FERC approves New York/New Jersey Pipeline

July 2012, Vol. 67, No. 7

The Federal Energy Regulatory Commission (FERC) approved a Spectra pipeline project which will bring new natural gas supplies to New York City. Spectra subsidiaries Texas Eastern and Algonquin will combine to build the new capacity, which will involve about 20 miles of pipeline, among other construction, such as compressor stations, with the total project weighing in at about $850 million. Texas Eastern and Algonquin hope to have the gas flowing into Manhattan by November 2013.

Currently, only Transcontinental Gas Pipe Line Company delivers gas to New York City. The driver behind the project has been ConEdison. The company has argued that interstate pipeline competition will lower prices for city users and will provide additional natural gas supplies which will be needed, theoretically, as residential and commercial users switch to natural gas as a result of a New York City 2011 dictate phasing out Nos. 4 and 6 fuel oil.

Texas Eastern has already signed binding precedent agreements for the full 800,000 Dth/d firm transportation capacity of the proposed NJ-NY Project with Chesapeake Energy Marketing Inc. for 425,250 Dth/d, Statoil Natural Gas for 204,750 Dth/d, and ConEd for 170,000 Dth/d. Chevron opposed the project because the new construction will cross its 44-acre property in Bayonne, NJ. But the FERC said its final environmental impact statement "adequately takes into account the potential for construction-related contamination and measures to ensure the integrity of a slurry wall proximate to the approved route."

More broadly, the FERC attached a number of mitigation requirements to its approval. For example, Texas Eastern has also agreed to use a thicker-walled pipe than is required by the Department of Transportation (DOT), and in many locations will bury the pipe much deeper than required by the DOT regulations.

Gas credits for electric utilities at issue in new Senate bill

Introduction of a new clean energy standard bill in the Senate has set off a debate on how to treat natural gas. The Clean Energy Standard Act (S. 2146) introduced in May by 11 Democrats, including Sen. Jeff Bingaman (D-NM), retiring chairman of the Senate Energy Committee, would require that, beginning in 2015, the nation’s utilities sell a percentage of their electricity from clean energy sources - including renewable energy, nuclear power, biomass, coal with carbon capture and sequestration and natural gas.

The legislation gives "credit values" to various forms of non-coal inputs. Zero-carbon sources such as new nuclear and renewables would get a full credit per kilowatt-hour produced.