Natural Gas Transmission Networks So You Want To

Natural Gas Transmission Networks: So You Want To Build A Pipeline? Raymond James, Infrastructure Office of Energy Projects Federal Energy Regulatory Commission At Wyoming Pipeline Authority Monthly Meeting August 2003 Casper, Wyoming 1

FERC What Does FERC Regulate? • Natural Gas Industry – Interstate transportation rates and services – Interstate gas pipeline construction and oversee related environmental matters • Electric Power Industry – Interstate transmission rates and services – Wholesale energy rates and services – Corporate transactions, mergers, securities issued by public utilities 2 Office of Energy Projects

FERC What Does FERC Regulate? (con’t) • Oil Pipeline Industry – Interstate transportation rates and services of crude oil and petroleum products • Hydroelectric Industry – Licensing of nonfederal hydroelectric projects – Oversee related environmental matters – Inspect nonfederal hydropower projects for safety issues 3 Office of Energy Projects

FERC Regulation of Interstate Construction Natural Gas Policy Act (NGPA) Natural Gas Act (NGA) 4 Office of Energy Projects

FERC NGPA OR NGA? • NGA Certificate Grants a Right of Federal Eminent Domain • NGPA Does Not Confer Any Rights of Federal Eminent Domain; Pipeline May Seek State Eminent Domain 5 Office of Energy Projects

FERC Natural Gas Act NATURAL GAS ACT Section 7(c) Interstate Case Specific Blanket Authority Automatic 6 Section 3 Import/Export Case Specific Prior Notice Office of Energy Projects

FERC Natural Gas Act • Blanket Certificate • Automatic Authorization • Cost of facilities is less than $7. 6 million • Facilities are “eligible” facilities • Prior Notice • Cost is between $7. 5 and $21. 2 million • 45 -day notice period prior to construction • Facilities are “eligible” facilities 7 Office of Energy Projects

FERC Natural Gas Act • Case Specific Section 7(c) Certificate • Conduct a full review of proposal including engineering, rate, accounting, and market analysis • Conduct an environmental review by preparing an Environmental Assessment or an Environmental Impact Statement 8 Office of Energy Projects

FERC Project Evaluation How Does FERC Evaluate All Of These Major Projects? What Is The Criteria Used in This Evaluation? 9 Office of Energy Projects

FERC PL 99 -3 -000 Certificate Policy • Apply Threshold Test – Subsidization Incremental Rates – No Subsidization Rolled-in Treatment – System improvements for existing customers Rolled-in Treatment 10 Office of Energy Projects

FERC PL 99 -3 -000 Certificate Policy • Develop Record – Adverse Impacts on • Existing Customers and Pipelines • Landowners • Communities – Specific Benefits – Need and Market – Condemnation Impact 11 Office of Energy Projects

FERC PL 99 -3 -000 Certificate Policy Needs and Benefits Record Adverse Impacts n n 12 Balance Benefits and Impacts Complete Traditional Environmental Process Office of Energy Projects

FERC Commission Action on Pipeline Projects in the Rockies • Since mid-1999, the Commission has approved 17 projects to increase pipeline capacity to move gas out of the Rockies – 3. 8 Bcf per day of capacity – 1, 788 miles of pipeline – 394, 689 horsepower of compression 13 Office of Energy Projects

FERC Major Pipeline Projects Certificated (MMcf/d) January 2002 to July 2003 Georgia Straits (96) Northwest (162) Northwest (224) Tuscarora (96) qu WBI (80) Northwest (175) ive n. R r Ke 6) (88 El Paso (320) 7. 3 BCF/D Total 2, 225 Miles TETCO (197) Transco (359) 3 1 2 4 Greenbrier (600) East Tennessee (510) Tennessee (320) 1 ) NFS/DTI(150) TETCO(250) CIG (272, 92) North Baja (500) ois ( 70 ANR (220) r Kern River (282) Iro 1. Algonquin (285) 2. Islander East (285) 3. Iroquois (85) 4. Columbia (165, 270) SCG Pipeline (190) Southern (330) 14 Office of Energy Projects

FERC Interstate Pipeline Capacity Out of Wyoming 0. 2 Bcf Note: Williams Gas Pipelines Central Inc. is now Southern Star Central Gas Pipeline. Opal Hub 2. 2 Bcf Cheyenne Hub 3. 1 Bcf 1 Source: RDI Power. Map and various flow diagrams on file at the FERC. 15 15 Office of Energy Projects

FERC Productive Capacity vs. Pipeline Capacity • EIA shows that the Rockies could produce up to 6 Bcf per day through 2003. • Wyoming Energy Commission shows that the Rockies could produce up to almost 8. 0 Bcf per day by 2005 and 11. 0 Bcf per day by 2010. • Both of these totals are greater than the current pipeline capacity of the region. 16 Office of Energy Projects

