DOE, EIB Energy Highlights, Electricity, FERC, Fracking, Gas-Electric Interdependency, Government Investigations, Grid Security, Liquefied Natural Gas (LNG), Natural Gas, Oil, White House

EIB Energy Highlights: Dakota Access & Keystone XL Pipelines Revived, FERC on Energy Storage & Pipeline Rates & More

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Our goal is to serve as a leading-edge resource for companies navigating the rapidly evolving landscapes of the domestic and global energy markets. Moore & Van Allen’s EIB Energy Highlights is a complement to our Energy Interdependency Blog’s in-depth individual treatment of critical issues emerging in energy policy, regulation, and related litigation. EIB Energy Highlights hits the highlights of recent energy developments, streamlining access to critical information for our readers. Subscribe to the Energy Interdependency Blog via email or RSS to ensure that you receive EIB Energy Highlights, as well as our comprehensive posts. Please contact us if you have any questions regarding the materials covered.


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Natural Gas & Liquefied Natural Gas (LNG)

    • Atlantic Coast Pipeline Draft Environmental Impact Statement Open for Comment – To close 2016, the Federal Energy Regulatory Commission (FERC) issued its Draft Environmental Impact Statement for the Atlantic Coast Pipeline (ACP) project to be completed by Atlantic Coast Pipeline, LLC, formed by Dominion, Duke Energy, Piedmont Natural Gas and Southern Company Gas. The ACP will transport up to 1.5 billion cubic feet/day of natural gas from the Utica and Marcellus Shales in the northeastern region of the U.S. to the southern states of Virginia and North Carolina for the purpose of fueling electricity generation, among others. FERC staff concluded that the ACP presents the possibility of adverse and significant environmental impacts that can be reduced to “less-than-significant levels” if certain measures are implemented to mitigate the impacts. The DEIS is open for comment until April 6, 2017 and several public comment sessions have been scheduled by FERC.

Electricity

    • DOE Quadrennial Energy Review Focus on Electricity: The DOE released the second portion of its Quadrennial Energy Review (QER 1.2) with a focus on “Transforming the Nation’s Electricity System.” The central finding of QER 1.2 identifies the electricity system as a critical asset in improving, protecting and increasing the economy, environment, and national security, and it sets out 76 recommendations in the following six areas to modernize and transform the system: (i) key crosscutting priorities; (ii) economic value & consumer equity; (iii) clean electricity; (iv) reliability, security, resilience; (v) electricity workforce; and (vi) North American integration. Among others, the recommendations include authorizing FERC to propose new reliability standards or to modify those proposed by NERC in the case of rapidly developing new threats, enhancing cybersecurity by assessing the interdependencies between natural gas and electric infrastructure, and increasing collaborations with Mexico and Canada on grid resiliency and reliability issues.

Oil

    • Keystone XL and Dakota Access Pipelines Given New Life Under Presidential Memoranda: President Trump recently issued two Presidential Memoranda giving new life to the Keystone XL Pipeline and Dakota Access Pipeline projects, which had been blocked from proceeding under the previous administration. The projects are designed to transport oil from Canada and the Bakken/Three Forks area, respectively, and were at different stages of development when halted. Keystone XL was rejected altogether by President Obama in November 2015 after a controversial and drawn-out review, in part, because “America is now a global leader when it comes to taking serious action to fight climate change….And, frankly, approving this project would have undercut that global leadership.” The Dakota Access Pipeline was under construction already when it was interrupted last year by objections to the planned route through federally regulated Lake Oahe due to its proximity to sacred land of the Standing Rock Sioux Tribe. In December 2016, the U.S. Army denied an easement for the pipeline to cross under the Lake and indicated that it would consider alternative routes for the pipeline via the Environmental Impact Statement (EIS) process. On January 18, 2017, the Army filed its Notice of Intent to prepare the EIS in the Federal Register. The Keystone Memorandum invited TransCanada to “promptly re-submit” its application for Keystone XL and directed the Secretary of State to issue a final permitting determination within 60 days of the resubmission. TransCanada announced on January 26, 2017 that it did resubmit its Presidential Permit application for Keystone XL. The Dakota Access Pipeline Memorandum directed the Secretary of the Army to instruct the Assistant Secretary of the Army for Civil Works and the U.S. Army Corps of Engineers to take the appropriate steps necessary for expedited review and approval of requests to build/operate the pipeline, including easements to cross Federal areas, and to consider whether to rescind/modify the December 2016 statement regarding consideration of alternative routes via an EIS and the subsequent EIS Notice of Intent. On February 7, 2017, the U.S. Army notified the U.S. District Court for D.C. in a filing that it intends to grant the easement for completion of the pipeline and it withdrew its Notice of Intent to prepare an EIS.

