Interstate Pipelines Research Articles

Regional Planning for Just and Reasonable Rates

Natural gas—a fuel used for electricity generation, heating, and transportation—plays an outsized role in the U.S. economy. Under the Natural Gas Act, the Federal Energy Regulatory Commission (FERC or the Commission) is responsible for overseeing the orderly development of interstate natural gas pipelines, which facilitate the transmission of natural gas throughout the country. Before a developer can construct or expand an interstate pipeline, it must apply to FERC for authoriza-tion; FERC can approve the pipeline only if it finds that it is required by the “public convenience and necessity.” Although FERC should consid-er a range of factors to determine whether a pipeline will serve the public interest, in practice, it looks primarily to the existence of prece-dent agreements, i.e., contracts between a developer and its customers for the purchase of pipeline capacity. If a developer can demonstrate that there is a party willing to pay to use its pipeline, FERC rarely asks questions and almost always finds “public” need. In this way, the natu-ral gas transmission network has developed through a system of ad hoc decisionmaking organized around the needs of private companies that earn a hefty return on their capital investments.
 This pipeline-by-pipeline approach to natural gas transmission build-out leads to the construction of unnecessary, underused pipe-lines, which in turn increases ratepayer costs and decreases consumer welfare. Climate change further increases the risk that pipelines will become obsolete as cities and states move toward electrification. Fur-thermore, the gas transmission planning process—or lack thereof—stands in stark contrast to electric transmission planning, an activity that FERC also regulates but that is conducted by centralized entities on a regional scale. This contrast is especially confounding consider-ing that electric transmission is regulated under the Federal Power Act, a sister law to the Natural Gas Act with similar statutory require-ments.
 Relying on economic theory, legal history, and policy analysis, we make the case for FERC’s adoption of regional gas transmission plan-ning. We begin by describing the status quo and articulating why FERC’s current process is economically inefficient. In doing so, we draw parallels between gas and electric transmission planning and de-scribe how FERC treats the two activities inconsistently. We then ex-plain why, under two provisions of the Natural Gas Act, FERC possesses both the legal authority and obligation to require regional planning. Finally, we envision how FERC might conduct gas transmission plan-ning going forward, encouraging FERC to account for increasing elec-trification efforts and to plan for gas and electric transmission in tan-dem.

Peaceful settlement of inter-state energy disputes: applicable law, defence arguments, and remedies in the ICC arbitration between Iraq and Turkey

Abstract At this critical juncture in the energy transition dominated by debates over armed conflicts, advisory opinions on climate changes, and investor-State arbitration, it is critical to also consider developments in the peaceful settlement of inter-State energy disputes. One central dispute between the Republic of Iraq and the Republic of Turkey arose out of the Crude Oil Pipeline Agreement for the supply and purchase of crude oil. Iraq filed a request for arbitration in May 2014 under the International Chamber of Commerce Rules of Arbitration. The Tribunal awarded Iraq nearly United States Dollars (USD) 1.5 billion. The Tribunal’s unanimous final award in 2023 discusses fascinating aspects of international energy transactions, including the choice of domestic law in a treaty dispute, defences under the law of treaties, a putative norm of jus cogens to prevent genocide, and possible remedies in an inter-State pipeline arbitration.

Attachment Issues: FERC’s Broad Authority to Attach Conditions to Pipeline Project Approvals

America annually consumes enough natural gas to fill Lake Erie nearly twice. The Federal Energy Regulatory Commission (FERC) approves the interstate pipelines moving the majority of this gas. This Article argues that FERC has and should use its considerable authority to impose robust conditions on the interstate pipelines it approves. Part I examines the history of FERC's conditioning authority. Part II argues that imposing conditions is a nimbler tool than denials of pipeline projects and is more resilient to both the major questions doctrine and the vicissitudes of Congress. Part III proposes several conditions for future projects.

