FERC Swears in Commissioner James Danly

On April 1st the Federal Energy Regulatory Commission (FERC) finalized last month’s Senate confirmation of James Danly to join the agency as the fourth Commissioner, rounding out the regulator’s most senior position.

Danly, an Army veteran and Vanderbilt Law School alum who most recently served as General Counsel to FERC for two years, has a Commissioner term that expires in June 2023. Danly joins Chairman Chatterjee and Commissioner McNamee as Republicans on the Commission.

GAIN spokesman Craig Stevens was quick to acknowledge and praise Danly’s experience, particularly as General Counsel, lending itself well to the Commissioner position. GAIN hopes that Commissioner Danly can help bring clarity to litigious challenges and trends in the energy space. This would be of great value to industry members and help abate costly courtroom sessions to projects like the Dakota Access or Keystone XL pipeline; the former has been safely operating for nearly three years yet still finds itself fighting duplicative legal battles.

Despite ongoing challenges in the domestic energy sector and international marketplace, it is encouraging to see regulators continue to march forward by best preparing for industry success. Danly’s confirmation and commencement should signal confidence to energy developers contemplating infrastructure projects that FERC is ready to work.

President Trump Calls for Infrastructure Spending Amid Coronavirus Downturn

A recent Wall Street Journal article highlighted President Donald Trump’s proposal calling for the fourth congressional coronavirus relief package to contain substantial investment in infrastructure, emphasizing low interest rates as an incredible opportunity.

President Trump wrote on Twitter:

“With interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill. It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country!”

Widespread infrastructure investment is both long overdue and necessary. Fortunately, members of Congress in both parties echo the president’s sentiments to include infrastructure in upcoming stimulus efforts. Specifically, House Speaker Nancy Pelosi has said in numerous recent press appearances that she would like the next bill to be bipartisan and include funding for infrastructure. She stated on a press call Monday:

“In addition to that, it’s an economic issue, it’s a job issue; it creates jobs immediately to build the infrastructure,”

Lawmakers from both parties and President Trump agree there is an immediate need for infrastructure investments. Recent political discussions about investing in our infrastructure, rising unemployment numbers, low interest rates and Congressional action on previous coronavirus bills show that this is an opportune time for to invest in our nation’s critical infrastructure.

Labor Shows Support for DAPL Optimization

The Chicago Sun-Times recently published a letter to the editor by Paul Flynn, business manager of IBEW Local 34, expressing support for a proposal to increase the crude oil capacity of the Dakota Access Pipeline (DAPL) – which has been safely operating for nearly three years. The project, known as DAPL Optimization, has been approved by the necessary regulators in North Dakota, South Dakota, and Iowa and is currently awaiting a decision from the Illinois Commerce Commission.

Read the full letter here:

In the first week of March, the Illinois Commerce Commission held a hearing to consider a proposal to increase the capacity of the Dakota Access Pipeline, known as DAPL. I attended the hearing as a representative of thousands of Illinois union members who rely on projects like DAPL Optimization to build long-term construction careers.

I urge the ICC to approve the project sooner rather than later, as projects like this help boost local economies. In the uncertain times we are facing, privately funded, shovel-ready jobs like those created by DAPL Optimization will be instrumental in moving Illinois and the Midwest forward.

The DAPL Optimization project would increase the capacity of the crude oil pipeline without new pipeline construction by adding a new pump station in Patoka, Illinois — a Midwest energy hub.

Given the uncertainty of employment opportunities, DAPL Optimization is all the more important for Illinois and us. This project would create shovel-ready jobs for Illinois’ skilled unions and help generate tax revenues for our local communities. The ICC’s approval will give us all confidence in the future.

The ICC hasn’t yet made a decision on the project, but my union brothers and sisters would agree that DAPL Optimization offers a ton of simple solutions, including:

  • Meeting Midwest energy demands by increasing crude oil delivery
  • Creating jobs for Illinois’ hardworking unions members
  • Generating new tax revenues for communities

DAPL Optimization could boost Illinois’ economy at a time when that is most needed. North Dakota and South Dakota already have done their part by approving the project. Unions statewide are counting on DAPL Optimization.

