regulation and investment in the u.s

Regulation and Investment in the U.S.

Robert J. Cupina, Deputy DirectorOffice of Energy Projects

Federal Energy Regulatory Commission

GIE Annual ConferenceBratislava, SlovakiaSeptember 28, 2006

2

FERC

Office of Energy Projects

Basis of U.S. Regulation:Natural Gas Act

NATURAL GAS ACT

Section 3 Import/Export

Section 7(c)Interstate

• Pipelines• Storage

• LNG Terminals

3

FERC


Source: Based on Platts PowerMap

Pipeline Regulation

•Construction and Operation•Tariffs

•Rates•Rate Schedules

•Terms and Conditions of Service

4

FERC


•Construction and Operation•Tariffs

•Rates•Rate Schedules

•Terms and Conditions of Service

Storage Regulation

Source: Based on Platts PowerMap.

5

FERC


LNG Regulation

•Construction and Operation

•Ongoing Safety

•No Tariff•Any Business Model Acceptable

LAKE CHARLESLAKE CHARLES

ENERGY BRIDGEENERGY BRIDGE(Coast Guard Jurisdiction)(Coast Guard Jurisdiction)

ELBA ISLANDELBA ISLAND

COVE POINTCOVE POINT

EVERETTEVERETT

6

FERC


Evaluation of PipelineProposals

• Certificate Policy Statement– Existing Shippers Do Not Subsidize

New Facilities– Develop Record on Impacts

(positive and negative) and Allow Commission to Make Decision

• Environmental/Engineering Review

7

FERC


Evaluation of StorageProposals

• Storage Policy for Market-based Rates– Relevant product market for market

power analysis includes many substitutes, or

– MBRs allowed even if lack of market power has not been demonstrated in situations to encourage infrastructure

• Environmental/Engineering Review

8

FERC


Evaluation of LNG Terminals

• Environmental/Engineering Review• Safety Review• No Tariff

– Hackberry Decision (December 2002) no need for tariffs or third party access . Treats re-gas as production.

FERC


9

AOpen Access At

Delivery of Liquid to Terminal

LNGSupplier

s

LNGBuyers

AB

BOpen Access At

Delivery of Vapor into Interstate

Pipeline System

Liquid to Vapor Flow

9

Hackberry Decision

FERC


10

Major Pipeline Projects Certificated (MMcf/d)

January 2005 to September 2006

12.6 BCF/D Total903 Miles

ANR(168)

15

Petal (600)

Cheniere Corpus Christi(2,600)

Transcontinental (105)

CenterPoint(113)

CIG (105)

Vista Del Sol(1,100)

Golden Pass (2,500)

El Paso(502)

Mill River(800)

San Patricio(1,000)

2 43

1. TransColorado (300) 2. Rendezvous (300) 3. WIC (350) 4. Entrega (EnCana) (1,500) 5. Questar (102) 6. Northwest (450) 7. Questar Overthrust (550)

Northern Border(Chicago III)(130)

Dominion South (200)

Columbia (172)

Triple-T Extension(Tennessee) (200)

Jewell Ridge Pipeline(East Tennessee) (235)

Midwestern(120)

26.88 BCF/D Total1,511 Miles

Transcontinental (100)

McMoRan (1,500)

NE ConneXion(Tennessee)

(136)

Dominion(700)

Cypress Pipeline(Southern Natural) (500)Florida Gas

(160)

Cameron (1,500)Cheniere Creole Trail (3,300)

Port Arthur (3,000)

Cove Point Pipeline (800)

Logan Lateral(Texas Eastern)

(900) 6

Essex-Middlesex(Tennessee)

(82)

7

FERC


11

Compass Pass(1,000)

Algonquin(800)

Point Comfort(1,000)

Seafarer Pipeline(El Paso) (800)

Millennium(525)

Empire Connector(Empire Pipeline) (250)

2007 Expansion(Vector Pipeline) (245)

Gulf LNG Pipeline(1,500)

Broadwater Pipeline

(Broadwater) (1,000)

North Baja Expansion(North Baja Pipeline)

(2,700)

Major Pipeline ProjectsPending (MMcf/d)

September 2006


Algonquin(325)

Carthage to Perryville(CenterPoint)

(1,237)

Market Access(Iroquois)

(100)

TIME II(Texas Eastern) (150)

Big Sandy Pipeline(Equitrans)

(130)

Maritimes Phase IV(Maritimes)

(418)

Rockies Express REX West(Rockies Express Pipeline)

(1,800) Blanco to Meeker(TransColorado) (250)

Northern Lights(Northern Natural)

(374)

Bradwood Landing(NorthernStar)

(1,300)

