Dakota Access Pipeline Optimization Key to Transporting Bakken Oil

Over the course of the next two months regulators in South Dakota, North Dakota, and Illinois will hear from Energy Transfer representatives, unions, and community members on the proposed Dakota Access Pipeline (DAPL) Optimization plan.

The plan, submitted by DAPL owner Energy Transfer, intends to double the throughput of DAPL to 1.1 million barrels a day through the addition of three pump stations along the pipeline route.

As the American energy industry continues to flourish the approval of DAPL Optimization is essential to fully realizing the benefits afforded by the country’s many resources.

North Dakota is ranked second among U.S. states in crude oil production and proved reserves. To take advantage of Bakken resources companies must continue to invest in infrastructure development. Similarly, regulators must acknowledge the value of these investments by approving modifications like DAPL Optimization.

DAPL Optimization is a very straightforward process. There will be no mainline construction and no additional pipeline added to the already existing 1,100 miles. The three proposed pump stations are subject to the same safety oversight bodies as the pipeline and will be remotely monitored around the clock. Energy Transfer will be working closely with local, state, and federal authorities to ensure full compliance.

Each state stands to benefit from the plan, too. Since becoming operational DAPL has paid nearly $25 million in taxes. Three additional pump stations will generate more tax revenues for each state to put towards public services like schools, hospitals, and emergency services.

Furthermore, unions throughout the states will have another important job-creating project to see to completion while industry members up investment in Bakken production knowing DAPL offers ample delivery capacity.

Pipelines are the safest means of delivering crude oil to market. The DAPL Optimization plan will continue to take risk off the road and open up opportunities for greater energy investment in the Bakken region.

As regulators begin their review of the plan they must fully consider the economic, environmental, and industry benefits optimization offers. DAPL Optimization is yet another step towards achieving a top-down, fully developed energy network for Americans.

Eliminate barriers to energy development in Texas

The Texas Tribune’s TribTalk published an opinion editorial by former chairman of the Texas House Energy Resources Committee Jim Keffer where he discusses the importance of investing in energy infrastructure and eliminating “senseless barriers to energy pipeline development.”  In his experience in the Texas Legislature, Keffer made it a priority to promote energy independence through thoughtful, market-based energy polices.  Keffer writes:

“Investment in our nation’s energy infrastructure network has a wide range of benefits beyond affordable and efficient delivery of energy products to consumers. For example, the Texas oil and natural gas industry paid more than $14 billion in state and local taxes and state royalties in fiscal year 2018. That is the equivalent of $38 million each day that directly funds our schools, universities, roads and emergency responders.”

He also highlights the growing influence of energy and liquefied natural gas projects across the state. According to the Texas Oil and Gas Association, oil and natural gas will generate an economic benefit of an estimated $145 billion in Texas. As energy development continues to be a priority among officials throughout the Permian, there will be a growing need for energy infrastructure like pipelines to transport oil and natural gas. Keffer adds:

“Further, using the Permian Basin as a case study, production in 2018 alone exceeded 15 billion barrels, while total takeaway capacity was 5.5 billion barrels; in effect only 58% of total production went to market. New pipelines that will likely go into service at various times in 2019 and will alleviate the bottleneck — but until then, capacity constraints will likely limit producers’ activities. In addition, flaring and venting of natural gas in the Permian Basin in Texas and New Mexico reached an all-time high in this year’s first quarter. This widespread waste of a valuable commodity is the result of persistent infrastructure challenges, a lack of enough takeaway capacity and natural gas storage and an unexpected outage on a key pipeline in the area.”

PHMSA Issues Improved Pipeline Safety Rules

Last week U.S. Secretary of Transportation Elaine Chao announced the issuance of major updates to the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) pipeline safety rules applicable to the more than half million miles of gas pipelines in the United States.

These rules follow Congressional mandates from the Pipeline Safety Act of 2011, to which Secretary Chao offered, “These are significant revisions to federal pipeline safety laws and will improve the safety of our nation’s energy infrastructure.”

