natural gas infrastructure readiness …
TRANSCRIPT
NATURAL GAS INFRASTRUCTURE READINESS
ASSESSMENT FOR ELECTRIC UTILITIES
American Coal Council (ACC) WebinarTheresa Pugh
Theresa Pugh Consulting, LLCApril 6, 2017
Experience• 13 years electric utility sector (public
power);• 7 years oil/gas sector (including 15
months in pipelines);• 11 years in manufacturing
advocacy; • 9 months in private consulting to
power sector, steel related manufacturing & oil/gas
• NERC Voluntary Expert
Detailed gas infrastructure 2017 Gas Infrastructure Paper Designed and wrote part of 2010’s
APPA study—still relevant (detailed analysis done by Katie Elder of Aspen)
http://www.publicpower.org/files/PDFs/ImplicationsOfGreaterRelianceOnNGforElectricityGeneration.pdf
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Take Away From This Webinar
• Utilities need to know as much about natural gas infrastructure (storage, compressor stations, pipelines) and regulations to understand reliability and cost;
• Gas storage may be the biggest infrastructure issue for utilities and often completely ignored
• Gas storage may affect electric utility reliability in some locations if a local bottleneck;• Utilities may be surprised at the local opposition to NGCC plants;• Utilities may find local opposition to gas pipelines for real estate value and public health concerns (real or feared);
• EPA dispersion modeling may limit or veto conversion from coal to gas units in permitting;
• Gas compressor stations also face EPA dispersion modeling for placement every 80 miles;
• Citizens may oppose compressor stations due to noise & smell;• PHMSA, EPA & state regulations on pipelines may create some short term repairs that may create some unpredictable downtime that MIGHT affect deliverability
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Why Gas Infrastructure Issues Matter to Electric Utilities• Current atmosphere of community opposition to oil & gas infrastructure in permitting or approval processes;
• Reliability & LOCALIZED service disruptions due to gas storage and compressor station repairs (due to regulations);
• CA, PA & CO have state methane leak detection & repair requirements affecting pipelines and compressor stations;
• What will Admin. do to address methane leak & repair under EPA;• 8 States Filed Lawsuit Against Admin. decision to rescind Jan. 3 rule;• If EPA hands off methane leak detection and repair to states—will this make hodgepodge of regulations that vary for interstate pipelines;
• Utilities converting from coal to gas might want to weigh options of intrastate and interstate after looking at the ultimate methane leak regulations;
• New maintenance costs & cost re‐openers may affect utility electricity prices; • Opposition at hearings includes health issues & property value loss; • Delays in permitting after Dakota Access (oil) and Keystone XL as new playbook for anti‐gas activists; and
• Will rating agencies score NGCC projects if the gas storage is not close by or if those storage facilities are offline due to repairs.
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Trump Executive Order on Energy Independence‐ CPP and Methane‐ March 28, 2017
(Image: The White House)
Trump Executive Order Highlights
• Specific direction to agencies with 45 and 120 day tasks;• Review of New, modified and existing power plant regs;• Review of FIP plan and modeling rule; • Suspend, revise or rescind Legal Memo;• Interagency Working Group on GHG (IWG) disbanded with 2013‐2016 Technical Updates withdrawn (that drove regulations);
• Addresses many Obama led policies and regulations at CEQ & other agencies (not sure about DOD & GSA energy footprint policies);
• Addresses Social Cost of CO2 and Methane regulatory costs/benefits will be more accurate;
• Addresses upstream oil/gas and coal production for rules on fracking, BLM and Indian lands rules;
• Acknowledgement of OMB’s role on budget, administrative & legislative; &• Clear message for court
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CEQ NEPA Guidance on GHGs
• CEQ withdrew Obama Administration NEPA Guidance on GHGs on April 5, 2017– See Federal Register
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Predictions of Coal Plant Retirements‐ Perhaps Even with CPP Being Rescinded & Re‐Proposed
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Median Age of State’s Coal Plants
The following states are suing against the Clean Power Plan, which requires the states to cut greenhouse gas emissions. But some of these states are bound to
reduce their emissions regardless, as their dirtiest coal‐fired power plants near
retirement age.
* Median age of coal plants that retired in 2015 is 58 yearsSource: U.S. Energy Information Administration. Data current as of 2015
When Will Utilities Build More Gas Plants (are new coal plants even possible?)
