MLP Gas Pipeline Projects Near Approval

The FERC has a quorum. Now what?

We’ve had our eye on the Federal Energy Regulatory Commission (FERC) since the beginning of the year. To make a long story short, there have been several “comings and goings” around the FERC over the past year, but now the FERC has returned to a quorum and can finally start approving projects again.

On August 4th, the senate confirmed Neil Chatterjee and Robert Powelson to the FERC. Chatterjee was sworn in on August 8th and will temporarily act as chairman. Powelson was sworn in August 10th and returned the group to a quorum after six months.

Here’s a sampling of gas pipelines that are in the queue for approval:

  1. Atlantic Coast Pipeline – Will be constructed and operated by Dominion Energy Inc (D). This interstate natural gas transmission pipeline will serve Virginia and North Carolina and be 600 miles long.
  2. Mountaineer Xpress Pipeline – A TransCanada (TRP) project planned to be built in West Virginia spanning 165 miles. Its capacity will be 2.7 Bcf/d.
  3. Mountain Valley Pipeline – The 300-mile-long pipeline operated by EQT Midstream Partners (EQM) will carry around 2 Bcf/d of Marcellus and Utica shale gas to the Mid and South Atlantic regions of the US.
  4. NEXUS Pipeline –This pipeline running from Ohio to Michigan will be built by Spectra Energy Partners (SEP). The 255-mile gas pipeline has a capacity of 1.5 Bcf/d and is set to carry Appalachian shale gas to consumers.
  5. PennEast Pipeline – Managed by several member companies but notably, SEP is one of them. This gas pipeline will be about 120-miles long and run from Pennsylvania to New Jersey.
  6. WB Xpress Pipeline – Another TRP project that will deliver natural gas in Virginia and West Virginia. The project will increase capacity in the area by about 1.3 Bcf/d.

In a podcast posted August 14th, Chatterjee was interviewed regarding the future of the FERC. He said the commissioners’ first priority is to get started on the backlog. Chatterjee is well aware of the anxiety that many have felt over the inability to get new projects approved. He assured podcast listeners that Cheryl LaFleur (former acting chairman and the only remaining commissioner before last week’s additions) has carefully prepared for the return of a quorum and believes the team will be able to address the backlog in short order, although no specific timeline was provided.

Notably, two other candidates were recently nominated to the FERC and are awaiting confirmation from the Senate: Richard Glick (D) and Kevin McIntyre (R). Glick currently serves as general counsel for the Democrats on the Senate Energy and Natural Resources Committee. McIntyre is an attorney leading the energy practice at his law firm in Cleveland and is expected to be named the permanent chairman of the FERC.

The majority of the pipelines waiting for approval are in New England and the Mid-Atlantic. While their completion and operation will be remunerative for their owners, operators, and associated investors, the completion will also likely lower differentials in the area, keeping natural gas prices low. That said, a FERC-approved project does not necessarily mean the project will come to fruition; operators will still face other governmental red tape, particularly in the Northeast region. The Access Northeast pipeline, first proposed by SEP, now an Enbridge Inc (ENB) project due to the ENB/Spectra Energy (SE) merger, recently withdrew its pipeline application since the Massachusetts court, as of August 2016, has prohibited utilities (the owners of the power plant generating electricity in the region and future customers of the pipeline) from raising rates in order to help support the pipeline. Regulatory approval, once a given with infrastructure companies, are now no longer taken for granted, thereby making existing infrastructure even more valuable.

 

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