The Future Development of Gas and Oil Pipeline Projects

Though ultimately the Keystone XL Pipeline project did not move forward, the number of transmission pipeline infrastructure projects nationwide is on the rise. In fact, planned pipeline construction is up 64% this year over 2015 according to a February 2016 report by Oil & Gas Journal. While not a “standard” pipeline project, the main takeaway from the Keystone XL Pipeline rejection is not a lack of interest in transmission pipeline projects but instead that the evaluation process to get to a final decision can take far too long and is unduly exposed to legal assault. Clearly regulatory analyses, like the Federal Energy Regulatory Commission’s (FERC) interstate pipeline review processes, need to be streamlined and improved.

Differences between interstate pipeline projects, those which cross multiple state lines, and intrastate pipeline projects, which are located entirely within a single state, play a large role in muddying the pipeline approval process. While FERC reviews and approves siting for interstate pipeline projects, the approval processes for intrastate pipeline projects vary significantly from state to state. Some states, including Pennsylvania, do not even have an established review and siting process. Additionally, proposed pipeline projects are subject to the input, and often vocal opposition, from local stakeholders and activists.

It is incumbent upon these three stakeholders – pipeline developers, regulatory agencies and local interests — to work together to establish an improved transmission pipeline review process in order to deliver timely, evidenced-based decisions.

A New Approach: The Federal-State Partnership Process

Before establishing any new review processes, the gaps in existing siting processes must be addressed. States that have no siting review and approval process for intrastate transmission pipeline projects must establish them. A new review system, a “Federal-State Partnership Process,” would then allow each state to review the intrastate “legs” of an interstate pipeline project for line siting issues concurrent with state and local permit approvals. Meanwhile, FERC would review the project’s viability in light of federal environmental standards and interstate considerations.

A clear division of responsibility between FERC and state authorities would ensure each jurisdiction does what it does best. Specific benefits to this approach include:

  • A Clear Timeline— Both the public and pipeline developers would benefit from a clear understanding of the expected execution timetable for each transmission pipeline project.
  • Local Input, Local Buy-in— Involving states and local governments in the siting process will aid in securing necessary buy-in upfront, allowing transmission pipeline projects to move forward, and provide a more appropriate forum for debating the specifics of a project.
  • A Comprehensive View of Infrastructure Development— With a consistent development process, the energy industry can more effectively build out other components of the country’s energy infrastructure, including refineries and direct delivery of resources to utilities.

The last decade has seen dramatic changes in the U.S. energy landscape, and there is growing optimism in natural gas’s potential to help solve many of the country’s pressing energy concerns. It is incumbent upon all stakeholders to establish comprehensive processes to make that optimistic vision for the future of natural gas a reality. Recent legislation, like the “Fixing America’s Surface Transportation Act” (FAST Act), are a step in the right direction; the Federal-State Partnership Process is the critical next step.

Alan Seltzer is a Shareholder at Buchanan Ingersoll & Rooney in the firm’s Harrisburg office and Co-Chair of the firm’s Power Generation, Renewable & Utility Practice Group.  Alan focuses his practice on domestic and international electric and gas matters with a concentration on transactions and litigation/appellate matters before various state and federal courts and administrative agencies.  

John Povilaitis is a Shareholder at Buchanan Ingersoll & Rooney in the firm’s Harrisburg office. John focuses his practice on administrative law matters with special emphasis on energy, communications, water/wastewater and transportation public utility law.  

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