• Load is still flat in most regions• Push for Renewable Energy in>20 states with RPS standards;• Customer pressures for renewables;
• Lower cost of RE (solar panels & wind);
• Tax policy;• Kemper’s CCS cost over‐runs; • PR and branding of utilities
• Utility CEOs face tough decisions if state PUCs or laws address keeping nuclear plants in subsidized for dispatch or if state regulatory agencies attempt to repeat any of the “environmental dispatch” in the Clean Power Plan in state NSPS/ESPS regulations.
• Watch out for environmentalists using state programs to penalize natural gas generation…
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300,000 MI OF EXISTING PIPELINES MOSTLY SERVING UPSTREAM OIL/GAS NOT PIPELINES—NEED MORE INFRASTRUCTURE FOR POWER SECTOR
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Natural Gas Storage Is Often Ignored and May be Biggest Reliability Issue For Gas Plants
• Few new gas storage projects planned due to economics, glut & lack of incentives
• Storage of gas varies by different gas storage locations and types (salt domes, mines, semi‐depleted fields, etc.)
• Many current storage fields may have surplus but may not have ability to move gas to power sector quickly based upon morning nomination or re‐inject quickly if gas is not needed
• Impacts of PHMSA Interim Final Rule, Dec, 2016, on storage safety, security & new requirements—how many of 400 gas storage locations must be under repair and for how long
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Natural Gas Storage is Essential and Key To Transition to Gas Generation
• Pipelines cannot always be line packed adequately for larger power plants; • Gas moves 25‐40 miles per HOUR– some plants 6‐9 hours from storage;• Many states have geology unsuitable for gas storage;• Dec. 2016 DOE Report suggested storage facilities were old and needed massive
updates—power sector to plan for “dual fuel” (oil);• Unrealistic expectation that oil units can be run as “dual fuel” during April‐Sept
in ozone nonattainment areas; some fuel handling units aren’t up to date; SPCC spill regs may not be implemented for oil handling (manmade berms etc.); limits on sequential running time of oil units (ex. <10%)
SOLID BLUE STATES INDICATE STATES WHERE SUBSURFACE GAS STORAGE IS
NOT POSSIBLE DUE TO GEOLOGYSOURCE: ASPEN ENVIRONMENTAL
Gas Storage Projects Can Be Stopped By States or FERC
• Arizona natural gas storage project declined by state water agency in approximately 2008 due to proximity to sole source aquifer near Tucson;
• FERC declined Tres Palacios & Leaf River• Some projects withdrawn due to market changes• Expect water storage issues to be brought up by environmentalists and water utilities (private and municipal)‐ not just in west
• In post Aliso Canyon world—getting natural gas storage locations newly permitted might be tough
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DOE’s October 2016 Storage Report Following Aliso Canyon Leak Is Significant
“Power system planners and operators need to better understand the risks that potential gas storage disruptions create for the electric system.” Sec. Ernest Moniz, DOE, October 2016;• 44 Policy Recommendations and suggestions for new PHMSA regulations;• DOE report recommended Dual Fuel for power sector until storage facilities have been retrofitted and meet many dozens of new requirements; and
• Associations for natural gas industry stated that they needed more than 1 year for storage facilities to meet PHMSA’s new safety regulations effective Jan. 2018
HOW LONG DO THEY NEED FOR REPAIR OF STORAGE FACILITIES? UTILITIES SHOULD KNOW THE STATUS OF INTEGRITY TESTING ETC OF STORAGE PROVIDER BEFORE DECIDING TO CLOSE COAL PLANT
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LNG for Above Ground Gas Storage Solution Where Subsurface Geology Won’t Work?
• Some former military facility plants possible outside Gulf of Mexico?• LNG Terminals not exporting to Latin America or with surplus capacity?
• Cost?
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EPA’s Upcoming Decisions on Compressor Stations & Pipelines and Why Repairs Matters to Utilities• OOOOa rule: Must fix all methane leaks <30 days “if feasible” regardless of leak size, season, weather, demand/load or costs (EPA’s NSPS for new sources, all pipelines & compressor stations built after Sept. 18, 2015);
• Some flanges, hatches & valves take a week, month or occasionally a year to repair;
• Pipeline/compressor station—no service during significant repair time unless they have secondary routing for methane gas (rare); and
• Many power plants won’t have access to multiple pipelines unless in oil/gas producing state;
• Many pipelines serving power sector don’t (yet) have secondary pipeline routing and
• Good news: EPA has called for comments to address methane. Utilities should file comments addressing reliability issues IF EPA regulates methane. Utilities should join in by filing comments to EPA.