Paul Flynn
Business Manager
IBEW Local 34

America Should Reduce the COVID-19 Unemployment Fallout by Investing in American Infrastructure

The Washington Times published an opinion column suggesting that amid the coronavirus pandemic as members of Congress and President Trump consider multiple stimulus plans, one opportunity to stabilize the $19.39 trillion U.S. economy is to invest in America’s aging infrastructure.

As unemployment numbers rise to over 3 million, this problem could be alleviated by hiring workers across the country to develop for shovel-ready infrastructure jobs. As most of the nation remains at home, this would be an opportune time to fix America’s bridges, streets, roads and highways especially as there are less cars on the roads.

The situation is untenable; there are 200,000 miles of major highways that need repairs, repaving or rebuilt right now. There are 47,000 bridges in poor condition. And according to the Government Accountability Office (GAO) the United States has 610,749 bridges and 24 percent of them are classified as both structurally and functionally deficient.

President Trump should jumpstart the job-creating effort by initiating a series of public-private partnerships by bringing together CEOs of large, medium and small-size companies with a pipeline of infrastructure projects to begin determining the best course of action. Congress can determine which areas require the most improvements then allocate the necessary funds from there. Despite current political tension, there has long been a bipartisan and historic commitment to investing in America’s roads and bridges.

There is also a historical precedent of success: President Franklin D. Roosevelt’s New Deal created the Works Progress Administration to provide jobs for the unemployed building things like post offices, bridges, schools, highways and parks. Now America has the chance to once again improve our infrastructure while providing good paying jobs to unemployed Americans.

Iowa Regulators Approve Proposal to Double Capacity of DAPL

The Des Moines Register reported the Iowa Utilities Board (IUB) last week issued approval for the proposed increased capacity and optimization of the Dakota Access Pipeline (DAPL), which will double the amount of oil that passes through Iowa from 570,000 barrels per day (bpd) up to 1.1 million bpd. DAPL has been safely transporting crude oil from North Dakota to the Patoka Oil Terminal in southern Illinois for nearly three years. Furthermore, optimization offers a welcomed opportunity to safely and efficiently increase access to American oil by investing in existing infrastructure.

The state regulators had requested additional information about the safety of the expansion in January, and ultimately determined that “the increased capacity will not have a significant effect on the safety of the pipeline.”  

The entirety of the Dakota Access Optimization proposal includes no new pipeline construction, only the construction of three pump stations – located in North Dakota, South Dakota, and Illinois respectively – and modifications to an existing facility in Iowa. Regulators in North Dakota, South Dakota and now Iowa have approved the proposal, as the project awaits a decision from Illinois regulators.

Craig Stevens, spokesman for Grow American’s Infrastructure Now, summed up Friday’s decision stating:

“The GAIN Coalition applauds the Iowa Utilities Board for approving the optimization of the Dakota Access Pipeline in Iowa. With today’s decision, DAPL Optimization is one step closer to allowing more American-produced crude oil to move to market and meet our country’s growing energy needs. The project will support high-skilled jobs and ensure the safe transportation of American oil. Pipelines like Dakota Access are some of the most heavily regulated, technologically advanced, and monitored infrastructure projects in the country.”

Judge Rules Army Corps Must Conduct an EIS on DAPL

On March 25th, the U.S. District Court in Washington, D.C. ruled the U.S. Army Corps of Engineers must conduct a full Environmental Impact Statement (EIS) for the Dakota Access Pipeline.

The pipeline, responsible for delivering Bakken crude oil to the Patoka Oil Terminal in Illinois, has been safely operating for almost three years following a lengthy approval process from state and federal regulators. GAIN spokesman Craig Stevens was one of the first experts to weigh in on the decision by the District Court, rightfully pointing out the project is among the most studied, regulated, and litigated pipelines in the history of our country.

Environmental Impact Statements are a component of the National Environmental Protection Act (NEPA) aimed to balance environmental and infrastructure interests by authorizing regulators to prepare documents assessing a project’s impact on its surrounding environment. Dakota Access’s 1200+ page Environmental Assessment (EA) was reviewed and approved by the Army Corps of Engineers  who issued a Finding of No Significant Impact or FONSI. This finding allowed construction to move forward on the project along with the four other state approvals from regulators across the line in North Dakota, South Dakota, Iowa, and Illinois.

