Forecasting Pipeline Milestones - Anytime Means No Time
Despite novel issues, major natural gas pipeline projects saw significant movement in their permitting in 2017. The lack of a quorum meant that those projects engaged in environmental review could move forward by completing their environmental report, and that those projects pursuing a notice to proceed with construction could continue to pursue the necessary state and federal permits. However, more so than ever before, state governments tasked with issuing these permits decided to further complicate matters. Not until the quorum was regained could those projects stuck in between federal and state regulators, seeking a Certificate, see movement. Today, we briefly examine what these issues mean for the industry through the prism of three market impactful projects, so our customers can adeptly address these issues in a hyper competitive market.
TransCanada's Mountaineer and Gulf Xpress Projects
Most recently, Columbia Gas's Mountaineer Xpress Project was approved. The FERC issued a Certificate of Public Convenience and Necessity for the project, as well as for the Gulf Xpress Project on Friday, December 29, 2017, just after we released our Insights presenting viewpoints on pipeline industry issues in 2018. While Columbia had requested that the Certificate be issued in June, those who benefit from LawIQ's forecasting services were well aware -- following issuance of the Final Environmental Impact Statement in July -- that the Certificate would likely be issued in late December. A view into the LawIQ platform below provides you with the insight our users gained from our models prediction on December 28. What's next for Mountaineer Xpress?
Columbia Gas must complete all of the necessary consultations and permits to proceed with construction of the project, a median date we are currently forecasting in our Platform to be March 4, 2018. The project is subject to a Clean Water Act, Section 401 Water Quality Certificate in West Virginia, which it has received, and thus the project will not likely encounter issues experienced by other developers. The project is also subject to the National Historic Preservation Act and the Endangered Species Act consultations. So where does Columbia Gas stand for beginning construction? LawIQ's users can identify all outstanding federal and state permits in the forecast tab of the LawIQ platform.
The MXP Certificate Order also offers a window into the Commission's thinking about the impact of tax cuts and revisions to the Certificate Policy Statement. For the tax cuts, the Order approves the incremental rates that are based on strict fixed/variable rate methodology, which presumably included taxes at 35%. So the Commission apparently did not feel compelled -- at least at this point in time -- to adjust rates based on pending tax cuts. (See our recent analysis for more on the impact of tax cuts on pipeline tariffs.) And with regard to further support for pending revisions to the Certificate Policy Statement, including perhaps the "need" determination, as we discussed last week, the Order states: "Moreover, it is current Commission policy to not look beyond precedent or service agreements to make judgments about the needs of individual shippers."
Enbridge's Nexus Pipeline Project
Similarly, the developer of the Nexus Pipeline Project requested that the project be approved in November 2016, but the Certificate was not issued for many months after the requested date. Perhaps even more importantly, when the Certificate was issued (one day after LawIQ's forecasted date) our model provided an accurate prediction two days from our median forecast) or the issuance of the notice to proceed with construction. And while the FERC experienced a lack of a quorum for nearly six months, this had little impact on LawIQ's prediction accuracy. When the Nexus project was approved, LawIQ users were already aware that the notice to proceed with construction would likely happen in the second half of October.
But litigation issues led to the stay of construction along an eight mile segment in Ohio. The stay has been in place since November 22, and hopefully does not portend another hurdle for developers after receiving all permits to begin construction.
Are you wondering which projects may be approved next or which have outstanding permits that could prove to be a hurdle? Contact us to see how to use the LawIQ Energy regulatory analytics and intelligence platform to provide you insights into the unforeseen and an advantage over your competition.