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Meanwhile at FERC ‐‐No Quorum for Interstate Pipeline Projects and other Actions• Feb. 3 news statement explaining operations https://www.ferc.gov/media/news‐releases/2017/2017‐1/02‐03‐17.asp
• How much work can be done by administrative staff? (Very unclear that any approvals for utilities or pipelines can be approved by staff)
• Politics on all appointments –process expected to be arduous for 2 approvals
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New Technologies Will Matter in Permitting NGCCs
• EDF and Universities have their own studies about methane at some LDCs and will use them;
• Will Google/EDF Use Drive By data used at power plant hearings; &
• Expect citizen activists to wear monitors that display methane, CO2 and NOx emissions (Illinois EPA ordered 4,000 monitors for citizens for ozone precursors)
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Unreasonable Timing for Fugitive Compressor Stations/Pipeline Leaks Might Affect A Utility’s Localized Reliability & Costs
• Compressor stations located approximately every 80 miles;
• Each compressor station has an average of 1,500 parts that can at some point leak;
• Typical leak repairs require 1 day, week or 1 month;
• Evacuate gas on up to 5 miles of pipeline in all directions of NEW compressor stations;
• A few compressor station leaks require up to 1 year for replacing valves;
• If a power plant is being served by compressor station or pipeline that is taken out of commission due to PHMSA or EPA regulations requiring repairs this could be a short term concern unless the pipeline has multiple routing (Similar to rail issues).
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Noise & Smell Issues in Permitting
• Address concerns about noise with community upfront even if pipeline company doesn’t;
• Find out about secondary routing of methane to avoid service disruptions for power plant and those costs;
• Will methane smell like mercaptan? Does your community want that smell for safety signal or find it offensive (don’t make assumptions)
See/Hear YouTube video at:https://www.youtube.com/watch?v=WtSH5V1YQvQ
Yellow arrow is a line of residential community close to pipeline compressor station
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Dual Fuel Sounds Like a Silver Bullet for Power Sector But…
• Dual fuel (oil) limited by Clean Air Act often to <10 percent of total year;
• Dual fuel (oil) not allowed during summer ozone season • Some Title V permits only allow dual fuel (oil) when Governor or FEMA issues emergency orders (flooding, tornado, hurricane, ice storms)
• Some “dual fuel” units were permitted that way thirty years ago but have not maintained other reg requirement to run; and
• Electric utilities that have kept up oil units may need special permits or variances for localized natural gas infrastructure issues (Find out what is needed in advance).
• $TICKER $HOCK
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Best Weekly Update on Cancellations from Beyond
Extreme Energyhttps://beyondextremeenergy.org/2016/04/27/10‐fracked‐gas‐infrastructure‐projects‐canceled‐or‐delayed‐in‐last‐24‐months/
Watch Crowd Sourcing Opposition www.gofundme.com
Crowd Source funding opposition in 100 communities –not always where you would expect the opposition ‐‐including:
Nashville, TNBurna, KYFt. Wayne, INCincinnati, OHArvada, CORutledge, MOWemberly, TX
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Demonstrations at FERC & Monitoring Commissioners’ & PUC Members’ Homes
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What We Learned From North Dakota Access Pipeline Permitting Process
• Protests can emerge at the end of the project and still delay or stop projects;
• Uncertainty as to what constitutes “consultation” with Indian Tribes; • Pipeline does not run across or through Tribal Lands but runs within 5 miles and public assumed this was Tribal Land;
• Protestors came to communities and often could not afford bus tickets to get home after protests ended;
• One community paid for bus tickets for protestors to return home;• Local community might be worried about stresses on police, fire, EMT, jails and courts if protest attracts large groups.
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Public Relations & Civil Liberties Issues
Whether true or not—media stories abound about snarling dogs; water guns; mesh enclosures; protestors marked with numbers on arms; North Dakota Court system jammed with civil disobedience cases.
A MURKY LEGAL MESS AT STANDING ROCK
By Colin Moynihan
January 11, 2017
http://www.newyorker.com/news/news‐desk/people‐arrested‐at‐standing‐rock‐protests‐fight‐for‐their‐legal‐rights
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Source: http://heavy.com/news/2016/09/dakota‐access‐pipeline‐protests‐video‐photos‐dogs‐map‐dapl‐routes‐north‐oil‐mace‐standing‐rock‐sioux‐native‐american‐indian‐energy‐transfer‐kelcy‐warren‐bakken‐lawsuit/
What is Unresolved… What is “Consultation” with Tribal Nations?In Sept. 2016 Departments of Justice, of the Army, and of the Interior released a joint statement that read, in part, “This case has highlighted the need for a serious discussion on whether there should be nationwide reform with respect to considering tribes’ views on these types of infrastructure projects.”
