U.S. CHAMBER OF COMMERCE

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Energy Blog

US Chamber of Commerce Blog

Sean Hackbarth Natural gas pipes in Bismarck, North Dakota.Natural gas pipes in Bismarck, North Dakota. Photographer: Daniel Acker/Bloomberg.

We could soon see a break in the logjam of pipeline projects waiting for federal approval.

President Donald Trump nominated two people to the Federal Energy Regulatory Commission (FERC).

Trump plans to nominate Neil Chatterjee, a senior energy adviser to McConnell who previously worked for the National Rural Electric Cooperative Association, and Robert Powelson, a member of the Pennsylvania Public Utility Commission, for terms expiring in 2021 and 2020, respectively, an emailed statement from the White House late Monday shows.

Currently FERC is down to two people on the commission. This is below its quorum of three, leaving it unable to sign off on new pipeline construction projects.

Bloomberg reported this is delaying $50 billion in energy infrastructure investment:

At least a half-dozen pipelines valued at $12 billion face imminent delays, while projects valued at $38 billion are slogging through an approval process that’s slow in the best of times. An additional $25 billion of proposed developments just beginning the application process also could be slowed if the situation persists late into the year.

FERC nominees will appear in front of the Senate Energy and Natural Resources Committee before confirmation votes in the Senate.

Needless to say, pro-energy folks are happy with President Trump’s nominees and hope for speedy confirmations.

“Given the complexity and importance of the issues before the Commission, President Trump made phenomenal picks in Commissioner Powelson and Neil Chatterjee, said Christopher Guith, Senior Vice President at the US  Chamber's Institute for 21st Century Energy. “From strained competitive markets to crucial energy infrastructure, FERC faces many challenges, and these nominees will help move America toward a more secure energy future."

 

As energy companies continue to innovate, invest, and produce more U.S. energy, more energy infrastructure will be needed. One study found that over $1 trillion in new energy infrastructure investment was possible through 2035. That will support a lot of manufacturing and construction jobs—along with energy jobs—directly and power the new jobs created by a growing economy in the years ahead.

While a fully-functioning FERC will alleviate the bottleneck at the federal level, it must be noted that needed energy infrastructure projects are being unnecessarily impeded at the state level .

Take New York State.

An Institute for 21st Century Energy report  finds in the Northeast region, residents pays 29% more for natural gas and 44% more for electricity than the national average, while factories pay 62% more for electricity. This is despite the fact that large natural gas reserves are nearby and in New York State where fracking is banned.

Given this situation, Governor Andrew Cuomo has made some bad decisions, as the New York Post editorial board recently noted:

The gov blocked the Northern Access project this month and the Constitution pipeline last year, claiming threats to water quality. But these projects would’ve been as safe as (or safer than) countless other water-crossing projects that got approval — and caused no problems — over the years.

There’s a big price tag for obstruction. The Energy Institute report finds that if natural gas pipelines are prevented from being built, New York State alone by 2020 will lose out on 17,400 jobs, $1.6 billion in GDP, and $971 million in labor income.

What if pipelines aren't built in New York State?What if pipelines aren't built in New York State?Source: Institute for 21st Century Energy.


What applies to New York also applies to the Northeast region. Failing to build pipelines across the region to connect customers with energy resources in the Marcellus and Utica Shales, it will cost 78,400 jobs, $7.6 billion in GDP, and $4.4 billion in labor income.

Whether it’s at the federal or state levels, a well-functioning, non-politicized pipeline permitting process will help businesses and households get the energy they need.

Sean Hackbarth Pipe to be used for the Keystone XL pipeline in a field in Gascoyne, ND.Pipe to be used for the Keystone XL pipeline in a field in Gascoyne, ND. Photo credit: Sean Hackbarth.

The center of revived Keystone XL pipeline debate is in York, Nebraska, where a marathon public hearing on the project is underway:

One by one they stepped forward -- union workers, environmentalists, farmers, politicians, business leaders, a lobbyist -- to make their case either for or against the Keystone XL pipeline.