Potomac Expansion(Transcontinental)

(167)

Wamsutter Expansion(Questar Overthrust)

(750)

Phase III Project(Gulfstream)

(200)

East TXMississippi Expansion

(Gulf South)(1,700)

FERC


12

Sonora Pipeline(1,000)

Brookhaven Lateral(Iroquois)

(80)

Phoenix Lateral(Transwestern) (500)

Southern Expansion(Questar Pipeline)

(170)

Louisiana Pipeline(Kinder Morgan)

(3,395)


Major Pipeline ProjectsPre-Filing (MMcf/d)

September 2006

GII Project(Guardian Pipeline)

(537)

Kanda & Mainline (WIC) (225)

Continental Connector(El Paso)(1,000)

Pacific Connector(Williams Pacific)

(1,000)

Southeast Supply Header(CenterPoint)

(1,000)

Rockies Express REX East(Rockies Express Pipeline)

(1,800)

Phase IV Project(Gulfstream)

(155)

Southeast Expansion(Gulf South)

(700)

Sentinel Expansion(Transcontinental)

(151)

FERC


13

Northwinds Pipeline(NFG) (500)

Dracut Interconnect (Tennessee) (250)

Coronado (500)Painter Lateral (Overthrust) (200)

EnCana Extension (Entrega) (1,000)Questar Expansion (160)Uinta Basin (WIC) (300)

Greasewood Lateral (Northwest) (200)

Panhandle Eastern (750)KM Illinois Pipeline

(Kinder Morgan) (360)Kinder Morgan (170)

Natural (232)Henry Hub Expansion (Natural) (200)

North Texas Expansion (Trunkline) (510)Carthage Pipeline(KM Interstate)(700)

A/G Line Expansion (Natural)(139)Mid-Continent Express (Kinder Morgan) (1,500)

Mid-Continent Crossing (CenterPoint) (1,750)Transcontinental (Mobile Bay) (700)

Boardwalk PL (1,000)Shenzi Lateral (Enbridge) (100)

Alaska (4,000)

Major Pipeline Projects On The Horizon (MMcf/d)

August 2006


14

FERC


PipelineInfrastructure

• Least speculative gas infrastructure project– If approved, usually gets built– Cost-based rates required as an option, but

usually rates are negotiated• Contracts or binding precedent

agreements with shippers usually required by sponsor, not the Commission, prior to filing application.

• Since 2000, the Commission has approved 57.1 Bcf per day of capacity; over 9,000 miles of pipeline; and 2.2 million horsepower of compression– Estimated cost of $16.9 billion.

15

FERC


Pipeline InfrastructureApprovals 2000-2006

0

2

4

6

8

10

12

14

16

2000 2001 2002 2003 2004 2005 2006

Appro

ved C

apacit

y (

Bcf/

d)

0

500

1000

1500

2000

2500

3000

3500

Appro

ved M

ileage

Capacity Mileage

Short, high capacity pipelines todeliver regasified LNG to grid

Typical long-line and replacementpipeline projects

16

FERC


Pipeline InfrastructureFuture Additions

• The INGAA Foundation estimates that between 2006 and 2020, $50.9 billion will need to be invested in 26,000 miles of pipelines and 5.2 milllion HP in the U.S. and Canada – Replacement of facilities: $16.4 billion

• 9,300 miles, 1.2 million HP

– New facilities (16,900 miles): $34.5 billion• 16,900 miles, 4.0 million HP

– Alaska and MacKenzie Delta– Other facilities

FERC


17

Storage Projects(Capacity in Bcf)

Falcon MoBay (50.0)

County Line (6.0)

EnCana (8.0)

Bluewater(29.2)

Columbia (12.4)

Natural (10.0)

Dominion (9.4)

Texas Gas (8.2)

Freebird (6.1)CenterPoint (15.0)

Starks (19.2)Falcon Hill-Lake (10.4)

Liberty (17.6) Petal (5.0)

SemGas (5.5)

Certificated Since 1/1/05

On The HorizonCurrently Pending

Falcon Worsham-Steed (12.0)

Unocal Windy Hill(6.0)

Columbia (16.4)

Natural (10.0)

Bobcat (12.0)

Texas Gas (6.8)

Dominion (18.0)

Caledonia (11.7) Caledonia (1.7)

Arizona Natural Gas(3.5)

18

FERC


StorageInfrastructure Additions

• More speculative gas infrastructure project than pipelines– Not all gas users need storage service

• New storage pricing policy to promote storage development

• Since 2000, the Commission has approved 275 Bcf of storage capacity and daily deliverability from storage of 14.6 Bcf.

