Week Ending December 13, 2019

DOE’s Brouillette, Industry Welcome NPC Studies on Infrastructure and CCUS

This Article Appears as Published in Foster Report No 3278
DOE’s Brouillette, Industry Welcome NPC Studies on Infrastructure and CCUS

Brouillette said both studies are of great interest to him given the historic surge in U.S. energy production, and if natural gas pipelines are not built the consequences include using foreign supplies or more environmentally harmful resources like fuel oil. He referred to overcoming “onerous rules and regulations,” through carrying out the One Federal Decision executive order from President Donald Trump, but also “bad actors” who try to halt pipeline development.New Secretary of Energy Dan Brouillette praised the work of the National Petroleum Council (NPC) December 12 as the group approved two reports to enhance the U.S. energy landscape. One report focuses on overcoming challenges to building infrastructure and the other lays out steps to advance carbon capture, utilization and storage (CCUS) technologies.

“We must counter those who would do anything to stop the use of many important sources of energy. From outright banning of energy sources to filibustering and blocking the construction of necessary infrastructure, certain bad actors are trying to slow down” infrastructure development and decrease the benefits for consumers, Brouillette said.

Brouillette’s predecessor at DOE, Rick Perry, ordered the two studies from the NPC. NPC reports to the head of DOE and the studies will be used by the agency and others as a resource and guide on infrastructure permitting and CCUS issues, officials said. Bottlenecks on pipeline infrastructure have produced commodity price disparities and other market disruptions, officials noted during the meeting.

CCUS technologies are costly but with the right incentives and technology gains through research, development and demonstration projects, the U.S. could see significant investment to build out CCUS infrastructure, said John Minge, former chairman and president of BP America Inc. Minge chaired the NPC committee that put the CCUS study together and said it could be used regardless of who sits in the White House or who controls the majority in Congress.

Speaking to reporters after his speech to the NPC, Brouillette referred to actions by New York state that hinder pipeline approvals and affect energy use in New England. He deemed it a bit hypocritical for New York officials to suggest that climate change concerns are the reason to reject pipelines, when the result of that action is people using more fuel oil in New England.

While DOE may have a limited role in improving the situation, the Energy Information Administration can inform regulators and lawmakers of the economic impacts of not building the pipeline infrastructure needed to meet consumers’ needs, Brouillette told reporters.

The NPC report on infrastructure challenges includes steps to improve federal and state coordination, action by Congress to clarify for agencies the assessment of greenhouse gas emissions under the National Environmental Policy Act (NEPA), and the use of a nonprofit, nonpartisan group to develop a model structure for state permitting and coordination on infrastructure applications.

“Having 50 different permitting pathways is difficult to navigate, to say the least,” said Amy Shank of Williams Companies, who chaired the NPC subcommittee that put the report together. She said entities such as the Interstate Oil and Gas Compact Commission or the Environmental Council of the States could help develop a model structure for permitting and enhanced coordination.

The study includes recommendations for the U.S. Army Corps of Engineers to improve implementation of the Fixing America’s Surface Transportation Act (FAST), with Section 41 involving coordination among government agencies for certain energy projects. Congress should reauthorize FAST-41 and improve it to cover all energy infrastructure projects and provide incentives for states to enhance coordination, said Shank, director of asset integrity & pipeline safety at Williams.

The report includes steps to improve engagement with stakeholders, with earlier connections and best practices for addressing concerns when there are disagreements, she said. That section of the report touches on the dual challenge of providing affordable energy while addressing climate change and greenhouse gas (GHG) emissions. The industry has to recognize that the voices about climate change are becoming stronger and have been successful in delaying or stopping some pipeline projects.

That trend is expected to continue and increase in intensity if litigation is seen as the only way to drive the policy debate, Shank said. “We believe that fighting individual projects in the courts is an ineffective way to get the change that’s needed,” so oil and gas companies need to strive for outstanding environmental records as a minimum step. The report includes efforts to make progress in that area.

It also calls for Congress to clarify that GHG emission assessments under NEPA should be confined to emissions that are proximately caused and reasonably foreseeable. Congress should also enact a comprehensive national policy to reduce GHG emissions and seek to harmonize state and federal efforts, Shank said.

The NPC member companies will advocate for some of the recommendations to be carried out, but it is up to the government entities and others to see that the report is put to good use, Shank and others said.

The compilation of data and analysis among the 300 members that worked on the report was a massive undertaking, said Alan Armstrong, President and CEO of Williams, who chaired the NPC committee on oil and natural gas transportation infrastructure. The task groups that focused on different topics wrestled with a lot of difficult issues, such as permitting, siting, and the social license to operate energy infrastructure.

The report includes a look at supply and demand issues, with a conclusion that America’s need for oil will remain significant out to at least 2040, Shank said. It also notes that as the U.S. has become the largest producer of oil and natural gas in the world, it has done so as carbon dioxide emissions have decreased, mainly due to gas-fired power plants replacing coal-fired generation.

That point was mentioned by Brouillette, who referred to the U.S. being the top oil and gas producer and the second-largest producer of wind and solar energy. The U.S. also is leading the world in reducing energy related GHG emissions, with improvements beyond countries that signed the Paris climate accord, he said.

With the energy renaissance and technology innovations that have taken place, the U.S. has proven beyond any doubt that it can grow the economy, produce energy abundantly and improve the environment at the same time, Brouillette said.

The CCUS study from the NPC will help government agencies and the energy sector drive emissions even lower, he said.

The report was praised by the American Petroleum Institute, Natural Gas Supply Association, and the Interstate Natural Gas Association of America, among other groups.

By Tom Tiernan ttiernan@fosterreport.com

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