An EIS is a broader review document than its EA counterpart and have become notorious for their length, timeline, and use as a political tool by project opponents, as GAIN has shared previously. These documents can average 669 pages in their finalized forms and typically take 4.5 years to complete. Any timeline for the Army Corps to complete this newly required EIS for DAPL is a guess at best.

Companies that construct major infrastructure projects need assurances from regulators that their investments in communities and projects will be honored by the rule of law. As Stevens’ statement noted, “…a court is [now] putting their work in potential peril. Not only does this decision risk one company’s investment, but it could also jeopardize our nation’s economic and energy security moving forward.”

Federal Judge Sides with Texas Natural Gas Pipeline Developer

The Houston Chronicle reported earlier this week that U.S. District Court Judge Robert Pitman has sided with Houston pipeline operator Kinder Morgan in a dispute over the construction of the Permian Highway Pipeline, a 430-mile pipeline to transport gas from the Permian Basin to U.S. Gulf Coast and Mexico consumer markets.

The Chronicle reports:

As part of a federal lawsuit, the cities of Austin and San Marcos, Hays and Travis counties, the Barton Springs Edwards Aquifer Conservation District and four landowners sought a preliminary injunction against the pipeline project which is being built through Texas Hill Country and over the Edwards Aquifer, an underground reservoir home to several threatened and endangered species of salamander, fish and insects.

Kinder Morgan has affirmed their commitment to environmental conservation and has assured regulators that the Permian Highway Pipeline project will fully comply with the Endangered Species Act. The pipeline has undergone a rigorous permitting and approval process, working with a number of state and federal regulatory agencies, including but not limited to the Texas Railroad Commission, U.S. Fish and Wildlife Service, and the U.S. Army Corps of Engineers.

Furthermore, investment in natural gas infrastructure to transport record natural gas production from the Permian is welcome development. Once complete, the pipeline will be able to safely and efficiently transport 2 billion cubic feet of natural gas per day. As we have seen, increased access to natural gas for power generation is key to lowering carbon emissions.

As the economy bounces back from the COVID-19 crisis, it will be critical that the United States greenlight shovel-ready jobs and maintain a steady supply of domestically-produced natural gas and oil. The $2 billion project will support an estimated 2500 local construction jobs, generate approximately $42 million in annual tax revenue, and create new economic opportunities for Texans. While additional legal challenges play out in court, given these important contributions and role in safely delivering natural gas to consumers, the Permian Highway Pipeline must be able to move forward and ultimately come in to service to best serve American consumers.

Shovel-Ready Infrastructure Projects Must be Part of Stimulus Package

Due to COVID-19 forcing businesses and restaurants to close and people to stay home, the economy is struggling. The stock market has recently seen several of its worst days in history. Luckily, Congress and the Trump Administration have been working around the clock on a stimulus package that could cost as much as $2 trillion dollars. As lawmakers put together legislation, they should consider all possible angles, including greenlighting shovel-ready infrastructure projects.

A recent Morning Consult op-ed authored by Craig Stevens, spokesperson for Grow America’s Infrastructure Now, explains how shovel-ready infrastructure projects can play a key role in boosting the economy post-COVID-19. Stevens points out that President Franklin Delano Roosevelt’s successful “New Deal” used large-scale infrastructure investment to put Americans back to work and inject money into the American economy post-Depression.

Stevens writes:

“Fast forward nearly 90 years, while society has made significant technological advancements, the same principles can be applied today. But rather than using taxpayer dollars to fund such infrastructure initiatives, the private sector stands ready to move. Public-private partnerships offer a unique opportunity to bolster American infrastructure — which received a D+ from the American Society of Civil Engineers’ on its latest report card.

“Energy infrastructure in particular offers a ripe opportunity for such partnerships. Energy projects such as pipelines, power plants, refineries and export terminals are capital-intensive, multiyear projects that support tens of thousands of high-skilled jobs. Projects such as the Permian Highway natural gas pipeline in Texas, the Line 3 pipeline replacement in Minnesota, and the optimization of the Dakota Access Pipeline in the Midwest all stand to provide significant benefits in a time when economic investment is most-needed.”

