The following leaked document seem to have been prepared by DC Think-tank Washington Analysis Corp for a major bank with investments in the Marcellus Shale. I have not attempted to verify this information.
by Rob Rains [202-756-4431 and Tim VandenBerg [202-756-7714 ] -- Recent public demonstrations before the Federal Energy Regulatory Commission (FERC) underscore the ongoing tension between the Commission and state-level reviews necessary to advance new natural gas pipelines. We believe that recent delays in approvals for pipelines that have largely completed the FERC review process constitutes a new normal of sorts for pipeline permitting, which ultimately means longer review times but should not necessarily lead to projects being denied. Adjustments by the Commission to placate pipeline opponents have and will likely continue to manifest themselves through more opportunities for input from potentially affected landowners, and more detailed analyses of potential effects from the projects that, in sum, add time to reviews.
Therefore, while we maintain that limited state-level review processes remain a key linchpin for advancing pipelines and LNG terminals, we also note that the Administration's overall energy and environmental agenda supports a continued buildout of natural gas infrastructure, albeit perhaps at a slower pace.
Consider the following:
· Congressional Review Rescue For FERC Unlikely. Proposed measures by GOP lawmakers in both the House and Senate to accelerate pipeline and liquefied natural gas (LNG) reviews by time-limiting them are unlikely to become law, and, even in the low-probability event that such measures should advance, we view a veto as likely in light of opposition by FERC staff and the White House. Comprehensive energy legislation that may seek to address this issue has been discussed at length by Senate Energy Committee Chairman Lisa Murkowski (R-AK) but appears out of reach due to a dwindling legislative clock and a looming presidential election.
· Protestors Flooding FERC, Disruptions Effective? Disruptions during monthly Commission meetings by protestors at FERC have become almost as routine as reciting the pledge of allegiance, and although the Commission has reacted with hostility to these overtures, we note that procedural matters reflect a small degree of success for disruptors. Specifically, pipeline and liquefied natural gas reviews are being inundated with comments and demands for more thorough reviews, that, on the margin, are lengthening review times by a matter of months, but not affecting approvals by FERC. On this basis, we expect a similar level of hostility for projects like Kinder Morgan's (KMI-$40) Northeast Energy Direct, PennEast [owned by AGL Resources (GAS-$48), New Jersey Resources (NJR-$28), PSEG (PEG-$41), South Jersey Industries (SJI-$26), Spectra Energy Partners (SEP-$49), and UGI Energy Services (UGI-$36)], and potentially Atlantic Coast [owned by Dominion (D-$68), Duke (DUK-$73), Piedmont (PNY-$37), and AGL Resources (GAS-$48)].
· State Watch. Although state pressure points for pipeline reviews remain limited, it is hard to overstate their importance because states control a handful of permits that must be obtained prior to FERC construction authorization. Illustrative of this point, we have observed three pipeline projects (Williams' (WMB-$60) Leidy Southeast expansion, Constitution Pipeline and Spectra's (SE-$31) Algonquin Incremental Market expansion) that have successfully completed their FERC review only to be held up by outstanding state-level approvals.
· Despite Potential For Delays, Administration's Agenda Positive For Pipelines. FERC still appears inclined to support these projects, and we note the White House's remaining energy agenda reflects a net positive outlook for the space despite some likely headwinds at the state level. Yes, the White House is seeking to modify FERC reviews to include greenhouse gas (GHG) emissions analysis, but FERC had begun to introduce this information in reviews anyway, and we hardly expect this to impact final approvals. Furthermore, the Administration's recently released Quadrennial Energy Review and its forthcoming final regulations for GHGs from existing and future coal plants clearly anoint natural gas as the electric fuel winner.
Finally, we wish to highlight the progress of the following pipeline projects under review now at FERC, including any potential procedural hurdles.
Companies Project Capacity FERC Docket Outlook Dominion (D), Duke (DUK), Piedmont (PNY), and AGL (AGL) Atlantic Coast 1.5 Bcf/d PF15-6 FERC approval 2017 . FERC issued its intent to prepare draft Environmental Impact Statement (EIS) on February 27. Expected to file formal application with FERC this August. Virginia Governor Terry McAuliffe supports the project, but is term limited and we expect this to become a campaign issue in the 2017 gubernatorial election. The project crosses several national forests (the Monongahela and George Washington) and we expect environmentalists to focus on this fact to slow down its review. Energy Transfer Partners (ETP-$54) ET Rover 3.25 Bcf/d CP15-93 FERC Approval Q2 2016 . Formal application was filed with FERC February 20. We expect FERC to issue the draft environmental statement by fall. Recently reconfigured proposed route to bypass pockets of opposition within Michigan and will now partially flow through Vector pipeline [DTE Energy (DTE) and Enbridge (ENB)]. Opposition in Michigan but state officials have not indicated an interest in delaying the project. EQT Midstream Partners (EQM-$84), NextEra (NEP-$43), WGL Midstream (WGL-$56), and Vega Energy (private). Mountain Valley Pipeline 2 Bcf/d PF15-3 FERC approval YE 2016 or Q1 2017 . FERC is currently preparing a draft EIS that we expect to be issued by YE 2015. Concern has centered around the route crossing two national forests, but the National Forest Service recently issued a 1-year special use permit for scoping purposes that will likely need to be renewed before construction can begin. Spectra, Enbridge (ENB-$48), DTE (DTE-$75) NEXUS 1.5 Bcf/d PF15-10 FERC approval 2017 . FERC is now accepting input from citizens and stakeholders to prepare an environmental impact study. Pockets of opposition exist in northern Ohio, but this is unlikely to affect review at this time. Spectra Atlantic Bridge 153 Mcf/d PF15-12 FERC approval 1H 2017. FERC has begun preparing an environmental assessment (EA) for the project. Pockets of opposition due to placement of new compressor stations along the Algonquin system within Massachusetts. Kinder Morgan (KMI) Northeast Energy Direct 2.2 Bcf/d PF14-22 FERC approval
early-2017. Route has been adjusted to use existing rights of way through New Hampshire to avoid some irate Massachusetts landowners. Intends to file formal application with FERC in October.
AGL Resources, NJR Pipeline Company, PSEG Power LLC, South Jersey Industries, Spectra Energy Partners, UGI PennEast 1 Bcf/d PF15-1 FERC approval 2H 2016 . Expected to file formal application with FERC later this summer. FERC issued its intent to prepare draft EIS on January 13. Strong opposition in New Jersey and pockets of Pennsylvania. Spectra Access Northeast 1 Bcf/d N/A FERC approval mid-2017. Will pre-file with FERC later 2015. FERC may opt for a full EIS, not an EA. Compared to Kinder Morgan's Northeast Energy Direct, far less opposition within Massachusetts, but potentially dependent upon rate reform by the Department of Public Utilities that is unlikely near term.
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