FERC Major Pipeline Projects Pending (MMcf/d) July 2003 Maritimes (400) CIG (118) El Paso (140) Algonquin (200) Texas Eastern (223) Cheyenne Plains (560) Columbia (135) Cove Point (445) Calypso (832) 4. 0 BCF/D Total 580 Miles 1 Ocean Express (842) 17 Office of Energy Projects

FERC Major Pipeline Projects in Pre-filing (MMcf/d) August 2003 Grasslands Expansion (120) (WBI) Ruby Pipeline (125) Weaver’s Cove Energy LNG (400) Sound Energy Solutions LNG (700) (Mitsubishi) Picacho Pipeli ne (1 Pacific Texas , 000) 1. 2 BCF/D Total Pipeline Capacity 1. 1 BCF/D Deliverability Capacity 1 1, 570 Miles 18 Office of Energy Projects

FERC Planned Projects To Move Gas in the Rockies • Staff is aware of 15 projects to move Rockies’ gas that would have a potential capacity of 7. 3 Bcf per day. • In addition, there is a project in planning that would reverse flow on a Rockies’ pipeline, allowing for more flexibility in moving Rockies’ gas 19 Office of Energy Projects

FERC NEPA Pre-Filing Guidelines • Applicant Must: – File a written request – Explain reasons and timing considerations – Verify other major state and federal agencies support the process 20 – Describe consultations completed to date Office of Energy Projects

FERC NEPA Pre-Filing Guidelines • Applicant Must: – Propose options for third-party contractor – Agree to file complete application – Preliminary route maps (if possible) – Prepare a Public Participation Plan 21 Office of Energy Projects

FERC You Need a Plan for Public Participation • A Plan is required for NEPA Pre-filing and is strongly encouraged in the traditional process • Must be an intentional Component • The Plan may include setting up a Website, a tollfree 800 telephone number, quarterly newsletter, a commitment to place all filings and information in libraries, and holding community-style “Open Houses” 22 Office of Energy Projects

FERC NEPA Pre-Filing Guidelines Staff Activities • FERC will assign a PF docket number • Issue a scoping notice • Examine alternatives • Attend site visits and meetings • Initiate preparation of NEPA document • Review draft resource reports 23 Office of Energy Projects

FERC NEPA Pre-Filing Guidelines Staff Activities • Identify affected parties – Landowners – Agencies – Others • Facilitate: – Issue identification – Study needs – Issue resolution 24 Office of Energy Projects

FERC Timeline Traditional vs. NEPA Pre-filing Announce Open Season File Develop Prepare Resource At Study FERC Reports Corridor Conduct Scoping Announce Open Season Develop Study Corridor Conduct Scoping 0 1 2 3 4 5 6 7 Issue Draft EIS File Prepare Resource At FERC Reports Review Draft Resource Reports & Prepare DEIS Issue Draft EIS Issue Final Order EIS 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (months) 25 Issue Final Order EIS Office of Energy Projects

FERC An Example: Kern River Expansion • • 716 miles of pipeline looping through CA, NV, UT, WY 3 New Compressors $1. 2 Billion 885. 6 MMcf/day of additional capacity – Doubles Kern River’s capacity from 845. 5 MMcf/day to 1. 7 Bcf/day X 26 PROPOSED COMPRESSOR STATION PROPOSED PIPELINE LOOPING Office of Energy Projects

FERC Kern River Expansion Environmental Highlights • Environmentally Acceptable – New pipe parallels initial right-of-way. – Mitigation measures minimize potential impacts. • First Major Project to utilize NEPA Pre-Filing 27 – Order issued less than 1 year from initial filing date - Final EIS completed in June 2002 which was 11 months from filing date. – In comparison, FEIS and certificate for Gulfstream required 16 months from initial filing date; Kern River’s initial greenfield project required 30 months for the FEIS. – Interagency cooperation contributed to meeting Federal and state environmental requirements. Office of Energy Projects

FERC An Example: Greenbrier Project 279 miles of pipeline through WV, VA, and NC – 2 New Compressors Stations – $0. 5 Billion – 600 MMcf/d of new capacity – Order issued 10 months after initial filing – FEIS issued 8 months after initial filing – 28 Office of Energy Projects

FERC Benefits of NEPA Pre-filing • More interactive NEPA process, no shortcuts • Earlier, more direct involvement by FERC, other agencies, landowners • Goal of “no surprises” • Time savings realized only if we are working together with stakeholders • FERC staff is an advocate of the Process, not the Project! 29 Office of Energy Projects

FERC What It All Means to You • Things will be perfect forevermore! 30 • Signatory agencies stand ready to assist • Consistent key agency contacts • Increased need for consistent and timely information from project sponsors • Good stakeholder communication is imperative, must be transparent • Better project design, quicker decision process Office of Energy Projects

FERC Contact Raymond E. James raymond. james@ferc. gov 202 -502 -8588 31 Office of Energy Projects