The Emerging Certified Natural Gas Market

The natural gas industry is increasingly utilizing certified natural gas as a means to address Environmental, Social, and Governance (ESG) commitments, with a particular emphasis on the reduction of methane emissions. Certified natural gas has emerged as a multi‐faceted commodity that has stirred up considerable debate as it begins to reach beyond bilateral transactions between producers and end users, and into the tariff filings and business practices of transportation providers and other actors along the natural gas supply chain. As this article surveys the landscape of certified natural gas and provides an overview of the well‐known certification providers, it will also explore a few of the issues and concerns raised by commenters within several Federal Energy Regulatory Commission (FERC) dockets concerning the Tennessee Natural Gas PCG Pooling Service Option—the first tariff proposal of its kind by an interstate pipeline to establish paper pools for the sale and purchase of certified natural gas. Finally, this author will take a brief glance at the North American Energy Standards Board (NAESB) efforts to facilitate certified natural gas transactions through the ongoing development of a standardized NAESB Certified Gas Addendum to the NAESB Base Contracts for Sale and Purchase of Natural Gas.

Hazardous air pollutants in transmission pipeline natural gas: an analytic assessment

Natural gas production occurs in specific regions of the US, after which it is processed and transported via an interconnected network of high-pressure interstate pipelines. While the presence of hazardous air pollutants (HAPs) in unprocessed, upstream natural gas has been documented, little has been published on their presence in the midstream natural gas supply. We systematically evaluated publicly available, industry-disclosed HAP composition data sourced from Federal Energy Regulatory Commission (FERC) natural gas infrastructure applications submitted between 2017 and 2020. Natural gas composition data from these filings represent approximately 45% of the US onshore natural gas transmission system by pipeline mileage. Given that reporting natural gas HAP composition data is not required by FERC, only 49% of approved expansion projects disclosed natural gas HAP composition data. Of those applications that disclosed composition data, HAP concentrations were typically reported as higher for separator flash gas and condensate tank vapor compared to liquefied natural gas and transmission-grade natural gas, with mean benzene concentrations of 1106, 7050, 77, and 37 ppm respectively. We also identified one pipeline operator that reports real-time HAP concentrations for its natural gas at five pipeline interconnection points. Similar to the FERC applications, this operator reported benzene, toluene, ethylbenzene, xylenes and hydrogen sulfide as present in transmission pipeline natural gas. Notably, mercury was also reported as detectable in 14% of real-time natural gas measurements but was not reported in any FERC applications. Given that transmission infrastructure releases natural gas during uncontrolled leaks and loss of containment events as well as during routine operations (e.g. blowouts and compressor station blowdowns), these gas composition data may serve as a critical component of air quality and health-focused evaluations of natural gas releases.

The development of natural gas and hydrogen pipeline capital cost estimating equations

Natural gas pipeline cost data collected by the Oil and Gas Journal (O&GJ) [1] for interstate pipelines constructed from 1980 through 2017 were used to develop capital cost estimating equations that are a function of pipeline diameter, length, and U.S. region. Equations were developed for material, labor, miscellaneous, and right-of-way costs, the four cost components in the O&GJ data, for six different regions of the United States (U.S.). Each equation is a function of pipeline diameter and length.Adjustment mechanisms were then developed for converting the natural gas pipeline equations into equations for estimating the costs of hydrogen pipelines. These adjustments were based in part on an analysis completed by the National Institute for Standards and Technology (NIST) [2,3]. The results of this work were used to update cost models in the Hydrogen Delivery Scenario Analysis Model (HDSAM) [4], developed by Argonne National Laboratory for the U.S. Department of Energy's Hydrogen Program. Our analysis shows a wide range of pipeline cost across different U.S. regions, especially with respect to labor and right-of-way costs. The developed cost formulas for hydrogen pipelines are both important and timely as hydrogen is being considered as a zero-carbon energy carrier with the potential to decarbonize all energy sectors, and the cost of hydrogen transportation is essential for techno-economic analysis of its potential use in these sectors.

Risk assessment of interstate pipelines using a fuzzy-clustering approach

Interstate pipelines are the most efficient and feasible mean of transport for crude oil and gas within boarders. Assessing the risks of these pipelines is challenging despite the evolution of computational fuzzy inference systems (FIS). The computational intricacy increases with the dimensions of the system variables especially in the typical Takagi–Sugeno (T–S) fuzzy-model. Typically, the number of rules rises exponentially as the number of system variables increases and hence, it is unfeasible to specify the rules entirely for pipeline risk assessments. This work proposes the significance of indexing pipeline risk assessment approach that is integrated with subtractive clustering fuzzy logic to address the uncertainty of the real-world circumstances. Hypothetical data is used to setup the subtractive clustering fuzzy-model using the fundamental rules and scores of the pipeline risk assessment indexing method. An interstate crude-oil pipeline in Egypt is used as a case study to demonstrate the proposed approach.