19

FERC


Storage InfrastructureFuture Additions

• The INGAA Foundation estimates that between 2006 and 2020, $5.5 billion will need to be invested in underground storage.

• The NPC estimates that between 2005 and 2025, 492 Bcf of storage capacity needs to be added in the U.S. at an estimated cost of about $4.5 billion.

46

30

CONSTRUCTEDA. Everett, MA : 1.035 Bcfd (SUEZ/Tractebel - DOMAC)B. Cove Point, MD : 1.0 Bcfd (Dominion - Cove Point LNG)C. Elba Island, GA : 1.2 Bcfd (El Paso - Southern LNG)D. Lake Charles, LA : 2.1 Bcfd (Southern Union - Trunkline LNG)E. Gulf of Mexico: 0.5 Bcfd (Gulf Gateway Energy Bridge - Excelerate

Energy)APPROVED BY FERC1. Hackberry, LA : 1.5 Bcfd (Cameron LNG - Sempra Energy)2. Bahamas : 0.84 Bcfd (AES Ocean Express)*3. Bahamas : 0.83 Bcfd (Calypso Tractebel)*4. Freeport, TX : 1.5 Bcfd (Cheniere/Freeport LNG Dev.)5. Sabine, LA : 2.6 Bcfd (Sabine Pass Cheniere LNG)6. Corpus Christi, TX: 2.6 Bcfd (Cheniere LNG)7. Corpus Christi, TX : 1.1 Bcfd (Vista Del Sol - ExxonMobil)8. Fall River, MA : 0.8 Bcfd (Weaver's Cove Energy/Hess LNG)9. Sabine, TX : 2.0 Bcfd (Golden Pass - ExxonMobil)10. Corpus Christi, TX: 1.0 Bcfd (Ingleside Energy - Occidental Energy

Ventures)11. Logan Township, NJ : 1.2 Bcfd (Crown Landing LNG - BP)12. Port Arthur, TX: 3.0 Bcfd (Sempra)13. Cove Point, MD : 0.8 Bcfd (Dominion)14. Cameron, LA: 3.3 Bcfd (Creole Trail LNG - Cheniere LNG)15. Sabine, LA: 1.4 Bcfd (Sabine Pass Cheniere LNG - Expansion)16. Freeport, TX: 2.5 Bcfd (Cheniere/Freeport LNG Dev. - Expansion)APPROVED BY MARAD/COAST GUARD17. Port Pelican: 1.6 Bcfd (Chevron Texaco)18. Louisiana Offshore : 1.0 Bcfd (Gulf Landing - Shell)CANADIAN APPROVED TERMINALS19. St. John, NB : 1.0 Bcfd (Canaport - Irving Oil)20. Point Tupper, NS 1.0 Bcf/d (Bear Head LNG - Anadarko)21. Kitimat, BC: 0.61 Bcfd (Galveston LNG)MEXICAN APPROVED TERMINALS22. Altamira, Tamulipas : 0.7 Bcfd (Shell/Total/Mitsui)23. Baja California, MX : 1.0 Bcfd (Energy Costa Azul - Sempra)24. Baja California - Offshore : 1.4 Bcfd (Chevron Texaco)PROPOSED TO FERC25. Long Beach, CA : 0.7 Bcfd, (Mitsubishi/ConocoPhillips - Sound Energy

Solutions)26. Bahamas : 1.0 Bcfd, (Seafarer - El Paso/FPL )27. LI Sound, NY: 1.0 Bcfd (Broadwater Energy - TransCanada/Shell)28. Pascagoula, MS: 1.5 Bcfd (Gulf LNG Energy LLC)29. Bradwood, OR: 1.0 Bcfd (Northern Star LNG - Northern Star Natural

Gas LLC)30. Pascagoula, MS: 1.3 Bcfd (Casotte Landing - ChevronTexaco)31. Port Lavaca, TX: 1.0 Bcfd (Calhoun LNG - Gulf Coast LNG Partners)32. Hackberry, LA : 1.15 Bcfd (Cameron LNG - Sempra Energy -

Expansion)33. Pleasant Point, ME : 2.0 Bcfd (Quoddy Bay, LLC)34. Robbinston, ME: 0.5 Bcfd (Downeast LNG - Kestrel Energy)35. Elba Island, GA: 0.9 Bcfd (El Paso - Southern LNG)36. Baltimore, MD: 1.5 Bcfd (AES Sparrows Point – AES Corp.)37. Coos Bay, OR: 1.0 Bcfd (Jordan Cove Energy Project)PROPOSED TO MARAD/COAST GUARD38. Offshore California : 1.5 Bcfd (Cabrillo Port - BHP Billiton)39. Offshore California : 0.5 Bcfd, (Clearwater Port LLC - NorthernStar NG

