Natural Gas Transmission Networks:

So You Want To Build A Pipeline?

Raymond James, Infrastructure

Office of Energy ProjectsFederal Energy Regulatory

CommissionAt

Wyoming Pipeline Authority Monthly Meeting

August 2003Casper, Wyoming

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FERC

Office of Energy Projects

What Does FERCRegulate?

• Natural Gas Industry– Interstate transportation rates and

services– Interstate gas pipeline construction and

oversee related environmental matters

• Electric Power Industry – Interstate transmission rates and

services– Wholesale energy rates and services– Corporate transactions, mergers,

securities issued by public utilities

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FERC

Office of Energy Projects

What Does FERCRegulate? (con’t)

• Oil Pipeline Industry– Interstate transportation rates and

services of crude oil and petroleum products

• Hydroelectric Industry– Licensing of nonfederal hydroelectric

projects– Oversee related environmental

matters– Inspect nonfederal hydropower

projects for safety issues

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FERC

Office of Energy Projects

Natural Gas Act (NGA)

Natural Gas Policy Act (NGPA)

Regulation of Interstate Construction

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FERC

Office of Energy Projects

NGPA OR NGA?

• NGA Certificate Grants a Right of Federal Eminent Domain

• NGPA Does Not Confer Any Rights of Federal Eminent Domain; Pipeline May Seek State Eminent Domain

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FERC

Office of Energy Projects

Natural Gas Act

NATURAL GAS ACT

Section 3 Import/Expor

t

CaseSpecific

CaseSpecific

BlanketAuthority

Automatic PriorNotice

Section 7(c)Interstate

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FERC

Office of Energy Projects

• Automatic Authorization• Cost of facilities is less than $7.6 million

• Facilities are “eligible” facilities

• Prior Notice• Cost is between $7.5 and $21.2 million

• 45-day notice period prior to construction

• Facilities are “eligible” facilities

Natural Gas Act

• Blanket Certificate

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FERC

Office of Energy Projects

• Conduct a full review of proposal including engineering, rate, accounting, and market analysis

• Conduct an environmental review by preparing an Environmental Assessment or an Environmental Impact Statement

Natural Gas Act

• Case Specific Section 7(c) Certificate

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FERC

Office of Energy Projects

How Does FERC Evaluate All Of These Major Projects?

What Is The Criteria Used inThis Evaluation?

Project Evaluation

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FERC

Office of Energy Projects

PL99-3-000Certificate Policy

• Apply Threshold Test

– Subsidization Incremental Rates

– No Subsidization Rolled-in Treatment

– System improvements for existing customers Rolled-in Treatment

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FERC

Office of Energy Projects

PL99-3-000Certificate Policy

• Develop Record– Adverse Impacts on

• Existing Customers and Pipelines• Landowners• Communities

– Specific Benefits– Need and Market– Condemnation Impact

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FERC

Office of Energy Projects

Adverse Impacts

NeedsandBenefitsRecord

n Balance Benefits and Impactsn Complete Traditional Environmental Process

PL99-3-000Certificate Policy

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FERC

Office of Energy Projects

Commission Action on Pipeline Projects in the

Rockies

• Since mid-1999, the Commission has approved 17 projects to increase pipeline capacity to move gas out of the Rockies– 3.8 Bcf per day of capacity– 1,788 miles of pipeline– 394,689 horsepower of

compression

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FERC

Office of Energy Projects

Major Pipeline Projects Certificated (MMcf/d)

January 2002 to July 2003

7.3 BCF/D Total2,225 Miles

Transco(359) Southern (330)

Kern River

(886)

CIG(272,92)

North Baja (500)

Tuscarora(96)

Northwest(162)

Kern River (282)

Iroquois(70)

TETCO(250)

Northwest(224)

NFS/DTI(150)

GeorgiaStraits (96)

1. Algonquin (285) 2. Islander East (285) 3. Iroquois (85) 4. Columbia (165,270)

SCG Pipeline (190)

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3

4

Northwest(175)

East Tennessee (510)

Tennessee (320)

TETCO (197)

Greenbrier (600)

El Paso (320)

WBI(80)

ANR(220)

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FERC

Office of Energy Projects

OpalHub

CheyenneHub

0.2 Bcf

2.2 Bcf

3.1 Bcf

Source: RDI PowerMap and various flow diagrams on file at the FERC.

Note: Williams Gas Pipelines Central Inc. is now Southern Star Central Gas Pipeline.

Interstate Pipeline Capacity Out of Wyoming

FERC

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FERC

Office of Energy Projects

Productive Capacity vs.Pipeline Capacity

• EIA shows that the Rockies could produce up to 6 Bcf per day through 2003.

• Wyoming Energy Commission shows that the Rockies could produce up to almost 8.0 Bcf per day by 2005 and 11.0 Bcf per day by 2010.

• Both of these totals are greater than the current pipeline capacity of the region.