The renewable energy supply chain problem: A new geography of power supply and new species of electricity transmission

The United States faces an increasingly pressing renewable electricity supply chain problem. The problem is manifestly geographical—the best, low-cost, renewable generation sites (in the county’s interior) are inconveniently located far from the population load centers. Transiting such a route means that renewable power often must cross state lines and various organized regional wholesale power markets—a trip that existing US transmission networks (designed first for reliability and second for low-cost regional wholesale power markets) were not designed to accommodate. Overcoming such geographical entry barriers through competitive transmission investment is challenging—but not a new kind of problem for Congress or the Federal Energy Regulatory Commission (FERC). The FERC is indeed the world’s expert in such difficult issues relating to the continental geography of competitive energy supply—overcoming such entry barriers with stunning success in US natural gas markets. This paper looks at how Congress and the FERC have motivated competitive interstate pipeline transmission and where/how those lessons can help with the investment and siting problems facing the new geography in renewable generation.

Towards Transparency in Oil Spill Management in Africa: Nigeria As A Case Study

ABSTRACT (684687) Oil spill is an inevitable occurrence in the production, transportation and processing of crude oil. Either in drilling platforms, oil tankers and interstate pipelines, oil spill incidence can occur, no matter the safeguard and precautionary practices in the oil and gas industry. Despite significant improvement over the years in oil spill prevention, preparedness, response, and restoration, oil spill management remains one of the most controversial issues across the world. In many developing countries including Nigeria, the management of oil spill is poorly coordinated, complicated and lacks transparency between the oil industry, spill contractors, regulators, environmental agencies, affected communities and other interested parties. From decision making to mobilization, post-impact assessment, spill response and mitigative approaches, there is a high level of laxity, mistrust, opacity and deliberate misinformation in dealing with oil spill issues. These practices in the oil industry is supported by a weak institutional and regulatory framework which affects the management of oil spill. Such lapses are creating a delicate system leading to the degradation of the natural environment, threatening ecological life support systems for biodiversity and indigenous people. There is a need for a comprehensive overhaul in oil spill practices and to adopt global best practices for oil spill management in developing regions of the world including Nigeria.

The U.S. Gas Pipeline Transportation Market: An Introductory Guide with Research Questions for the Energy Transition

Natural gas currently represents close to a third of U.S. primary energy consumption and has often been described as a bridge fuel in the context of the ongoing energy transition. As coal plants are retired and the share of variable renewable resources in the U.S. power markets grows, power sector CO2 emissions are declining and gas-fired power plants increasingly relied upon to provide peak and balancing services to complement the variable electricity supply from wind and solar plants. Growth in gas-fired electricity generation in the past decade has made the power sector the largest user of the U.S. interstate gas pipeline network, just ahead of the industrial and building sectors. Nevertheless, future gas demand from these latter two sectors, and from the power sector, is expected to be reduced by policy and regulatory initiatives aimed at electrification of heating loads and economy-wide decarbonization. These developments open up important questions around the role of the U.S. interstate pipeline network in the ongoing energy transition. Such questions include what changes may be needed in the gas transportation markets to provide more flexible gas delivery services to gas-fired generators that provide valuable balancing in the power markets, and how long-term stranded asset risk for gas transportation infrastructure should be managed in the face of electrification and decarbonization. The objective of this paper is to facilitate further research to address these types of questions by outlining the main market features and regulations important for understanding the U.S. gas transportation market.

Planning for Natural Gas Pipelines in Ohio: Governance and Other Complexities

ABSTRACT In addition to crossing state lines, networks of natural gas transmission pipelines in the US cross multiple local jurisdictions, each potentially with its own local comprehensive plans and zoning ordinances. Under federal preemption, these interstate pipeline projects present new challenges to local land use planning. We examine aspects of the planning process of a portion of an interstate natural gas transmission pipeline in Ohio. The goal of this research is to explore how local planners navigate the interstate pipeline planning process under the limitations they face due to the regulatory framework in which these projects exist.

