Natural gas is being shipped by truck out of the Marcellus basin in Pennsylvania due to a shortage of natural gas pipelines. While it is cheaper and faster to move natural gas by pipeline rather than by truck, environmentalists are fighting the construction of new pipelines. The lack of pipelines is impacting the price of natural gas, which is selling at about a 25 percent discount in the Marcellus basin compared to the Henry Hub in Louisiana due to the inaccessibility of getting the natural gas to markets. To enable the natural gas to reach demand centers in New England and New York, the Trump administration just approved shipping natural gas by rail in chilled, liquefied form. As with truck shipment, the cost is greater by rail than by pipeline. Unfortunately, some natural gas producers have had to flare their gas (burn the gas into the atmosphere) due to the lack of shipping opportunities. Stopping pipelines and using truck and rail instead means increased inefficiencies and greater impact on the environment.
Recent Pipeline Events
The Supreme Court recently ruled in favor of the 604-mile Atlantic Coast Pipeline, which would transport 1.5 billion cubic feet per day of natural gas from West Virginia to North Carolina. Initial construction of the Atlantic Coast Pipeline ran into issues over a year ago when lawsuits claimed the Forest Service lacked the authority to grant it a right-of-way permit to cross the Appalachian Trail. In a 7-to-2 ruling, the Supreme Court dismissed the lawsuits, indicating that the Forest Service’s permit was valid because the pipeline crossed several hundred feet beneath the Appalachian Trail—not over or near its surface—and therefore remained within the remit of the Forest Service.
Another pipeline issue that could affect the Atlantic Coast Pipeline was raised recently when a federal judge in Montana ruled that a key permit on which companies rely on to build pipelines, called Nationwide Permit (NWP) 12, is not valid because the U.S. Army Corps of Engineers did not consult properly with the Fish and Wildlife Service when it reissued that permit for an oil pipeline in 2017. That ruling may impact the Atlantic Coast Pipeline because the pipeline still needs approval from the Fish and Wildlife Service. A group of 18 states has asked the Supreme Court to consider overturning the judge, arguing among other things “permitting processing estimates that found individual permits took 788 days and $271,596 to complete, compared with the average NWP 12 applicant who spent 313 days and $28,915.”
Another pipeline—the $5.4 billion, 303-mile Mountain Valley Pipeline—is over 92 percent complete, but the pipeline still needs to obtain permits to cross four miles of the Jefferson National Forest and Appalachian Trail, as well as some water bodies. The decision invalidating Nationwide Permit 12 is among the issues that could delay it. Once finished, the 42-inch pipeline would move about two billion cubic feet of natural gas per day from northwestern West Virginia to southern Virginia. If all goes well, the Mountain Valley pipeline is expected to start operating in early 2021.
New York Success in Canceling Gas Pipelines
The Constitution Pipeline, which would have crossed New York’s Catskill Mountains, was cancelled this February after years of legal battles and opposition from environmentalists. After an eight-year regulatory battle, Williams Co. announced February 24 that it was cutting off investment in the proposed project. The proposed 124-mile pipeline was designed to connect natural gas production in Pennsylvania to northeastern markets, with a capacity to transport 650 million cubic feet per day of natural gas. The 30-inch pipeline would have extended from Susquehanna County, Pennsylvania, to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, New York. The Constitution Pipeline received federal approval in 2014, and officials thought it would be delivering natural gas to New York as soon as the following year. In 2016, however, New York denied a required water permit. In 2019, Governor Cuomo said, “…any way that we can challenge it, we will.”
New York blocked water permits last month for a $1 billion multistate natural gas pipeline. The Williams Co. was planning to build the Northeast Supply Enhancement pipeline project to expand its existing 10,000-mile interstate transmission pipeline system in New Jersey, New York, and Pennsylvania. The project would supply an additional 400 million cubic feet of natural gas per day for New York’s 2021 winter heating season. With one of the Indian Point nuclear units shuttered at the end of April, New York is in need of low-cost natural gas for its generating, residential, and industrial sectors. But Cuomo’s Department of Environmental Conservation denied a required Clean Water Act certificate for the project because it did not meet the state’s “rigorous water quality standards” and because the project was incompatible with New York’s new climate law, the Climate Leadership and Community Protection Act. Under the law, the state must cut greenhouse gas emissions by 40 percent below 1990 levels by 2030 and 85 percent by 2050.
Natural Gas Demand Is Expected to Grow
According to the Energy Information Administration (EIA), the electric power and industrial sector demand will increase total demand for natural gas to 36.5 trillion cubic feet by 2050—18 percent higher than in 2019 when it totaled 31 trillion cubic feet.
Natural gas consumption by sector (AEO2020 Reference case)
Trillion cubic feet on the left
Billion cubic feet per day on the right
EIA expects natural gas production to increase more than demand reaching 45 trillion cubic feet in 2050—33 percent more than in 2019–as the United States expands its pipeline and LNG export markets.
Conclusion
Natural gas demand is increasing and its supply is being held captive because environmentalists and politicians do not want to allow their residents to have access to low cost and plentiful natural gas supposedly due to climate change. As a result, natural gas is being shipped at greater cost by truck and rail in liquefied form to markets in New England where there is insufficient pipeline capacity, causing increased emissions as well as increased public safety issues.
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