Democratic News

Jun 14 2016

Cantwell: We Should Focus on Using Existing Pipelines More Efficiently

Expert Witness on Reducing Inefficiencies: Changes to the Rate Design in Natural Gas Markets Are Needed

Watch Sen. Cantwell’s opening statement. Download a PDF of her opening statement.

Washington, D.C. – Today, Ranking Member of the Senate Energy and Natural Resources Committee U.S. Senator Maria Cantwell (D-Wash.) called for using existing pipelines more efficiently and asked experts about changes in the natural gas market.

Sen. Cantwell urged both federal and state regulators to ensure that pipelines will not endanger public health and safety before approval. “I am not against building new pipelines, when necessary,” Sen. Cantwell said. “New pipelines must meet federal and state standards so that public health and safety will not be impaired.”

Reiterating a recommendation from the U.S. Department of Energy’s Quadrennial Energy Review, Sen. Cantwell suggested an examination of how efficiently existing pipelines are used before proposing new ones. “We undoubtedly will need some additional natural gas pipeline capacity. … We should focus first on using existing pipelines more efficiently.”

On a related note, Mr. Peress of the Environmental Defense Fund discussed changes in the natural gas market. Specifically, he testified that: “The [natural gas] market is completely based on bilateral contracts between pipelines and their customers for capacity. Capacity does not necessarily equal deliverability. What customers need is they need to get fuel delivered to them. Because that deliverability is not priced, … we see inefficiencies in the way that pipelines are operated.”

Sen. Cantwell followed up asking, “how do you think we make this transition?” Mr. Peress responded, “There needs to be a shift in the rate design, so that as pipelines are incented to provide more flexible deliverability services, they can earn and garner revenues from those services, which are actually the services that customers need.”

Lastly, Sen. Cantwell noted the differences between provisions in the House and Senate energy bills on pipeline siting: “The Senate energy bill attempts to enhance coordination between Federal Energy Regulatory Commission (FERC) and other federal and state agencies with responsibility for issuing permits before a new pipeline is built. In contrast, the House-passed bill proposes to give FERC just 90 days to make a final decision on permit applications, no matter the complexity of the proposed pipeline or the potential impact on people or the environment. This is something that we cannot do.

Read Sen. Cantwell’s full statement below:

“Madam Chairman, thank you for holding this hearing. And thank you to our witnesses for coming today to talk about issues associated with natural gas and oil pipelines.

“Domestic production of natural gas and oil has reached record levels. This increased production requires a network of pipelines and other modes of transportation to ensure that natural gas and oil can be moved from the point of extraction to the point of consumption. In many instances, new pipeline capacity will be required.

“But it is important to remember that we are talking about transporting toxic, highly flammable material hundreds, if not thousands, of miles across the United States. New pipelines must meet federal and state standards so that public health and safety will not be impaired.

“We can always look to improve the efficiency of the pipeline siting process, but we have to remember not to take shortcuts. The Senate energy bill attempts to enhance coordination between Federal Energy Regulatory Commission (FERC) and other federal and state agencies with responsibility for issuing permits before a new pipeline is built.  

“In contrast, the House-passed bill proposes to give FERC just 90 days to make a final decision on permit applications, no matter the complexity of the proposed pipeline or the potential impact on people or the environment. This is something that we cannot do.  

“In addition to threatening public health and safety, leaks of methane from natural gas and oil pipelines can also have a dramatic impact on our changing climate. In the first two decades after methane is released into the environment, it is 84 times more potent as a greenhouse gas than carbon dioxide.  

“The recent leak at the Aliso Canyon natural gas storage project in California is estimated to have caused more damage to the environment than any other gas leak in history. The project emitted more greenhouse gases than even the Deepwater Horizon explosion in the Gulf of Mexico.    

“Most new interstate natural gas pipelines require multibillion dollar investments. These investments are recovered through rates charged to consumers signing long-term contracts. “Obviously I am concerned that these multiyear contracts may delay the transition to non-fossil fuel alternatives.  

“Natural gas is a very important ‘bridge fuel,’ helping to reduce our reliance on coal, while bringing online greater amounts of intermittent renewable energy, such as wind and solar power. So we are in the middle of a revolution. And advances are being made every day to develop technologies improving the way we create, store and use energy that will further reduce the demand for fossil fuels.  

“We undoubtedly will need some additional natural gas pipeline capacity. As I often mention to the chair, my interest and support of natural gas pipelines in Alaska – but as the Department of Energy’s Quadrennial Energy Review suggests, we should focus first on using existing pipelines more efficiently and making sure that the process for granting a certificate for a new pipeline explores better ways to utilize existing capacity, to mitigate other issues and to make sure that we are making the right decision.

“I want to mention, because of this health and safety issue, we were unfortunate on June 10, 1999, to have a gasoline pipeline explosion in Bellingham, Washington, killing three children who were playing in Whatcom Creek. We’ve made some improvements in pipeline safety, but we can never forget the importance of these issues, as we continue to move forward on this.

“I look forward to hearing what the witnesses have to say, Madam Chairman, and look forward to our discussion.”

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