Feasibility of Using Small-Scale GTL Plants To Mitigate Flaring in North Dakota Evaluated

This article, written by JPT Technology Editor Judy Feder, contains highlights of paper SPE 195209, “Evaluation of Small-Scale Gas-to-Liquid Economic Feasibility To Mitigate North Dakota Flaring Issues,” by Pascoela da Silva Sequeira and Rouzbeh Ghanbarnezhad Moghanloo, SPE, University of Oklahoma, prepared for the 2019 SPE Oklahoma City Oil and Gas Symposium, 9–10 April, Oklahoma City, Oklahoma, USA. The paper has not been peer reviewed. Booming shale gas production in the United States has created excess capacity, which has caused natural gas prices to plummet and significant percentages of production to be flared. On the other hand, the country’s imports of crude oil and its production of diesel, gasoline, and other products is increasing. Mitigating this situation depends on finding practical, economical, and efficient ways of making natural gas marketable. A potential solution is small-scale gas-to-liquids (GTL) plants. The complete paper describes a Monte Carlo simulation approach and field analysis showing that a small-scale GTL plant in North Dakota could be a profitable solution to mitigating the state’s current flaring rate of 35% of the natural gas produced. Introduction The shale gas revolution has negatively affected natural gas prices. According to the US Energy Information Administration, dry natural gas production in the US will increase through 2050 by 59%, from 73.6 Bcf/D in 2017 to 118 Bcf/D in 2050, and the price of natural gas will remain lower than $6.00/MMBtu throughout the same period, causing producers to vent and flare excessive gas. In 2017 alone, the total natural gas flared in the US was approximately 335 Bcf, according to the World Bank-led Global Gas Flaring Reduction Partnership. Most intense natural gas flaring occurs in fields that are far from consumers and transportation infrastructures such as interstate pipelines. Some of the heaviest flaring comes from the Bakken Field in North Dakota. While most of the natural gas consumers in the US are located along the East coast, the Bakken’s distance from the seaboard makes transportation of the produced natural gas difficult. Natural gas production in North Dakota reached a record high of 1.94 Bcf/D in August 2017, and as a result of the lack of infrastructure to collect, gather, and transport it, more than 35% of the gross withdrawals were flared rather than marketed. By October 2018, production had increased to 2.04 Bcf/D, with 20%, or 527 MMcf/D, flared. According to the North Dakota Pipeline Authority, 80% of the flared gas came from the wells that connected to pipelines, but where capacity was insufficient to capture all of the production. The other 20% was from the wells that were not connected to a pipeline. North Dakota’s Industrial Commission has established a target to limit natural gas flaring to 10% by 2020. The fundamental problem is not the technical aspect of natural gas production, but determining a way to market natural gas that is practical, economically feasible, and efficient. One option for marketability would be to convert natural gas into hydrocarbon liquid through a GTL processing plant.

