PITTSBURGH—For 20 minutes on a Wednesday afternoon, a government regulator, of all people, was treated like a rock star at an oil and gas conference.
That Commissioner Robert Powelson of the Federal Energy Regulatory Commission (FERC) had a vote in determining whether projects moved forward—that anyone had a vote on a panel which lacked a quorum for six months last year—cheered the packed house at last week’s Marcellus-Utica Midstream Conference.
“We are back in business at the FERC,” Powelson told an approving crowd.
Powelson, nominated by President Donald Trump last May and confirmed as a FERC commissioner in August 2017, came to the federal agency after almost nine years on the Pennsylvania Public Utility Commission (PUC). Since seats were filled last summer, the commission has moved quickly.
“Within the last seven months, this current makeup of Federal Energy Regulatory Commissioners have approved $25.6 billion in pipeline infrastructure in this country,” Powelson said. “As I like to remind people, when you’re a five-member independent agency, you can come up with a lot of solutions to the problems but you can’t buy No. 2 pencils unless you have three votes; it’s that simple.”
Among the recent approvals, Powelson listed:
- Atlantic Coast Pipeline, a $5.1 billion, 600-mile project between West Virginia and eastern North Carolina, scheduled for completion in 2019;
- Mountain Valley Pipeline, EQT Corp.’s $3.5 billion, 303-mile line between northwestern West Virginia and southern Virginia; and
- PennEast Pipeline, a 115-mile line connecting the Marcellus Shale in northeast Pennsylvania to New Jersey.
Powelson also gave an extended shout-out to Dominion’s Cove Point LNG terminal, set to begin operations in March, and noted the geopolitical importance of developing U.S. gas exports.
“The exploration of natural gas and the ability to move it to market is the greatest peace dividend we have,” he said.
He recalled how, during his years on the Pennsylvania PUC, a delegation from Kosovo described how Russian gas pipelines were shut off in the middle of a cold winter snap, shutting down power plants and leaving citizens without heat.
“Can you imagine that in this country?” he asked. “In this construct, with rule-of-law markets, that any operator could do that to an American citizen, an American ratepayer? But that’s the reality of how the Russians are playing with these markets. I think it’s disruptive and I think if we get our act together around LNG exports, I think we have a tremendous opportunity in front of us.”
But Powelson expressed his own concerns about the U.S., especially regarding the radical price spikes experienced by the New England market during the recent bomb cyclone storm that struck the region. Some spot prices for natural gas soared as high as $141 per million British thermal unit during the storm.
Less than 500 miles from the New England market and its massive price blowout sits the Transco Leidy hub, he noted. Yet the 15 million customers in the market, despite living within driving distance of the cheapest natural gas in the country, pay the highest prices, not only during severe weather events like the bomb cyclone but on average going back to 2014.
“It is alarming,” Powelson said. “It’s alarming for FERC. It’s alarming for governors in the New England market who objectively have been committed to solving their lack of pipeline capacity into the market. It really speaks to where we need to look ahead in terms of solving this energy calculus equation.”
Ironically, a region that is pushing for clean energy sources was forced to burn 2 million barrels of oil during the bitter four-day cold snap in January when natural gas supplies were insufficient. Powelson noted that Repsol’s Canaport facility in St. John, New Brunswick, with 10 billion cubic feet (Bcf) of storage, went through almost 1.8 Bcf during the bomb cyclone.
“The New England ISO [utility] has alerted us that if that facility ever went down, it could create a cascading event in the power sector in New England where between 5,000 and 7,500 megawatts of combined-cycle generation would come offline,” he said. “That’s very alarming. Again, it’s something that is critically important to the FERC and you as industry partners as we work together to solve that problem.”
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
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