Is the Crush of New FERC Projects Receding?

The time required for developers proposing pipeline projects, expansions and LNG facilities to receive a FERC certificate has been growing steadily since 2010. Many have attributed this to the mobilization of opposition groups, but that may not be the only factor contributing to the lengthening of the timelines. Our data shows that beginning in 2010 through 2015, the number of the projects that were submitted to FERC grew substantially. For the current fiscal year 2018, substantially fewer projects have been submitted, as compared to the peak year of 2015. If the industry stays on this current pace for the last third of this fiscal year, the number of projects will return to levels not seen since 2008 through 2012. For developers, a key question will be whether the time frames for approval will revert to the shorter time periods seen in 2008 to 2012, or whether approval timelines will continue to lengthen.

FERC Certificate Approval Timelines

The chart below shows the average time it took for projects that were filed in fiscal years from 2008 through 2016 to move from the certificate application to the issuance of the order. We note that there are still a few projects that were filed in fiscal years 2015 and 2016 that have not yet received approval --so the time required for projects filed in those two years will be even longer.

Timelines for P ipeline Projects, Expansions and LNG Facilities

Opposition Is Undoubtedly a Contributing Factor, But Is There More?

While conventional wisdom says that opposition to pipeline projects may have been a leading cause for the lengthening in the approval timelines, the chart below shows that there was also a substantial increase in the number of projects filed in each fiscal year, beginning in 2013 and peaking in 2015. The number of certificate proceedings declined from the peak in 2015, so, for this year, the industry is on pace to file fewer than half as many as it did in 2015. This means the number of projects filed at FERC is returning to a level consistent with the period of more prompt certificate reviews experienced between 2008 and 2012.

Yearly Certificate Proceedings Filings

With the Growth of the Permian, What Are the Regional Trends?

Clearly, the growth of the Marcellus/Utica and the demand for gas in the Northeast resulted in a very high percentage of projects between 2008 and 2017 being in the Northeast. But as shown below, in 2017, the Southwest became the focus of new projects. This burst of projects in the Southwest is most likely tied growth of LNG and the Permian. However, the Northeast has reasserted itself in 2018. Do the numbers mean that the Permian will not be as active a location for projects as was the Marcellus/Utica? Perhaps, but there are two mitigating factors. First, the next wave of Permian projects may not have found its way into the FERC funnel. Second, many of the Permian pipelines are being built solely within the state of Texas, which means FERC will not be responsible for approving the route for those pipelines.

Percentage of Proceedings by Region

We will continue to watch both the trends regarding protestor involvement and the number of projects filed at FERC, to see how changes in this data may impact our projections for the time required to receive FERC approval for pipeline projects, expansions and LNG facilities.

Upcoming Insights

Permitting issues regarding Permian-related pipeline projects that don't leave the State of Texas

What to make of the Form 501G and our view on some key issues that will arise when pipelines start completing them