Hundreds of people showed up for the marathon public meeting Wednesday at the Holthus Convention Center in York, although only 150 people will have a chance to speak, each with a five-minute time limit.

The five members of the Public Service Commission, which has authority to decide whether the Keystone XL's proposed 275-mile Nebraska route is in the state's interest, sat elevated on a stage at a black-skirted table in front of a backdrop of black curtains.

I visited York in 2014 when I took a road trip along the pipeline’s route. Nice place. Fun water tower.

York, Nebraska water towerYork, Nebraska water towerWater tower in York, Nebraska.


Earlier this year, President Donald Trump issued a federal permit for the long-delayed pipeline running from Alberta to Steele City, Nebraska. When built, the Keystone XL pipeline will transport 800,000 barrels of oil from Canada, Montana, and North Dakota to refineries on the Gulf Coast. Nebraska is the last state on the pipeline’s route that has yet to give its permission. Thus the public hearing.

Not only would the Keystone XL pipeline be a welcome addition to America’s energy infrastructure, specifically the project would be a benefit to Nebraska. Here are some numbers from the State Department’s most-recent (2012) analysis:

Pipeline construction will generate $739 million of economic activity Construction of the pipeline will support 4,400 jobs  Construction of the pipeline will support $149.4 million in earnings Pipeline construction will expand Gross State Product by $244.3 million During its first year of operation, the pipeline will generate an estimated $11.780 million in state property taxes  Pipeline construction camps in Nebraska will generate an additional $420,000 in state property taxes Nebraska will see an additional $16.5 million in sales taxes during pipeline construction

While those numbers are a bit out of date, they still show that the pipeline will have a significant benefit to the Nebraska economy. That’s why both labor unions and industry support this important project.

 

As I heard when traveling the route, these economic benefits help workers and families, create new jobs, and enable school districts to buy new computers and supplies. Local governments will be able to buy or replace much-needed fire trucks and safety equipment, and roads will be paved and new roads will be built, all as a result of this project.

The Nebraska Public Service Commission will hear from a lot of people today. When weighing what was said with the facts, approving the Keystone XL pipeline will be what’s best for Nebraska.

Sean Hackbarth John Watson, chairman and CEO of Chevron.John Watson, chairman and CEO of Chevron. Photo credit: Aaron M. Sprecher/Bloomberg.

The U.S. fracking boom can only do so much to meet world oil demand, says Chevron’s CEO.

“Shale can help. Certainly between now and the end of the decade it will be a big contributor to meeting that million-barrels-of-oil-demand growth that's out there,” John Watson told CNBC. “But ultimately oil fields decline, and we're going to need all sources of supply, including the shales, but also deepwater and other sources around the world.”

 2010-2040.EIA chart: U.S. Shale oil production: 2010-2040.Source: Energy Information Administration.


President Donald Trump is cognizant of this fact and has made unleashing American energy an important part of the first few months of his administration.

As Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy, noted, “Of all executive actions as well as bills to repeal Obama’s midnight regulations, 20% have been focused on energy.”

Last week, President Trump ordered a review of offshore energy development. In the future, we could see safe energy development in the Mid-Atlantic, the Eastern Gulf of Mexico, and the Arctic.

Regulatory Reform

On the regulatory front, the Trump administration earned a good grade from Watson. “Arguably it’s been one of the most significant things the Trump administration has done so far,” he declared. “There have been regulations and guidance documents that have been rescinded by the Trump administration that were just heaping costs on our industry with no discernible benefit.”

 

Locking in those gains is critical. “We have routine regulations in the country—we want those,” Watson explained. “But it’s the overreach without cost-benefit analysis without an understanding of what the real implications are that have hurt this economy.”

The first major move to modernizing the federal regulatory process in decades, the Regulatory Accountability Act, would achieve much of what Watson wants. It would focus federal agencies’ efforts on the most expensive rules and require more analysis, transparency, and public input.

Reining in the Regulatory State will pay off. “The speed of business is slowed by excessive regulation,” Watson said. “Rolling back the unnecessary regulations can kick start the economy in a big way.”