europe was in because of their own policy decisions,” followed by a cold winter.
“But I honestly think the thing that’s been more beneficial to the U.S. gas industry has actually been these winter storms, Uri and Elliott,” the INGAA chief said.
“You saw, unfortunately, in some cases, the energy industry did not necessarily perform as well as we might have liked. But it drove home that criticality of natural gas as part of the bulk power system…We're still in a place where you need natural gas to perform to have a fully functioning energy system. So I think that that need for ‘natural gas for reliability’ message is starting to finally resonate.”
INGAA’s end user customers fall into four buckets, Andryszak noted, with the local distribution companies, industrial manufacturers, LNG export facilities and, “increasingly,” electricity generators.
Stalled Infrastructure
Advancing energy infrastructure permitting reform legislation has been on the table for years. And it may be there for a while longer, she admitted.
“The concept is not new. But we've seen a couple of different legislative proposals since 2022,” including one by Sen. Joe Manchin (D-WV), who chairs the Energy and Natural Resources Committee.
“We've seen a number of different proposals since then…This is really a key issue for us as an industry, because you're just not seeing new infrastructure get developed.”
For Manchin, permitting reform has been a top priority. However, the powerful energy ally is retiring. Also pushing for permitting reform is FERC Chair Willie Phillips, who last year said it was critical as demand was rising.
The Federal Energy Regulatory Commission has been taking steps to “streamline our permitting processes,” Phillips said last year.
And yes, FERC has approved infrastructure projects. Often, though, they stall out because of litigation and protests, as has been the case for Mountain Valley Pipeline LLC.
The situation is clearly defined by the numbers.
Domestic interstate gas pipeline capacity additions have declined since 2018, according to a recent report by the Energy Information Administration. Last year, new interstate gas capacity totaled 0.98 Bcf/d, or 3% less than in 2022. That was the lowest amount of annual capacity additions on record, according to regulators.
Additional new capacity on systems crossing state lines accounted for 14% of the total in 2023, versus 65% in 2017.
Interstate capacity additions last year included two by TC Energy Corp., one by Tennessee Natural Gas Pipeline Co. (TGP) and one by WBI Energy Transmission.
TC’s 0.5 Bcf/d North Baja Xpress Project expansion included compressors and meter station upgrades on the system in Arizona and California. North Baja transports gas from the Rocky Mountains and the Permian Basin to Arizona, California and Mexico. TC’s Alberta Xpress Project expansion added 0.2 Bcf/d with the addition of a compressor station in Louisiana on the ANR Pipeline, which transports supply from the Midwest to the Gulf Coast.
TGP’s East 300 Upgrade included 0.1 Bcf/d in compression along the 300 Line in Pennsylvania and New Jersey. WBI’s Grasslands South Expansion included a 15-mile lateral to move 0.1 Bcf/d of incremental capacity from the Bakken Shale in North Dakota to an interconnection in Wyoming.
Interstate Capacity ‘Hit A Low Bar’
Meanwhile, intrastate gas capacity additions, completed within one state’s borders, last year totaled 5.2 Bcf/d. Nearly all of the additions were either within Texas or Louisiana to serve Gulf Coast markets, including for gas exports.
For the interstate gas capacity, it “hit a low bar for 2023,” Andryszak noted. “It’s not that there’s less interest in infrastructure. That’s not the issue.”
However, “it is becoming increasingly difficult to build this infrastructure. And increasingly, it's become difficult in multiple ways…This is where permitting reform would make a difference.”
A gas pipeline project may be granted a FERC certificate for public convenience and necessity to start building. However, it has to obtain a Clean Water Act (CWA) 401 certificate from the states. And that can be a hurdle.
“We are seeing some states significantly delaying the issuance of certificates, or in some cases, denying certificates,” Andryszak said. “Then you start to add in time and legal challenges. All those things add on to costs…
“We’re looking for some mechanism not to take away state’s rights, but to shorten the time periods” for challenges to water quality certificates, which “drag out the process.”