Mature Fractured Reservoirs Can Be Repurposed for Gas Storage

This article, written by JPT Technology Editor Chris Carpenter, contains highlights of paper SPE 190134, “Securing California Gas Supplies by Storage in Mature Fractured Monterey Reservoirs Offshore California,” by Iraj Ershaghi, SPE, Donald L. Paul, SPE, and Saran Kaba, SPE, University of Southern California, prepared for the 2018 SPE Western Regional Meeting, Garden Grove, California, USA, 22–27 April. The paper has not been peer reviewed. This paper discusses studies conducted on two California offshore fields that may be abandoned in the near future. These studies examined the feasibility of repurposing these fields for offshore gas storage by using their reservoir voidage and existing pipeline facilities. These storage sites could offer a significant alternative to the current onshore sites located in highly populated urban areas of the state. Introduction California has been a major oil-producing state since the turn of the 20th century. However, in terms of current natural gas production, California’s indigenous production meets only approximately 10% of state demand. Gas imports are delivered on interstate pipelines from sources in the southwestern and Rocky Mountain regions of the US and western Canada. The majority of gas delivered to California is consumed directly or pumped into onshore storage fields. California currently has 14 onshore gas-storage fields used to stabilize the supply system. The total current onshore storage capacity is approximately 600 Bcf, with the working capacity being approximately 375 Bcf. Background and Field Characteristics A year-long study of issues related to gas-storage fields in California concluded that significant investment would be needed for additional pipelines and gas-compression systems if all onshore storage facilities were to be shut down. While new regulations are in place to reduce the risk of current onshore storage fields, alternatives need to be considered that would be reliable for expanded demand. The study concluded that there is no method for storing electricity that can replace the need for gas to meet the winter peak. (Note that approximately 50% of gas is for nonpower uses.) Uncertainties are also associated with renewable sources as a substitute for gas for generating electricity. The study indicated that Californian consumption of natural gas currently is approximately 6.6 Bcf/D. However, the study points out that there may be a drop in demand for natural gas. Several issues loom on the horizon, one being the increasing liability associated with operating gas-storage fields in urban areas. Another is that, if some or all these onshore sites are decommissioned, insufficient storage capacity exists to address increased use of natural gas in California. An alternative exists in the form of offshore storage fields. Semidepleted offshore fields present an opportunity for this purpose. Some of these oil-producing operations may be reaching the abandonment stage during the next decade. Total abandonments may result in the removal of offshore platforms and plugging of existing wells, denying Californians further access to nearby offshore reservoirs.

Pipeline or Pipe Dream: The Potential of Peace Pipelines as a Solution to Fragmentation and Energy Insecurity in the European Union

In recent years, the European Union (EU) has developed its energy policy to adapt to an evolving global market calling for cleaner energy while maintaining and enhancing its energy security as consumption has remained constant. While the EU works towards this goal, it also seeks to reduce Russian dominance in its energy markets. The EU’s internal politics have become more fragmented with the Eurozone and refugee crises, which has made the coordination of Union policies difficult as leaders are unable to form strong domestic policy alone to counter Russian presence in the energy market. Lacking a united energy policy against Russia, the EU seeks alternative suppliers for its energy needs. One increasingly popular solution is importing newly discovered gas in Israel and the countries of the East Mediterranean region into the EU via pipeline. The peace pipeline theory has the potential to address both energy security and conflict mitigation through the claim that states with economic relations are far less likely to engage in conflict with one another than those without economic ties. This article analyzes the economic interdependence peace pipeline theory and investigates its potential to aid Europe’s quest for energy security. It explores current efforts to use pipelines as a foreign policy tool, examining case studies of Turkey, Israel, and Cyprus. While interstate pipelines can assist Europe’s goal of achieving energy security, available evidence suggests proponents have overstated their impact on energy security and international relations.

Finding Fault with the Nexus Pipeline? Agency Capture and the Public Good

Natural gas is an increasingly vital U.S. energy source that is presently being tapped and transported across state and international boundaries. Controversy engulfs natural gas, from the hydraulic fracturing process used to liberate it from massive, gas-laden Appalachian shale deposits, to the permitting and construction of new interstate pipelines bringing it to markets. This case explores the controversy flowing from the proposed 256-mile-long interstate Nexus pipeline transecting northern Ohio, southeastern Michigan and terminating at the Dawn Hub in Ontario, Canada. As the lead agency regulating and permitting interstate pipelines, the Federal Energy Regulatory Commission is also tasked with mitigating environmental risks through the 1969 National Environmental Policy Act's Environmental Impact Statement process. Pipeline opponents assert that a captured federal agency ignores public and scientific input, inadequately addresses public health and safety risks, preempts local control, and wields eminent domain powers at the expense of landowners, cities, and everyone in the pipeline path. Proponents counter that pipelines are the safest means of transporting domestically abundant, cleaner burning, affordable gas to markets that will boost local and regional economies and serve the public good. Debates over what constitutes the public good are only one set in a long list of contentious issues including pipeline safety, proposed routes, property rights, public voice, and questions over the scientific and democratic validity of the Environmental Impact Statement process. The Nexus pipeline provides a sobering example that simple energy policy solutions and compromise are elusive—effectively fueling greater conflict as the natural gas industry booms.

