Week Ending July 5, 2019

Amid Delay at FERC, Dominion Withdraws Sweden Valley Project Application

This Article Appears as Published in Foster Report No 3256

With no progress in sight on receiving an order from FERC, Dominion Energy Transmission Inc. on June 28 asked to withdraw its application for the Sweden Valley expansion project that has been pending at FERC for 18 months.

Dominion is not pleased, and a spokeswoman said there is no reasonable justification for the delay in approving the relatively small project. The estimated $48 million project faced no protests, received a favorable environmental assessment (EA) in August 2018, would have been located within or adjacent to existing facilities, and Dominion had received all needed right-of-way access through agreements with landowners, said Samantha Norris of Dominion.

Dominion inquired about the status of the FERC review in a February 22 letter to FERC Chairman Neil Chatterjee and did not receive any response. “We cannot speak for FERC on the reason for their non-response,” Norris said in an email to The Foster Report.

Unprecedented delays in the approval process for natural gas infrastructure harms the U.S. economy, consumers, and the environment, with customers relying on higher-carbon fuels, she said. Dominion expects to move forward with similar projects in the future and will continue to offer transportation service to consumers.

The lone customer of the Sweden Valley project is independent producer JKLM Energy, with the pipeline expansion planned to move natural gas to Midwest markets. Pointing to months of inaction at FERC, Norris said Dominion can no longer meet the planned in-service date and JKLM opted to terminate the requested transportation service.

Others, who asked to not be identified, referred to the voting dynamics at FERC and apparent opposition from Commissioner Cheryl LaFleur as a factor in not moving an order on the project. The application (CP18-45) was on the meeting agenda for FERC’s December 2018 meeting, but was struck and has been pending ever since. That same agenda had an LNG project on it that was not voted on at the meeting, with an agreement among commissioners reached in February to support an order for the Calcasieu Pass LNG project.

LaFleur concurred with the LNG order after a calculation of greenhouse gas (GHG) emissions, and she has done the same with other orders on pipeline or LNG projects since then, with Commissioner Richard Glick dissenting based on a lack of a thorough analysis of GHG emissions.

When a notational order did not come on the Sweden Valley project and other meetings passed without action, Dominion asked what is holding up a decision.

Commissioner Bernard McNamee has recused himself from some cases in which his prior legal work included utility or pipeline owners, including Dominion. Whether that played a role in the lack of an order for the Sweden Valley project is not known, though sources noted that if LaFleur supported it, there could have been a 2-1 vote in favor of it, if Glick dissented.

LaFleur and Chatterjee have had a bit of a strained relationship following the Calcasieu Pass LNG project approval, if jabs on Twitter are to be any gauge of their interactions.

One source who asked not to be named blamed politics and animosity among the commissioners as the hold-up for Dominion’s Sweden Valley project, along with the possible recusal of McNamee. In terms of environmental impact or opposition, “this is about as benign a project as the Commission will ever see,” making the lack of action a head-scratcher, said another source who previously worked at FERC.

Chatterjee addressed Dominion’s withdrawal of the application in a statement on Twitter June 28. “I am deeply disappointed that the unique circumstances of this case prevented the Commission from approving the project as quickly as the applicant had hoped, and that, as a result they are withdrawing the application. While I cannot discuss internal deliberations, I would note that this was a relatively small project at only around five miles of pipeline. It would have had very limited environmental impacts, but importantly, it would have brought much-needed gas to an underserved part of the country.”

A spokesman for FERC declined to answer questions on Chatterjee’s statement, such as what the unique circumstances are and if there is concern that infrastructure reviews will be held up without a fifth commissioner at FERC.

Chatterjee downplayed such talk at the press briefing after the June 20 meeting, when there were no certificate items or natural gas cases on the meeting’s agenda. He said he is frustrated when people talk about politicization or gridlock at the Commission.

There are at least eight gas pipeline projects that have been pending at FERC for more than one year, and the owners of several have asked FERC to act on them promptly to enable construction to take place to meet planned in-service dates.[1]

All may not be lost for the Sweden Valley project, however. Dominion’s June 28 letter of withdrawal asked FERC to end the case without prejudice, meaning an application could be resubmitted. The EA from FERC staff found that approval of the project would not constitute a major action significantly affecting the quality of the human environment.

The EA data can be maintained, assuming not too much time passes before a new application is filed or some environmental conditions haven’t changed from the August 2018 EA, sources noted. A supplemented EA may be needed if Dominion files a new application, but with much of the legwork already completed, they said.

Dominion did not indicate if it planned to file a new application later this year. Sources speculated that if a Republican commissioner is added late in 2019, a revised application for the project could gain approval using an updated EA.

The Sweden Valley project would expand capacity on Dominion’s pipeline system in Pennsylvania and Ohio by 120,000 Dth/d for the single customer, JKLM Energy, for gas to reach Midwest markets. Dominion was looking to add metering and regulation (M&R) facilities, a short pipeline segment in Ohio, pipeline looping in Pennsylvania, a new connection with a pipeline jointly owned by Dominion and National Fuel Gas Supply Corp., modifications to three existing compressor units at Dominion’s existing Newark Compressor Station in Licking County, Ohio, with new discharge piping, regulation equipment at the South Bend Compressor Station, and associated facilities.

The project was designed to move gas from northern Pennsylvania to Ohio for delivery to Tennessee Gas Pipeline Co. LLC. It did not involve additional compression. The re-wheeling of the three compressor units at the Newark station would not change the station’s horsepower or emissions, but the modifications would have allowed them to operate more efficiently at a different range of suction and discharge pressures.

JKLM Energy declined to comment for this story.

By Tom Tiernan ttiernan@fosterreport.com

[1]   For past stories see, With Projects Pending, Chatterjee Defends Agenda With No Gas/Certificate Items, FR No. 3254, pp. 2-4, and Hello? Sweden Valley Project Still Pending, Dominion Reminds FERC, FR No. 3238, pp. 3-5.

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