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Don't Pass Me By - Plans for Energy Development Largely Rest on Fate of U.S. Permitting Reform

If you follow developments in the energy industry, you know that news about permitting for major infrastructure projects can sometimes read more like a horror story: 14 years to build an electric transmission line, a decade to get a mining permit, and the reality that some projects can be constructed in far less time than it takes to secure the required permits and work through any legal challenges. It’s a known problem with a lot of contributing factors, but no easy answers. In today’s RBN blog, we look at how permitting difficulties have become a flashpoint for all sorts of stakeholders — industry groups, environmental advocates, the general public, and politicians of all stripes. Our focus today will be on the current poster child of permitting challenges, Mountain Valley Pipeline (MVP), but we’ll also discuss how permitting setbacks complicate the development of all types of projects, from traditional oil and gas pipelines to initiatives at the heart of the energy transition.

Almost everyone acknowledges the benefit of having interested parties and stakeholders weigh in on major proposals to build or expand infrastructure, whether it be a new highway, an airport runway extension or an interstate oil or gas pipeline. Additionally, credible regulations and appropriate safeguards (such as the Clean Water Act’s focus on protecting the nation’s water supplies) are essential to the process. Still, the reality is that the permitting process for some important, badly needed projects can drag on for three, six or even nine years or longer. And permitting delays not only drive up project costs, they also put additional stress on infrastructure that’s already in place and prevent some projects from ever becoming a reality.

Given the substantial regulatory challenges that a number of natural gas pipeline projects have faced in recent years (a trend we’ve covered extensively in our Midstream Conundrum series), that’s a logical place to start. Aside from blocking or delaying an individual gas pipeline project, permitting issues can also have ripple effects such as creating market imbalances, keeping gas supplies from getting where they’re needed and spurring severe price disruptions — including distressed prices where gas becomes stranded, such as in Appalachia and the Permian, and price spikes in gas-starved regions cut off from supplies, such as on the West Coast and in New England. And even with all its existing infrastructure, the Gulf Coast will need considerably more new gas pipeline capacity given the additional LNG feedgas demand expected to come online in future years. (LNG has its own permitting issues to deal with; see our Climb That Hill series for more.)

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