A breakdown of the new rules:

  • “Gas transmission rule” requires gas transmission pipeline operators to test the Max Allowable Operating Pressure (MAOP) of lines built before 1970 to determine material strength while updating retention standards on transmission line recordkeeping.
  • “Hazardous liquid rule” requires operators to inspect pipelines following extreme weather events to address any resulting damage. Additionally, the rule encourages operators to use all available data to understand pipeline threats and leak detection.
  • The final rule, “Enhanced emergency order procedures” finalizes provisions from a 2016 interim rule establishing emergency orders to impose restrictions, prohibitions or other safety measures on pipeline operators.

It is encouraging to see PHMSA honor its responsibility by continuing to review and improve upon the safety of domestic energy transport and delivery. The latest round of updates are welcome additions to the robust oversight that has worked to make pipelines the safest means of natural gas transport.

As natural gas grows into the nation’s primary energy source it is critical that delivery remains reliable and safe. Improved safety benefits consumers and industry members, who can seldom afford delays in delivery thanks to the wealth of natural gas being produced nationwide.

Looking ahead, as pipeline safety continues to grow and develop, regulators should look for opportunities to streamline permitting and application processes to broaden the network of pipelines nationwide. Otherwise, natural gas production will continue to outpace delivery capabilities and create bottlenecks that ultimately dampen the United States’ energy revolution.

For further insight on the importance and value of safe energy infrastructure former PHMSA Administrator and GAIN strategic advisor Brigham McCown weighed in on the rules in a recent Forbes column here.

NY Pipeline Moratorium Comes with Costs

News out of upstate New York indicates a tractor trailer carrying compressed natural gas overturned on Interstate 88 when swerving to avoid a deer en route from the Marcellus shale region of Pennsylvania.

During cleanup of the accident some 80 area homes were evacuated in caution of potential ignition of the natural gas. Additionally, portions of the interstate were also closed for several hours.

This accident – which also killed the driver of the tractor trailer – should signal to Governor Cuomo the auxiliary costs the public must bear while under a moratorium on pipeline infrastructure.

All signs point to truck transport of natural gas to be much less safe than other methods, especially natural gas pipelines. In fact, truck transit accidents have been found to be especially difficult to diffuse, with deaths and injuries “fairly common.”

Since going to war on natural gas pipelines, Governor Cuomo has subjected New Yorkers to a number of costs.

As many as 800,000 New Yorkers are living in communities without gas – hookups. The moratorium has also inflated prices. Despite already paying some of the highest utilities nationwide, a moratorium on natural gas infrastructure has pushed prices 90% higher than the average U.S. consumer. Furthermore, as cold weather subsided in 2019 Con Ed consumers – especially afflicted by the moratorium – paid two-thirds more than the national average.

The tragic accident on I-88 highlights additional costs imposed by leaving the risk on the road. Governor Cuomo should wisen-up to pipelines’ ability to take the risk off the road and offer reliable resource delivery to New Yorkers; the costs of doing otherwise are already too high.

New Natural Gas Pipeline Comes Into Service in the Permian

Kinder Morgan announced its 448-mile Gulf Coast Express Pipeline will begin full commercial service ahead of schedule today, September 25, 2019. The Houston Chronicle reports the natural gas transmission is fully booked under long-term contracts and will move 2 billion cubic feet of natural gas per day from the Waha hub in West Texas to the Agua Dulce hub in South Texas. From there, product can be exported on other pipelines to Mexico or LNG export terminals along the Gulf Coast.

“With natural gas supplies projected to rise over the next 20 years from supply basins such as the Permian, our strong network of pipelines provides the ability to connect this supply to the growing markets along the Gulf Coast,” Kinder Morgan CEO Steve Kean said in a statement.

This pipeline, and others like it, are critical additions to our nation’s energy infrastructure. As experts have previously argued, expanding the Permian’s pipeline network to carry the record amount of natural gas being produced will decrease the practice of flaring and instead transform the excess product into a significant asset.

In addition to bolstering our energy security and ensuring grid resiliency, the project provided significant economic benefits. Construction involved 3,000 contractors who logged in more than six million hours of work. Pipeline projects provide economic development opportunities, new streams of tax revenue, and well-paying jobs. It is important that U.S. policymakers continue to welcome investment in our energy infrastructure network to meet our energy needs at home and abroad.

