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POLITICS: PennAve

Pipelines get spotlight as natural gas prices rise

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Energy Department,PennAve,Energy and Environment,Zack Colman,Natural Gas,Ernest Moniz,Pipelines

Lawmakers and the Obama administration are turning their focus to energy infrastructure constraints in the wake of a cold snap that has caused natural gas futures prices to rise to levels last seen in 2008.

Natural gas futures closed at $6.149 per thousand cubic feet last week, up from $3.279 at the same time the previous year, according to the U.S. Energy Information Administration. The spike has been most acute in the Northeast, where more natural gas Pipelines are needed to meet demand -- though it's not clear whether those increases reflect the abnormal winter conditions or a trend.

Energy Secretary Ernest Moniz alluded to the issue in a speech Feb. 19 at the National Press Club in Washington. His department is spearheading a comprehensive interagency review of the nation's energy infrastructure, known as the Quadrennial Energy Review, which will be used to inform potential changes in policy.

"Infrastructure, clearly, ultimately is in the private sector's hands. But we have tremendous public interest and public needs for this," he said. "So, for example, we will be carrying out at the department as part of this review a whole set of fuel resiliency studies that are regional in nature. The fuel challenges that we have seen are very different in different parts of the country."

Rep. Ed Whitfield, chairman of the House Energy and Commerce Subcommittee on Energy and Power, said that private interest exists, but that regulatory obstacles and other legal issues relating to eminent domain make new investment "complicated."

"The capital seems to be there," the Kentucky Republican told the Washington Examiner in a recent interview. "But I think it's limited in what we can do because the process has really worked pretty well historically."

The flurry of newfound natural gas resulting from advances in hydraulic fracturing, or fracking, technology has allowed U.S. natural gas prices to plummet. It also has led to pipeline investments near fracking sites -- but the Northeast isn't one of those places.

Rep. Henry Waxman, D-Calif., the top Democrat on the House Energy and Commerce Committee, said on the House floor in November that securing investment for new pipelines is more of a market demand issue.

"The problem is that the pipeline companies aren't even submitting the applications because they haven't figured out who will pay for these new pipelines. The pipeline companies haven't been satisfied that there is a sufficient year-round demand to justify and finance these pipelines," he said.

National Grid, an electric utility that serves Massachusetts, New Hampshire, New York and Rhode Island, hopes some sort of action comes sooner rather than later. The combination of crunched supply, higher winter natural gas prices and increased demand for fuel among large industrial and residential customers jolted prices this winter, said Fred Kuebler, a National Grid spokesman.

"In the Northeast, those demands coupled with the fact that we're toward the end of the supply chain and we have limited pipeline capacity in the Northeast — all those things have contributed to higher natural gas prices," he said.

Those concerns will get their airing at a pair of House Energy and Commerce Committee hearings on electricity access in the next two weeks.

Rep. Mike Pompeo, R-Kan., a member of the committee, said he's trying to get Senate traction for his House-passed bill that would cap pipeline permitting decisions by the Federal Energy Regulatory Commission at one year. He held out hope that new Senate Energy and Natural Resources Committee Chairwoman Mary Landrieu, D-La., a supporter of enhancing oil and gas drilling, might be willing to move a companion bill.

The Northeast price shocks have helped reinvigorate debate, Pompeo said. He said he has had several talks with Democrats from the region about supporting the effort, and that he believes those lawmakers are coming along.

"It's going to take a broad coalition of folks to get this done. And it's going to take a little while," he said.

The bill passed with 26 Democrats joining 226 Republicans in support. Many of the skeptical Democrats from the Northeast who voted against the bill, Pompeo said, had concerns about controlling leaks of methane, a short-lived, but potent heat-trapping emission that contributes to climate change.

Still, the bill got the backing of several who have made climate change a legislative priority, such as California Rep. Scott Peters and Arizona Rep. Ron Barber, both members of the all-Democratic House Sustainable Energy and Environment Coalition.

But Democrats had other issues with the bill. They said it would not alleviate some of the roadblocks for installing new pipelines and that imposing deadlines on FERC would circumvent necessary engineering and environmental reviews.

The White House said much of the same, as the Office of Management and Budget said it "strongly" opposed the bill.

So far, the administration appears poised to wait on the Quadrennial Energy Review, which is due by Jan. 31, 2015, before making any significant changes to regulations.

"What that will lead to in terms of policy — will it require some government-sponsored installations? Will it require some suggestions of legislation? Will it require our working with the states in terms of their regulatory structures to encourage that we are moving coherently toward the kind of energy infrastructure that will move electricity, that will move fuels, to people when they need them?" Moniz said in his speech.

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