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Federal Energy Regulatory Commission (FERC)

    • Commissioner LaFleur Appointed Acting Chairman: On January 26, 2017, FERC Chairman Norman Bay resigned his post, effective February 3rd, outlining the accomplishments of the agency during his tenure. Commissioner Cheryl LaFleur was appointed Acting Chairman, pending the appointment of a permanent leader for the agency.
    • FERC Investigates Natural Gas Pipelines for Rate Over Recovery: Pipeline rates are under scrutiny at FERC, with the agency having recently issued an Advanced Notice of Proposed Rulemaking examining the method for setting oil pipeline rates (see our previous post) and the agency initiating investigations into two natural gas pipelines for apparently “substantially over-recovering” on their costs. FERC is investigating Natural Gas Pipeline Company of America, LLC and Wyoming Interstate Company, L.L.C. pursuant to the Natural Gas Act to make a determination as to whether their rates are just and reasonable. According to the agency, the investigations were prompted by publicly available information on file and the companies must submit a full cost and revenue study to FERC. FERC has required an Administrative Law Judge to issue an initial decision within 47 weeks of when the cost and revenue studies are submitted.
    • FERC Policy Statement re: Energy Storage Services & Rates: Energy storage will play an increasingly important role in the operation of the electrical grid. It has been reported that the energy storage market is expected to grow from the 0.34 GW installed in 2012-2013 to an annual installation of more than 40 GW by 2022. Energy storage resources have the ability to function in several capacities and to switch between those capacities and the services offered nearly instantly. This creates a dynamic in which energy storage resources may fall into more than one traditional function (i.e., generation, transmission, or distribution) and offer services to varying entities that include both cost-based services and market-based services. In November 2016, FERC held a technical conference exploring the use of energy storage in its various capacities in the electricity markets, including “mimic[ing] a transmission function,” “providing a compensated grid support service,” and “providing both wholesale electric service(s) and retail and/or end-use service(s) at once.” FERC followed up with a Policy Statement on January 19, 2017, clarifying its position “that providing services at both cost- and market-based rates is permissible as a matter of policy.” FERC did not intend to address the nuances of how such services could be offered concurrently, but offered insight on several issues, including (a) avoiding double recovery of costs, (b) minimizing adverse impacts on Wholesale electric markets, and (c) RTO/ISO independence. Although providing guidance and clarification regarding precedent on related issues in the Statement, FERC intends for stakeholder processes and filings with the agency to serve as forums for working out details. Commissioner LaFleur dissented from the Statement, expressing “concern about the broad rationale for this approach put forth in the Policy Statement, which [she] believe[s] is both flawed in its conclusions and premature in its timing.”

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In our dynamic global energy market, data is king and leading-edge information is a critical input for the development of sound policy and business strategies. We highlight several resources that recently have been made available and reflect up-to-date insight into industry data and market fluctuations:

Federal Energy Regulatory Commission (FERC)

    • Electric Grid Reliability Primer – Reliability of the electric grid is of paramount concern, with cybersecurity risks and changes in available fuel sources at the top of a list of pressing issues. FERC staff recently released its Reliability Primer detailing the agency’s authority to oversee grid reliability and the role the agency plays in conjunction with the North American Electric Reliability Corporation (NERC), the electric reliability organization designated by FERC to develop and enforce reliability standards. In its explanation, the Primer also serves as a resource for establishing a basic understanding of the operation of the electric grid.

U.S. Energy Information Administration (EIA)

    • Annual Energy Outlook 2017: The EIA released its Annual Energy Outlook 2017 reflecting projections for the nation’s energy markets through 2050. The AEO2017 models a reference case, as well as side cases, including: low oil price, high oil price, high oil and gas resource and technology, and low oil and gas resource and technology. High and low economic growth scenarios are also taken into account. In the reference case, natural gas production accounts for almost 40% of U.S. energy production by 2040 and the U.S. becomes a net energy exporter by 2026. The EIA issues Short-Term Energy Outlooks, as well, the most recent released February 7, 2016.
Brian Heslin

About Brian Heslin

Brian Heslin represents energy companies in regulatory proceedings at the state and federal level. In addition, he provides advice on busines and strategic planning, upstream natural gas supply and capacity negotiation, compliance and other related services.

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Welcome to the Energy Interdependency Blog!

The landscape of the energy industry is rapidly changing, with a focus on the development of clean, domestic energy sources and a secure, reliable energy infrastructure driving significant changes in the interdependency of energy industry segments and an increase in government regulation. Continued growth in the domestic production of oil and natural gas has positioned the U.S. to be an energy exporter in the global market and will have a marked impact on the course of the industry’s development.

The Moore & Van Allen Energy Interdependency Blog seeks to inform companies navigating the domestic and global energy markets by providing leading-edge insight on issues critical to energy interdependency and developments in energy policy, regulation, and related litigation.

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