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Natural gas industry stakeholders gathered in Pittsburgh last week at the Hart Energy’s Marcellus-Utica Midstream Conference. For the nearly 1,000 attendees, the talk was about natural gas industry expansion: more pipelines, more production and more exports.
The exhibition hall had booths with steel workers, pipeline manufacturers and inspectors from around across the nation, all vying for attention of big industry players like Equitable Gas or Dominion Energy.
The conference also attracted one of the industry’s ultimate decision makers, Commissioner Robert F. Powelson, a recent appointee to the Federal Energy Regulatory Commission (FERC), the agency charged with approving interstate pipeline construction.
“It is a really remarkable time in where we are today as a country with energy production, where we are here, some from Texas would argue, but the epicenter of natural gas development,” Powelson said.
The U.S., once a net importer of natural gas, is now a net exporter. That trend is only expected to grow. For Powelson, that energy production is a national strength.
“The exploration of natural gas and the ability to export that to market is the greatest peace dividend we have aside from our monetary and military power,” he told the audience at Pittsburgh’s David L. Lawrence Convention Center.
But Powelson and industry experts here say current pipeline capacity is constraining production that could feed national and international markets.
Powelson was particularly concerned about the ability to grow natural gas distribution to New England during “polar vortex” type weather events. He blamed “some of the game playing that goes on in certain jurisdictions around pipeline development,” as a constraint. To the audience of industry stakeholders he said, “I pledge to you as a new FERC Commissioner that I will work with you to really solve those problems.”
It’s state regulators that often bare the weight of environmental review in both the planning and construction stages. Several years ago New York denied a water permit to the Constitution Pipeline that’s left that project unbuilt.
Powelson acknowledged there are times that pipeline construction has problems. At Ohio’s request FERC has halted construction along the Rover Pipeline multiple times. It’s current under a stoppage now.
“FERC listens to the state environmental regulators, we try to work cooperatively. I think that’s demonstrates our ability to have cooperative federalism,” Powelson said. “Those kind of situations make it more difficult for other operators in the market and it creates a hypersensitivity with the folks that are that oppose these projects.”
Powelson noted that critics argue FERC simply rubber stamps projects. Members of Congress and FERC commissioners themselves, have called for reevaluating the criteria for establishing need for pipelines and where to put them.
“We do not build the interstate pipeline on speculation,” Powelson said. “You need to have a business case,” he said, “I’m open to where we’re headed with it, but I’m also at the end of the day, I want to give everybody a piece of mind here that you’re not going to see these tectonic shifts in in policy.”
EQT’s Sr. Vice President Jerry Ashcroft listed the permitting process and community opposition as the second biggest obstacle to constructing EQT’s proposed Mountain Valley Pipeline. Ashcroft said the project’s biggest obstacle will be the mountains themselves. He called the 42-inch-diameter pipeline that would stretch 303 miles from northern West Virginia to southern Virginia an “engineering marvel.”
“A lot of our skilled work workforce is from the Appalachian area just because of the terrain. There is a different knack to doing that business. It’s very tough to bring in contractors from the Permian (Texas) for example, and say take on this terain and take on the snow,” Ashcroft said.
Dominion Energy’s Senior Vice President Don Raikes, also talked about jobs. He runs the company’s Cove Point export facility. Raikes said construction of Cove Point required about 10,000 people. Now, it takes about 100 people to run the operation that converts natural gas to liquid natural gas, know as LNG. Once in the liquid form, gas can be shipped out in tankers off the Maryland coast. Cove Point is one of more than two dozen new LNG export facilities either planned or recently built.
“Cove Point offers real market to a supply rich environment. We are so blessed in the northeast that have the Marcellus and Utica tremendous natural resources what we need and I’m sure producers will agree we need market, we need burner tip,” Raikes said, “Cove Point provides that burner tip market.”
The Raikes had kicked off the conference’s second day that featured a lot more talk about exporting natural gas. Wrapping it up was analyst Bernadette Johnson, Vice President, Market Intelligence, DrillingInfo Inc..
“We’re predicting a lot of production growth coming out of Appalachian,” she said. “The problem is demand. How quickly is demand growing? Demand for power, industrial, residential, commercial, exports to Mexico, LNG on the natural gas side.”
Johnson cited a lagging workforce availability to take on production jobs and lack of pipeline capacity as constraints, but she kept return to one item:
“Where will future natural gas production end up?” she asked, “The short answer is exports are key for everything — for crude, for natural gas and for NGLs and LPGs(Liquid Petroleum Gas).”
Nancy Andrews is a Pittsburgh based journalist and 2018 Alicia Patterson Foundation Fellow. Follow her on Twitter @NancyAndrews