First QER proposals include local gas system improvement assistance
The White House recommended that the US Department of Energy concentrate on modernizing the nation’s energy transportation, storage, and distribution (TS&D) systems in its initial proposals under the recently established Quadrennial Energy Review. The Apr. 21 report also posed that DOE financially assist states in providing incentives for natural gas utilities to replace and improve local distribution systems (LDS).
“Changes in the geography of domestic energy production stress the ability of existing infrastructures to move both liquid fuels and electricity from supply regions to demand centers,” the White House said in a statement. “Congestion in the nation’s ports, waterways, and rail systems affect the timing and cost of moving not just energy products, but all commodities,” it added.
It said the program, which also would include targeted funding to offset incremental costs to low-income households, would cost an estimate $2.5-3.5 billion over 10 years.
The report also called for:
• Expansion of the US Strategic Petroleum Reserve’s capacity, and updating its release authority to reflect modern oil markets.
• The US Department of Defense and DOE to continue research and development of biofuels, which would be compatible with existing petroleum distribution systems.
• An ambitious integration of Canadian, Mexican, and US energy markets, and promotion of programs to help Caribbean nations diversify their supplies.
• Congressional approval of DOE’s request for $10 million in fiscal 2016 to help update estimates of methane emissions from gas wells, pipelines, and local distribution systems.
• Programs to help train more workers to inspect, maintain, and replace energy TS&D systems.
Oil and gas association officials said on Apr. 21 that the initial QER recommendations, which also include several for electricity, highlight the need to improve the national energy infrastructure.
“[It] reflects DOE’s own prediction that by 2040 Americans will still need oil and natural gas to meet more than 60% of their energy needs,” American Petroleum Institute Executive Vice-Pres. Louis Finkel said. “If the president wants to achieve our nation’s full energy potential and play a key role in this equation, he should put this industry to work.”
US gas supply and production areas have shifted and expanded in the last 10 years, and more demand for gas to generate power and manufacture goods will lead to adjustments in regional consumption patterns, Natural Gas Supply Association Pres. Dena E. Wiggins predicted. “Building new infrastructure and optimizing the efficient use of our current pipeline and LNG infrastructure is essential,” she said.
Interstate Natural Gas Association of America Pres. Donald F. Santa said the QER’s first volume also recommends greater coordination across agencies, cost recovery, and greater resources for key federal agencies involved in the siting, permitting, and review of infrastructure projects, including pipelines.
“We appreciate, as well, the recognition of the need for statutory reforms to improve coordination across agencies involved in authorizing and permitting energy infrastructure projects,” Santa said.
American Gas Association Pres. David K. McCurdy said gas utilities already are focused on upgrading and modernizing LDS, and 38 states now have specific rate mechanisms to foster accelerated replacement of pipelines. AGA members’ concerted efforts to replace local lines also have contributed to methane emissions reductions, he said.
Contact Nick Snow at [email protected].
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.
