Democratic Takeover In Senate Positive For Natural Gas

Pipeline & Gas Journal, July, 2001 by Stephen Barlas

Conventional wisdom might say that the Democratic takeover of the Senate was a black-letter day for the natural gas industry. But that is far from true. Sen. Jeff Bingaman (D-N.M.) has introduced two "energy development" bills that are more favorable toward the natural gas industry in at least one important respect than the bill introduced by former Committee Chairman Sen. Frank Murkowski (R-Alaska). Bingaman's bills are also considerably more aggressive on clearing away roadblocks to development of the interstate pipeline infrastructure than anything in Vice President Cheney's ballyhooed task force report.

Bingaman has introduced two bills. The first is the Energy Security Tax Incentive Act. It includes the same pipeline depreciation improvement provision that is in Murkowski's bill. But Bingaman has a provision which would allow gas producers on Alaska's Northern Slope to take a $.25 per MMBtu tax credit for gas produced and delivered into interstate commerce before Jan. 1, 2009. There is no similar provision in the Murkowski bill. The Cheney "National Energy Report" recommendations simply suggest that federal agencies work closely with Canada to expedite the building of a pipeline from the Northern Slope to the lower 48 states. No particular actions are recommended.

Similarly, the Cheney recommendations make some vague references to the need for federal agencies to expedite pipeline permitting. Nothing specific is proposed. In Bingaman's second bill, The Comprehensive & Balanced Energy Policy Act, there are two provisions worth noting. The first requires FERC to conduct a study with other federal agencies on how to decrease the time and cost of obtaining a pipeline construction certificate. FERC would have to submit a report to Congress within six months.

Second, it would require the chairman of the White House Council on Environmental Quality to set up a task force of other federal agencies charged with writing a Memorandum of Understanding (MOU) with respect to cooperation and coordination on approval of new pipeline construction applications. This has been a long-running INGAA priority. Nothing happened on this during the Clinton administration, and nothing is happening yet under the Bush administration. The Bingaman bill says the MOU would have to be completed within one year. Murkowski's bill does have similar provisions; in fact, he would require an interagency agreement within six months.

Both the Bingaman and Murkowski bills include sections on pipeline integrity research and development. Bingaman would have the Department of Transportation spend $3 million a year which would come from user fees paid by the pipelines. The research would aim to expand the capability of internal inspection devices, develop techniques to measure structural integrity of pipelines and other similar measures.

Martin Edwards, spokesman for INGAA, admits that Bingaman "may be a little bit stronger" on natural gas transportation issues than Murkowski. While the Cheney report looks tepid on natural gas transportation, the Bush FERC seems to make an effort to move construction applications through the bureaucracy more quickly. FERC issued a proposed rule in March suggesting some steps the agency could take such as waiving blanket certificate regulations in some instances.

Moreover, FERC quickly approved two recent construction applications. On May 7, the Commission approved El Paso Natural Gas Co.'s request to switch an oil pipeline over to natural gas within two months of El Paso amending the original application. On April 6, Kern River got the go-ahead within three weeks to upgrade compressor sites in order to get an additional 135,000 Mcf/d to California from Wyoming this summer. Neither of these were the kind of major construction projects which have run into serious delays in recent years.