LLC)40. Offshore Louisiana : 1.0 Bcfd (Main Pass McMoRan Exp.)41. Gulf of Mexico: 1.5 Bcfd (Beacon Port Clean Energy Terminal -

ConocoPhillips)42. Offshore Boston: 0.4 Bcfd (Neptune LNG - SUEZ LNG)43. Offshore Boston: 0.8 Bcfd (Northeast Gateway - Excelerate Energy)44. Gulf of Mexico: 1.4 Bcfd (Bienville Offshore Energy Terminal - TORP)45. Offshore Florida: ? Bcfd (SUEZ Calypso - SUEZ LNG)46. Offshore California: 1.2 Bcfd (OceanWay - Woodside Natural Gas)

Existing and Proposed North American LNG

Terminals

As of September 22, 2006

FERC


A

2 326

38

25

40

39

18

US Jurisdiction

FERC MARAD/USCG

* US pipeline approved; LNG terminal pending in Bahamas** Construction suspended

28

82711

C,35

4117

7

515

4229

E

19

22

20

2324

43

1031

9 1214

3334

1,32

44

36B,13

37

45

21

4,166

D

55

POTENTIAL U.S. SITES IDENTIFIED BY PROJECT SPONSORS47. Offshore California: 0.75 Bcfd, (Chevron Texaco)48. St. Helens, OR: 0.7 Bcfd (Port Westward LNG LLC)49. Philadelphia, PA: 0.6 Bcfd (Freedom Energy Center - PGW)50. Astoria, OR: 1.0 Bcfd (Skipanon LNG - Calpine)51. Boston, MA: 0.8 Bcfd (AES Battery Rock LLC - AES Corp.)52. Calais, ME: ? Bcfd (BP Consulting LLC)53. Offshore New York: 2.0 Bcfd (Safe Harbor Energy - ASIC, LLC)54. Offshore California: 0.6 Bcfd (Pacific Gateway - Excelerate Energy)55. Offshore California: ? Bcfd (Esperanza Energy - Tidelands)POTENTIAL CANADIAN SITES IDENTIFIED BY PROJECT SPONSORS56. Quebec City, QC : 0.5 Bcfd (Project Rabaska - Enbridge/Gaz Met/Gaz de France)57. Rivière-du- Loup, QC: 0.5 Bcfd (Cacouna Energy - TransCanada/PetroCanada)58. Prince Rupert, BC: 0.30 Bcfd (WestPac Terminals)59. Goldboro, NS 1.0 Bcfd (Keltic Petrochemicals)60. Énergie Grande-Anse QC: 1.0 Bcfd POTENTIAL MEXICAN SITES IDENTIFIED BY PROJECT SPONSORS61. Lázaro Cárdenas, MX : 0.5 Bcfd (Tractebel/Repsol)62. Puerto Libertad, MX: 1.3 Bcfd (Sonora Pacific LNG)63. Offshore Gulf, MX: 1.0 Bcfd (Dorado - Tidelands)64. Manzanillo, MX: 0.5 Bcfd 65. Topolobampo, MX: 0.5 Bcfd66. Baja California, MX : 1.5 Bcfd (Energy Costa Azul - Sempra - Expansion)

Potential North AmericanLNG Terminals

As of September 22, 2006

FERC


47

US Jurisdiction

FERC MARAD/USCG

49

4850

63

57

58

59

61

62

64

65

51

52

47

53

6056

54

66

22

FERC


LNGInfrastructure Additions

• Most speculative gas infrastructure project– Capacity usually reserved by

marketers

• Hackberry Decision encourages new LNG facilities by removing some of the economic and regulatory barriers to investment.

23

FERC


LNGInfrastructure Additions

(Cont.)

• Existing Deliverability = 5.8 Bcf per day

• Since Hackberry Decision:– Approved by FERC = 25.3 Bcf per day– Pending before FERC = 13.6 Bcf per

day

• Potential Deliverability = 48.9 Bcf per day

24

FERC


LNG InfrastructureFuture Additions

• The NPC projects up to 9 new terminals and 9 expansions in North America are necessary by 2025 to provide a total of 15 Bcf per day of LNG imports.

• The INGAA Foundation estimates that $9.4 billion in investment will be needed to develop LNG terminals in the U.S. and Canada between 2006 and 2020 to support LNG imports of about 19 Bcf per day.

25

FERC


Conclusions

• Infrastructure construction necessitates firm contracts for capacity.

• The Commission is a responsible and responsive regulator - to both the public and the industry-the public interest.

• We approve the siting of infrastructure, but the market ultimately decides what is built.

• Contact [email protected]

regulation and investment in the u.s

Documents