The natural gas industry criticized a federal appeals court for tossing approval of the Regional Energy Access (REA) expansion project by Williams, claiming the ruling ignored the need for additional natural gas in the Northeast.
The U.S. Court of Appeals for the District of Columbia (DC) Circuit on Tuesday ruled that FERC erred when it issued a 2023 certificate for REA. The court said the Federal Energy Regulatory Commission had failed to adequately consider studies suggesting there was no need for the pipeline capacity (No. 23-1064).
The 829,400 Dth/d REA expansion, with its last phase ramping up in July, is designed to relieve bottlenecks along the Transcontinental Gas Pipe Line Co. LLC (Transco) system in Maryland, New Jersey and Pennsylvania.
The court said the Commission “arbitrarily overlooked significant environmental consequences” of greenhouse gas (GHG) emissions from using natural gas. It also said FERC failed to explain how pipeline capacity contracts accurately measured the need for the project when those agreements have “perverse incentives” that allow local gas distribution companies (LDCs) to resell unused capacity.
The American Gas Association (AGA) challenged the court’s ruling.
“We know for a fact that the project will improve overall reliability and diversification of energy infrastructure in the Northeast, ease pipeline constraints, and help address current challenges including increased natural gas prices during the winter months for consumers,” said AGA”s Matthew Agen, chief regulatory counsel for energy.
LDCs had pledged for 73% of pipeline capacity, and the pipeline was 100% subscribed under long-term contracts, according to AGA.
Agen noted that Winter Storm Elliott in December 2022 made the need for the pipeline obvious. The collapse of gas pressures in delivery pipelines across the New York City area threatened the loss of service over weeks or months.
“The court’s decision sets a dangerous precedent by dismissing the reliability needs of LDCs to satisfy the demand for energy during critical periods, such as life-threatening winter events,” he said.
No Delays
“We believe the court erred in vacating the certificate,” a Williams spokesperson said. The company was “taking the necessary legal and regulatory steps to address the court's concern and to ensure that this much-needed firm transportation capacity continues to be available to serve the needs of our customers without interruption.”
Williams said the court decision would not have any immediate impact on the project. FERC in late July authorized Transco to place REA fully into service. The $1 billion expansion is designed to provide enough gas to serve roughly three million homes, according to Williams.
Natural gas market analysts expect the project to reduce gas price volatility during peak demand periods. During Elliott, the price premium for Transco Zone 6 non-NY in southeastern Pennsylvania and New Jersey jumped above $27/MMBtu over prices at the upstream Transco-Leidy Line hub in Pennsylvania. That price premium has averaged about 37.9 cents year to date, NGI data show.
More than half of the project’s capacity came online along the Leidy Line in late 2023.
Other Battles
The court ruling handed a victory to several states and environmental groups. The ruling also came weeks after another federal appeals court ruled that a Pennsylvania agency could review water permits for REA.
The legal battles over REA extend similar pipeline fights that Williams has faced in the Northeast. In 2016, New York State denied a water permit for the greenfield Constitution Pipeline LLC. After that setback, the Williams-led Constitution partnership said they would turn their attention to brownfield expansions like REA, Leidy South and the Northeast Supply Enhancement (NESE) project.
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Williams put Leidy South into service in 2020, but let the FERC certificate for NESE expire in May, four years after New York and New Jersey rejected the water permits.
Permit Reform?
Sen. Joe Manchin (I-WV), the primary force behind a law that rescued the Mountain Valley Pipeline LLC (MVP) from a regulatory abyss, is mounting a final effort to overhaul federal permitting for energy projects. Manchin, who chairs the Senate Energy and Natural Resources Committee, is retiring this year.
He gained a key victory in that push Wednesday as the committee reported out the Energy Permitting Reform Act of 2024 (EPRA24) with bipartisan support.
“No matter what side of the fence you might be on, everyone knows it can’t happen unless you reform our permitting…the time to act is now,” said Manchin, who sponsored the bill with Ranking Member John Barrasso (R-WY).
Among the legislation’s provisions, it would stop the Biden administration’s pause on approving permits for worldwide liquefied natural gas exports.
The committee’s vote “bolsters our view that EPRA24 could potentially become the second installment in an incremental permitting reform process that began last June,” analysts at ClearView Energy Partners LLC said in a note.
However, significant hurdles remain. Calendar pressures could delay the full Senate’s consideration of the bill until after the election, the analysts said. In addition, some issues that were deferred on Wednesday “may have highlighted conflicts that could derail the bill at later stages of the legislative process,” they said.