Post-2003 Iran–Iraq Cooperation in the Oil and Gas Sector: Initiatives, Challenges, and Future Scenarios

Iran–Iraq cooperation in the oil and gas sector took shape after the 2003 war as relations between the two countries improved with the assumption of power by a Shia-led government in Baghdad. The two Persian Gulf neighbors recognize the importance of joint or unitized development of cross-border oil fields and have taken preliminary initiatives to that end. Inter-state pipelines for energy export and import are binding them into a tight economic embrace, and combined backing for high oil prices as well as mutual support for raising production quota in the Organization of the Petroleum Exporting Countries (OPEC) speak of their similar imperatives for high revenue. However, Iran and Iraq continue to face challenges to their collaborative ventures, which stem from their historical rivalry over oil production and sales, persisting Iraqi suspicion of Iranian domination, absence of a hydrocarbon law in Iraq, and Iraq’s energy agreements with Iran that add to regional tensions with Baghdad’s Sunni neighbors. The road ahead is likely to see dynamic cooperation in areas that are less contentious, such as building of oil and gas pipelines, whereas the prickly issue of unitization of shared fields would take a backseat.

Is the U.S. Natural Gas Market Integrated or Segmented? a Dynamic Study of Regional Natural Gas Prices

Considering U.S. natural gas prices at one hub and several city gates, we investigate the structural evolution of natural gas prices (i.e. law of one price), and the potential convergence or divergence of gas prices across the country. First, we extract the latent common price component, which describes the evolution of the fundamental natural gas price. Second, we gauge if U.S. regional natural gas prices follow the law of one price. Our findings confirm the difference between West and East natural gas price behaviors, but also highlight the discrepancies between West and other regional natural gas prices. Finally, we measure the distance of hub and city gate prices relative to the fundamental price component. The proximity of regional gas prices with the fundamental gas price component supports market integration while a gap between these prices advocates market segmentation. We show that the U.S. natural gas market shifts towards a more integrated structure after august 2004. Such shift results from both the delayed impact of recent FERC reforms and the development of interstate pipelines. However, the development and improvement of natural gas infrastructures still need enforcement to support intrastate pipeline-deficient regions.

Measuring the effects of natural gas pipeline constraints on regional pricing and market integration

Natural gas pipeline capacity sets physical limits on the quantity of gas that can be moved between regions, with attendant price effects. We find support for the hypothesis of integrated regional markets. Using data on daily pipeline flows and capacities in Florida and Southern California, we estimate reduced-form price effects of capacity constraints. We find that pipeline congestion increased realized citygate prices by at least 11% over the mean in Florida and by 6% over the mean in Southern California. We attribute the difference in price effects to more binding capacity constraints in the Florida pipeline network. Our estimates provide guidance for interstate pipeline investments.

Limitations in Pipeline Policy of India and its Implications in Natural Gas Business

Oil and Natural gas is the key to our country's rapid economic growth. By the introduction of NELP which allows more exploration efforts, East coast becoming the hub of natural gas after large scale discoveries, the LNG import terminals being commissioned in the west coast, growing refinery sector reaching 220 MMTPA, this has enforced government to take initiative in implementation of intrastate and interstate pipelines so that there will imminent supply to different industries. With an aim to facilitate the evolvement of a nationwide gas grid and the growth of City Gas Distribution networks government made substantial efforts for eminent infrastructure with domestic oil and gas pipeline policy. Hence the objective of the paper is to promote investment from public as well as private sector in pipeline sector as well as city gas distribution networks to facilitate open access for all players to the pipeline network on a non-discriminatory basis and secure the consumer interest in terms of gas availability and reasonable tariff for natural gas pipelines.

Electric Regulation: Gas Prices Affect Electricity Costs Most Strongly in Northeast and Mid‐Atlantic

AbstractThe US Energy Information Administration (EIA) began the public posting of select regional electricity and natural gas hub prices in concert with the Federal Energy Regulatory Commission's (FERC's) proposal to change the scheduling and operating practices used by interstate pipelines. This data includes eight corresponding electricity and natural gas trading hubs.