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See Our Children’s Trust case against U. S. EPA re failure to address climate change on behalf of 21 young people affected by climate change now.
“Exercising my ‘reasoned judgment,’ I have no doubt that the right to a climate system capable of sustaining human life is fundamental to a free and ordered society.” –U.S. District Judge Ann Aikenhttps://www.ourchildrenstrust.org/state‐legal‐actions/
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Watch for Clever Use of Court Action Under Trump Administration During Perceived Regulatory “Roll Backs?”
Anti Gas Community’s Reach Out to Banking Community‐ Just Like in Coal Opposition
Letter about ND Access is reminder of efforts in late 1990s by CERES and other organizations that went through financial community and corporate boards to influence policy
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FERC Commission
Nominees not named—process could take several months—and no cases approved for power sector or pipelines until quorum
Rumors:•Neil Chatterjee, Senate staff—McConnell•Rob Powelson, PA PUC Comm. (former chair) & President of NARUC
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Key Administration & EPA StaffWHITE HOUSE • CEQ Chief of Staff: Mary Neumeyer (House E &C
staff)• CEQ Chair: Not named• OMB:Mick Mulvaney (confirmed)Career: Dominic ManiciniFAST 41: Angela Colamaria
• OIRA: not named • Energy Advisor: Mike Catanzaro (title?)• WH Regulatory Reform: Carl Icahn• EPA: Pruitt• AG: Sunny Purdue (confirmed)• Interior: Rep. Ryan Zinke (MT): confirmed• Commerce:Wilbur Ross (FL): confirmedPermitting Streamlining: Earl Comstock• SBA: Linda McMahon (CT): confirmed
EPA
• Ryan Jackson, Chief of Staff to Adm. Pruitt• Don Benton, White House liaison (title?)• Samantha Dravis, Assistant Adm. for Policy (no
Senate Confirmation)• Mandy Gunasekara, Sr. Policy Advisor, Air & Climate • George Sugiyama, Advisor• Amy Graham, Deputy Assoc. Admn. For Public
Engagement• John Konkus, Dep. Assoc. Admin, Public AffairsSeveral from Transition & Beachhead team have returned to prior business or retired• Deputy Administrator: rumors in trade press• No Assistant Administrators named – confirmation
could take 2‐3 months• Regional Administrators require no Senate
Confirmation—perhaps merging of some regions.• Air: Sarah Dunham (career)• Water: Benita Best‐Wong, Acting Deputy Assistant
Administrator and Mike Shapiro (career), Acting Assistant AA
• Waste: Brian Breem• OECA: ??
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Gas Conversion Challenges Are Not Insurmountable
• Natural gas infrastructure permitting process is far slower than five years ago with considerable public opposition
• Infrastructure opposition ranges from property value losses, smell, noise, and public health.
• Natural gas is a preferable fuel source when contemplating CO2.• Dual fuel may require special state air pollution agency approvals for use during natural gas infrastructure force majeure events;
• Natural gas compressor station repairs mean station out of service for 5‐21 plus days—more issue if no natural gas storage or secondary pipelines nearby;
• Natural gas storage repairs & downtime;• Cost of natural gas affected by operational issues; and• Possible reliability issues are localized & perhaps short term with adequate storage and reasonable methane repair regulation(s)
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Looking Ahead
• NGCC need space for steel catalysts (formaldehyde MACT); (not a big deal)• Gas chromatographs for watching for variances in gas quality if localized infrastructure options are limited (know your supply‐ similar to knowing coal blending); • Possible electrification of pipeline compressor station motors (replace gas motors) in ozone nonattainment areas (study reliability before hearing siren song of more load) & • FERC and State PUCs to hear cost recovery requests for pipelines for all new costs– can re‐open existing firm contracts.• Utilities need to understand gas storage & pipelines serving power plants
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EPA Budget
• Trump Administration’s budget shows a 31% budget cut to U. S. EPA–legitimate question as to whether they can complete all the assignments outlined in various Executive Order with that large of a budget cut;
• TSCA program (not affecting utilities) needs staff to meet new statutory deadlines and chemical industry may push for more EPA staff to meet those deadlines rather than to pay fees for all the studies;
• Discussions at EPA to combined EPA Regional Offices;• Cuts to State Programs Under Section 110 of CAA will make states and governors very unhappy even if they don’t like EPA; and
• Watch Hill debate… some programs are programs that mean staff cuts in Congressional Districts or favorite program.
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