Berkeley Natural Gas Ban Misses the Mark

Morning Consult recently published an op-ed by GAIN spokesman Craig Stevens regarding the City of Berkeley’s ban on natural gas hookups for new buildings. Stevens points out that other California cities including San Jose, Sacramento, and Los Angeles are considering similar bans. The Seattle City Council is also considering a ban of their own, which Stevens calls “myopic.” The op-ed describes the new regulation:

Under the natural gas ordinance introduced by Berkeley Councilwoman Kate Harrison, all new single-family residences — including townhouses and small apartment buildings — are prohibited from installing natural gas appliances. Officials say that a similar regulation for commercial buildings and larger apartment complexes will soon follow.

Stevens contends that Berkeley and other municipalities are “operating under the misguided belief that the shift from natural gas to electric appliances will be better for the environment.” But these policies will burden residents with higher energy costs while providing minimal environmental benefit. Stevens writes:

With this announcement, Berkeley’s city council has struck a new blow – not only against common sense, but also against consumer choice, preventing residents from taking advantage of affordable, clean-burning and domestically produced natural gas. In a state that already boasts one of the highest costs of living in the nation, Berkeley’s ordinance will further increase utility costs for residents. According to Patrick Kennedy, a developer who builds high-density housing in the area, adding individual electric hot-water heaters to each apartment unit would be between 10 and 20 times more expensive than gas water heaters, a cost that could be as much as an additional $3,000-$4,000 per unit.

Environmental activists are constantly moving the goal posts. What was once lauded by President Barack Obama as an important “bridge fuel” has now been referred to as “dirty energy.” Natural gas has helped lower U.S. carbon emissions from the power sector by 28% since 2005. It is responsible for providing more than 35% of America’s electricity, and more than two-fifths of California’s total in-state net electricity generation (2017).

Ironically, natural gas power generation may increase in order to meet the rising electricity demand in California, considering wind and solar only provide about 8% of the country’s electricity needs. While developing sustainable energy solutions is important, policymakers should carefully consider the effectiveness of regulations that could negatively impact consumers and risk grid reliability.

New Mexico Proposal Seeks to Use Oil Profits to Pay for College Tuition

The New York Times recently reported New Mexico is unveiling a program to make tuition at its public colleges and universities free for all state residents, regardless of family income. The $35 million program, which still requires legislative approval, would use revenues from the state’s booming oil and gas production to cover much of the cost.

The Permian Basin, spanning West Texas and Southeastern New Mexico, has played a significant role in the United States’ record energy production. But in order to sustain the growth in the Permian, policymakers must welcome further investment in the region’s critical energy infrastructure network. New pipelines are needed to transport crude oil and gas to refineries and consumer markets across the country.

Free college has been staple for a number of the 2020 presidential hopefuls – but so has limiting – or even eliminating – U.S. oil and gas development. New Mexico’s proposal is a perfect example as to how a strong domestic energy industry can benefit all parties – from the thousands of families supported by the industry’s well-paying jobs to the students that will be able to take advantage of this innovative program. A successful energy industry is key to a successful economy.

In light of the Saudi Aramco attacks this past weekend, the United States was reminded as to the importance of American energy production. Thanks to record production in the Permian, Americans were able to continue with their everyday lives, largely uninterrupted despite the attacks affecting 5-6% of the global oil supply.

Prioritizing investment in energy development and expanding our energy infrastructure network facilitates new economic opportunities, bolsters our national security, and meets the energy needs of Americans and our allies abroad.

Look Beyond Traditional Solutions to the Immigration Crisis

As leaders in Washington debate over solutions to the immigration crisis at our southern border, a recent opinion editorial by James “Spider” Marks, a retired U.S. Army major general and strategic adviser to the GAIN Coalition, offers a hands on solution that involves digging deeper into why Hondurans and Latin Americans are fleeing their home countries in the first place.

Marks suggests the idea of an “energy marriage between the United States and Honduras” to address the immigrant crisis. He notes that this partnership would be mutually beneficial in advancing both Honduran and American national security while addressing migration concerns.  He notes: 

“Honduras is a country lacking sufficient energy infrastructure, resulting in poor availability and reliability. There are undoubtedly humanitarian gains to be made through a happy matrimony between the Honduran and U.S. energy sectors.”