The private sector can create long-term infrastructure investment that will bolster American energy, while simultaneously benefiting the environment by lowering carbon emissions and reducing reliance on truck and train energy transport. These projects could also employ tens of thousands of skilled workers across the country while the economy bounces back from this pandemic while also increasing American energy independence.

Federal and state governments should be working together, now more than ever, and must ensure infrastructure investment is encouraged to move forward. These projects will help get people back to work and offer some stability during these uncertain times.

Lessons on Modernizing America’s Infrastructure from the Success of the Dakota Access Pipeline

In an op-ed recently published in the Williston Herald, Ret. Colonel Tom Magness draws on his expertise as a former commander in the U.S. Army Corps of Engineers to make the case for the continued enhancement of America’s energy infrastructure though public-private partnerships. Citing bipartisan consensus on the need to modernize national infrastructure, Magness argues that recent successes in the energy sector should be used to inform subsequent undertakings. In his view:

The combination of industry-led innovation and strong regulatory oversight has helped improve existing infrastructure and deploy new capabilities, both of which have been instrumental in keeping pace with new production happening across the country.

For Magness, the success of the Dakota Access Pipeline and Energy Transfer’s proposed optimization plan exemplifies the benefits of a public-private approach. He writes:

The Dakota Access Pipeline optimization will add significant capacity to efficiently move product, helping to alleviate transportation bottlenecks and reduce dependence on rail and truck.

He stresses that the advantages of these partnerships are not limited to improvements in efficiency and are shared by all stakeholders.

The result of the project plan is a clear win for communities and the environment…Working with federal, state and local regulators, industry leaders are introducing new technologies, implementing best practices and investing in community safety—all of which reduce the chances of an incident and improve responses if one happens.

Magness applauds the industry leaders and government officials whose cooperation has made early victories possible, and concludes his piece by calling for the continued improvement of energy infrastructure through public-private partnerships and the streamlining of the regulatory process.

Doing so will build on recent success, secure our country’s march towards energy independence, and best protect our communities and the environment.

Doubling Down on the US Oil Industry

Real Clear Energy recently published an op-ed by former administrator of the U.S. Energy Information Administration Guy Caruso on the resilience of the American energy industry. Media coverage of the coronavirus-driven recession and the OPEC-Russia oil war has portrayed both as existential threats to American oil producers. Caruso argues that while these problems are not insignificant, they are far from insurmountable.

Caruso refutes several of the common claims made by energy doomsayers. The first is the notion that the coronavirus has exposed complex structural deficiencies in the U.S. oil industry. Caruso finds little evidence of this. He writes:

“Fortunately for American oil producers, the root cause here is largely singular … The current glut does not reflect a longer systemic problem such as an unfriendly regulatory environment or any other more permanent obstacle to success.”

Anticipating that critics of his analysis might retreat to arguments about oil price susceptibility to foreign manipulation, Caruso demonstrates that the current situation reveals the vulnerability of the American oil industry’s chief competitors.

“Skeptics would be correct to point out that OPEC and Russia’s decision to engage in a price war in the midst of this viral crisis is largely responsible for the magnitude of the price drop. However, they would be wrong to interpret that choice as a sign of unassailable market dominance.If anything, it exposes weakness. … Russia’s recalcitrance to cut supply, even at the cost of alienating an ally, is proof of the threat posed by the growing US energy industry.” 

Caruso shows that the price war is a unsustainable attempt to reduce investment in American oil and force producers to shut down by highlighting the discrepancy between short term political tactics and long term economic reality.

“Cutting oil prices is a tactical move that stunts the growth of the US energy industry in the short term. However, it isn’t a credible strategic threat in the long term because the success of the American economy is far less dependent on oil prices than its antagonists.”

Caruso argues that unless Russia and Saudi Arabia’s scare tactics succeed in eroding investor confidence, the U.S. oil industry will not only survive the current crisis but will be well-positioned for substantial expansion in its aftermath. He concludes:

“For American investors and producers, a steady hand in the face of uncertainty may be rewarded with a more robust domestic oil industry, greater energy security, and enhanced negotiating power. Yielding now would amount to a missed opportunity to subvert the strategies of vulnerable energy adversaries.”