You Never Can Tell - With FERC Back in Business, What Does It Mean for Gas Projects?

On August 4, the U.S. Senate confirmed two new commissioners for the Federal Energy Regulatory Commission (FERC), restoring the three-member quorum legally required for FERC to vote. The Senate action ended a six-month dry spell during which FERC could not issue any orders, and thus could not approve any of the many pipeline projects pending there. What does it mean that FERC can act again to approve new projects? And does that mean the industry can move forward at the pace it needs? Today we explore these questions and assess what it will take to get some key gas infrastructure projects back on track.

This is the second part of our “You Never Can Tell” series on the challenges that midstream companies face when they run their projects through the regulatory gauntlet. In Part 1, we explored the implications of the loss of its quorum for FERC, which is chartered to have five members; discussed the “midnight orders” issued just before the commission lost its quorum to approve three major projects (Energy Transfer Partners’ Rover Pipeline, Williams’ Atlantic Sunrise Pipeline and National Fuel’s Northern Access Pipeline); and noted that other permitting issues can be just as troublesome as getting a certificate of public convenience and necessity from FERC.

At the time of that post, we did not expect the inability of FERC to vote to last for six months. By taking so long to repopulate the five-member commission, the administration and the Senate have delayed project development for at least a half-year and probably longer. The “probably longer” refers to delays in authorization that can cause a project to miss key dates for tree clearing and other seasonally sensitive activities the developers can’t start without a certificate. This can force developers to wait for the target season to roll around again next year. So it’s very easy for a FERC delay of a couple of months to delay a project for a year or more.

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