The U.S. is a leader in the energy sector achieving production records and setting high expectations across the globe. We have set production records this year and are on our way to become a net energy exporter by 2020. On the other hand, Honduras’s energy sector has not fared as well with its nationalized energy provider suffering consistent financial losses. Marks explains:

“[T]he United States is perfectly positioned to help Honduras get ahead of this crisis by pursuing private investment there from energy companies. In particular, the natural gas sector is experiencing a boon from which Honduras and its citizens can benefit.”

The GAIN Coalition adamantly supports seeking investment opportunities in neighboring countries to not only share learned knowledge and expertise, but to increase market share for U.S. energy companies. Not only would this approach help stabilize the Honduran energy supply, it would create unique economic stimulus in the U.S. thus providing tax revenues and capital expenditures to Americans.

Shell’s new cracker plant sets a great example for future energy projects

The Tribune-Review published an opinion editorial by Bill Godsey, owner and president of Geo Logic Environmental Services and a former geologist for the Texas Railroad Commission.  Godsey highlighted President Trump’s recent visit to Royal Dutch Shell’s ethane cracker plant in Western Pennsylvania noting that production of the state’s natural gas resources is booming and over the past ten years, has increased “more than thirty-fold”. Godsey wrote:

“Second only to Texas, Pennsylvania produced more than 18 billion cubic feet per day of natural gas through the first half of this year, or about 20% of total U.S. supply. That extraordinary output has been good for the state’s consumers, more than half of whom rely on gas as their primary heating fuel. And, as it turns out, it’s not bad for attracting business either.”

Godsey then touted the benefits that will come from the multibillion-dollar plant. The Shell facility created about 6,000 construction jobs and when completed, it will establish another 600 permanent positions. Cracker plants and LNG facilities are popping up around the country and while they are extremely beneficial for the economy and the job market, some people are not supportive. He notes:

“These activists fail to acknowledge the success of shale energy and emerging technologies in reducing our environmental footprint while simultaneously allowing us to safely retrieve vital energy resources. Between 2005 and 2017, the United States cut CO2 emissions by 14%. During the same time, oil and natural gas production increased more than 80% and 50%, respectively.”

The Shell ethane plant is a great example of what projects we need to invest in as a country to promote more infrastructure development and ensure energy security. Opponents are naïve to think renewables can produce enough electricity to do the job oil and natural gas do now. They should focus on the positives that come from producing, refining, and transporting these energy resources. 

PA Court Ruling Underscores the Importance of Energy Infrastructure

On Monday, the Pennsylvania Commonwealth Court dismissed a complaint filed by Pennsylvania Sen. Andrew Dinniman that attempted to challenge the construction and operation of Marine East, a pipeline currently under development in Pennsylvania. The ruling, delivered by President Judge Mary Hannah Leavitt, found that Dinniman’s claim lacked both personal and legislative standing to challenge the project.

Dinniman has long been an opponent to the project but has yet to be successful in his attempts to stop construction. According to the Philadelphia Inquirer, his complaint noted:

“The pipelines are part of a system that Sunoco Pipeline is building to transport natural gas liquids, such as propane, from the Marcellus and Utica Shale regions to an export terminal in Marcus Hook, Delaware County.”

Mariner developer Sunoco Pipeline is owned by Energy Transfer Partners LP, of Dallas. Vicki Granado, Energy Transfer spokeswoman, was also quoted in the Daily Local News stating her satisfaction with the ruling:

 “We are pleased that the court has remanded this matter to the PUC to dissolve the interim emergency injunction and to dismiss this complaint. We hope the PUC acts swiftly to take care of the matter. Furthermore, we believe this ruling confirms that Senator Dinniman inappropriately used public funds to pay his legal fees for this case, which should result in him having to pay the money back to the Commonwealth. As we have always said, our focus remains on the safe construction and operation of this important infrastructure project for the state of Pennsylvania.”

GAIN applauds the Commonwealth Court for upholding the rule of law. This ruling further proves that anti-pipeline politicians and activists are acting on baseless, frivolous claims that undermine energy security and threaten the safe transportation of our reliable energy resources. Pipelines are the safest, most efficient method of delivering oil and natural gas across the country. We must work together, not against each other, to ensure sustainable energy for future generations.