And the chances for permitting reform this year fall into the maybe category.
“I would say I’m still hopeful,” the INGAA chief said. “But again, in the realities of an election year, you just get concerned that the windows are closing. Sen. Manchin has been very vocal that he is working on a proposal” with GOP Sen. John Barrasso of Wyoming, ranking member on the Energy Committee.
If permitting reform is not enacted this year, “that issue is going to stay evergreen,” she said. “You're going to need permitting reform for the transmission industry” as gas demand is on a growth trajectory as more supply is used for electricity generation.
“I do think this is a good bipartisan issue, which is wonderful to have a bipartisan issue,” the INGAA chief told NGI. “There seems to be more of a practical awakening about the long-term need for natural gas,” beyond the pipeline industry.
Andryszak noted that CEO Jim Robb of the North American Electric Reliability Corporation “is talking about the value of natural gas.” The heads of the regional transmission organizations, or RTOs, also are calling for “flexible dispatchable fuel sources. They're talking about natural gas, even if they don't feel like they can promote natural gas.
“They are aware that for reliability, they need natural gas…The policymakers that are in charge of ensuring the reliability of our bulk power system in the United States are the people saying this.”
Another priority is to ensure Congress reauthorizes the Office of Pipeline Safety through the federal Pipeline and Hazardous Materials Safety Administration as authorization expired at the end of 2023.
Two related House bills have advanced from the Energy and Commerce, and the Transportation and Infrastructure committees. While “it’s not unusual” for an authorization to expire and then be reauthorized, “I am getting nervous that it’s April. And we’ve seen nothing out of the Senate Commerce Committee. That’s starting to make me a little nervous.”
Winning The Emission Mission
On another front, INGAA members, whose infrastructure stretches across 200,000 miles of the United States, are reducing their greenhouse gas (GHG) emissions because it has become “part of their social license to operate,” Andryszak said. Since her appointment in 2020, Andryszak has spearheaded climate change commitments that focus on modernizing gas infrastructure and minimize climate impacts.
So far, it’s been a big success.
According to the trade group’s 2023 Climate Report, average methane emissions for transmission compressor stations have fallen by double digits.
In reports to the Environmental Protection Agency under Subpart W of the GHG Reporting Program, methane emissions for the group decreased by 28% since setting the targets in 2021. Total annual methane emissions also are down, falling by 1.2 million metric tons of carbon dioxide equivalent.
For interstate pipelines, “the bulk of where you're going to see emissions is from our compressor stations,” Andryszak said. “Our members are getting very aggressive in what they can do proactively to reduce methane emissions,” and the proof is in the statistics.
The group’s overall methane emissions intensity most recently was .087%.
“So essentially, that means that 99.9% of all the methane that was transported through our assets actually reached their intended destination,” she said. “If you look at total methane emissions across our members, it was 1% of all the methane emitted in the United States.”
Differentiated gas also is becoming more important for some of the members that export supply, Andryszak told NGI. If they want to export gas to the European Economic Area, they may seek to obtain a CE tag, or Conformité Européenne, which translated means European Conformity.
For example, leading LNG exporter Cheniere Energy Inc., a member of INGAA, “has a significant amount of interstate natural gas pipeline…and certify their gas using a CE tag that they provide to customers that show estimated GHG emissions associated with each cargo.”
Blending hydrogen into the gas stream is another option underway by some companies.
Calgary-based Enbridge Inc. “has been blending a low amount of hydrogen into one of their gas distribution systems for some time” in Canada.
Others are undertaking pilot projects, including Southern Star Central Gas Pipeline, which has a pilot project blending hydrogen through a compressor station.
“Members are all trying to figure out that optionality,” she said of hydrogen blending. “We have a ton of great existing infrastructure here in the United States. How will that be used to move hydrogen in the future? I think that's still a question.”