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FERC

Office of Energy Projects

Major Pipeline ProjectsPending (MMcf/d)

July 2003

4.0 BCF/D Total580 Miles

Calypso(832)

Maritimes (400)

Ocean Express(842)

Columbia(135)

Texas Eastern(223)

Algonquin(200)

El Paso (140) Cove Point(445)Cheyenne Plains

(560)

CIG(118)

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FERC

Office of Energy Projects

Major Pipeline Projectsin Pre-filing (MMcf/d)

August 2003

1.2 BCF/D Total Pipeline Capacity

1.1 BCF/D Deliverability Capacity

1,570 Miles

Picacho Pipeline (1,000)Pacific Texas

Grasslands Expansion (120)(WBI) Weaver’s Cove Energy LNG

(400)

Sound Energy Solutions LNG (700) (Mitsubishi)

Ruby Pipeline (125)

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FERC

Office of Energy Projects

Planned Projects To MoveGas in the Rockies

• Staff is aware of 15 projects to move Rockies’ gas that would have a potential capacity of 7.3 Bcf per day.

• In addition, there is a project in planning that would reverse flow on a Rockies’ pipeline, allowing for more flexibility in moving Rockies’ gas

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FERC

Office of Energy Projects

NEPA Pre-Filing Guidelines

• Applicant Must:

– File a written request

– Explain reasons and timing considerations

– Verify other major state and federal agencies support the process

– Describe consultations completed to date

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FERC

Office of Energy Projects

• Applicant Must:

– Propose options for third-party

contractor

– Agree to file complete application

– Preliminary route maps (if possible)

– Prepare a Public Participation Plan

NEPA Pre-Filing Guidelines

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FERC

Office of Energy Projects

You Need a Planfor Public Participation

• A Plan is required for NEPA Pre-filing and is

strongly encouraged in the traditional process

• Must be an intentional Component

• The Plan may include setting up a Website, a

toll-free 800 telephone number, quarterly

newsletter, a commitment to place all filings

and information in libraries, and holding

community-style “Open Houses”

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FERC

Office of Energy Projects

• FERC will assign a PF docket number

• Issue a scoping notice

• Examine alternatives

• Attend site visits and meetings

• Initiate preparation of NEPA document

• Review draft resource reports

NEPA Pre-Filing GuidelinesStaff Activities

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FERC

Office of Energy Projects

• Identify affected parties– Landowners– Agencies– Others

• Facilitate:– Issue identification– Study needs– Issue resolution

NEPA Pre-Filing Guidelines Staff

Activities

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FERC

Office of Energy Projects

Timeline Traditional vs. NEPA Pre-

filing

AnnounceOpen

Season

AnnounceOpen

Season

DevelopStudy

Corridor

DevelopStudy

Corridor

Conduct

Scoping

Conduct

Scoping

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Review DraftResource Reports& Prepare DEIS

IssueDraftEIS

IssueDraftEIS

FileAt

FERC

IssueOrder

IssueOrder

FileAt

FERC

Prepare ResourceReports

Prepare ResourceReports

IssueFinalEIS

IssueFinalEIS

(months)

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FERC

Office of Energy Projects

PROPOSED PIPELINE LOOPING

An Example:Kern River Expansion

XPROPOSED COMPRESSOR STATION

• 716 miles of pipeline looping through CA, NV, UT, WY

• 3 New Compressors• $1.2 Billion • 885.6 MMcf/day of additional

capacity– Doubles Kern River’s

capacity from 845.5 MMcf/day to 1.7 Bcf/day

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FERC

Office of Energy Projects

Kern River Expansion Environmental Highlights

• Environmentally Acceptable– New pipe parallels initial right-of-way.– Mitigation measures minimize potential impacts.

• First Major Project to utilize NEPA Pre-Filing– Order issued less than 1 year from initial filing

date - Final EIS completed in June 2002 which was 11 months from filing date.

– In comparison, FEIS and certificate for Gulfstream required 16 months from initial filing date; Kern River’s initial greenfield project required 30 months for the FEIS.

– Interagency cooperation contributed to meeting Federal and state environmental requirements.

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FERC

Office of Energy Projects

An Example:Greenbrier Project

– 279 miles of pipeline through WV, VA, and NC– 2 New Compressors Stations– $0.5 Billion – 600 MMcf/d of new capacity– Order issued 10 months after initial filing– FEIS issued 8 months after initial filing

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FERC

Office of Energy Projects

Benefits of NEPA Pre-filing

• More interactive NEPA process, no shortcuts

• Earlier, more direct involvement by FERC, other agencies, landowners

• Goal of “no surprises”

• Time savings realized only if we are working together with stakeholders

• FERC staff is an advocate of the Process, not the Project!

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FERC

Office of Energy Projects

What It All Means to You

• Things will be perfect forevermore!• Signatory agencies stand ready to assist• Consistent key agency contacts• Increased need for consistent and timely

information from project sponsors• Good stakeholder communication is

imperative, must be transparent• Better project design, quicker decision

process

FERC

Office of Energy Projects

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Contact

Raymond E. James

raymond.james@ferc.gov

202-502-8588