INSIGHT: US Congress may make it easier to issue pipeline permits

HOUSTON (ICIS)–US energy trade groups see an opening for reforming how the country issues permits for pipelines and other energy infrastructure because Congress is facing several pieces of legislation that it must pass this session.

• Limits on pipeline capacity can constrain new oil and gas production, the source of domestic supplies of chemical feedstock
• Permit reform has bipartisan support
• The Farm Bill and the nation’s debt ceiling all present opportunities to address permit reform

SLOW PERMITTING PROCESS CONSTRAINS ENERGY PRODUCTION
The inability to receive permits to build new pipeline capacity can distort energy markets.

Energy companies are running out of pipeline capacity to take away natural gas produced in the Marcellus and Utica Shale formations in the northeastern US.

Growing oil production in other parts of the country could also face constraints. Oil wells – particularly those in shale basins like the Permian in west Texas and the Bakken in North Dakota – produce associated gas. If oil producers run out of pipeline capacity to ship out that gas, then that will limit their ability to increase crude production.

Slow, cumbersome permitting could sabotage the renewable energy projects that feature so prominently in President Joe Biden’s administration.

The Bipartisan Infrastructure Law and the Inflation Reduction Act (IRA) set aside billions of dollars for energy transmission, hydrogen, carbon capture and many other renewable and low-carbon projects.

These can be enormous projects that approach the scale of a refinery or a petrochemical complex, said Ryan Lance, CEO of ConocoPhillips. He made his comments during the CERAWeek by S&P Global energy conference.

“It is procedurally impossible to today to go on this journey unless we tackle the permitting process,” Lance said.

TRADE GROUPS SEE OPENING FOR PERMITTING REFORM
The Democratic party has already expressed support for permit reform. Joe Manchin, a senator from West Virginia, attached several proposals in a continuing resolution. It failed to pass the Senate, but not before receiving votes from most Democratic senators and some Republicans.

Energy trade groups said Congress could make another attempt at permit reform.

The Republican Party holds a majority in the House of Representatives, and they place energy as the top of their agenda, said Mike Sommers, president of the American Petroleum Institute (API). He made his comments during CERAWeek.

They will likely move on an energy bill at the end of March, Sommers said.

That bill will be an opening shot, and Sommers warned that there will be proposals exchanged between Democratic and Republican lawmakers.

Nonetheless, the energy bill could address permit reform.

Another opportunity for permit reform could come from the nation’s debt ceiling. Republicans in the House will need to vote on increasing it and allowing the federal government to stay open, Sommers said.

He expects legislators will focus on scoring policy wins instead of targeting cuts in spending. The debt talks could instigate the two parties to find consensus to pass policies that have bipartisan support.

The Farm Bill provides another opening for permit reform, said Karen Harbert, president of the American Gas Association (AGA).

The Farm Bill contains safety-net programmes, loans, disaster assistance and other programmes for farmers and ranchers. The last one was enacted in 2018.

The Farm Bill is a must-pass piece of legislation, and it contains a tremendous amount of energy policy, Harbert said.

Natural gas is used to make ammonia fertilizer; farmers burn propane to dry corn and other grains; and a large amount of the corn grown in the US is used to make ethanol. Increasing amounts of vegetable oil, animal fats and used cooking oil are being used to produce renewable diesel and sustainable aviation fuel (SAF).

REFORM PROPOSALS
Any new proposals could resurrect some of the ones made by Manchin.

One Manchin proposal would set a two-year target for reviews under the National Environmental Policy Act (NEPA) that cover major energy and natural-resource projects. Such projects require a full environmental impact statement and reviews from more than one federal agency.

Another proposal would set a one-year target for projects that require an environmental assessment.

All other permits would need to be issued within 180 days of finishing the NEPA process.

Manchin proposed that one agency should be designated to coordinate project reviews.

The government should find ways to share review documents and agency reviews.

One other Manchin proposal would set a 150-day statute of limitations for court challenges. Courts would set deadlines of 180 days for agencies to act on remanded or vacated permits.

US REFORMS FOR TRANSMISSION PERMITS
The US has taken steps to speed up the process for issuing permits for transmission lines, said John Podesta, US senior advisor to the president for clean energy innovation and implementation.

He made his comments during CERAWeek.

Podesta estimates that the US will need to increase high-voltage energy transmission by 60% by 2030 if it wants to realise the low-carbon ambitions of the Inflation Reduction Act and the Bipartisan Infrastructure Law.

To speed up permitting, the IRA increased funds to key permitting agencies to hire more staff and to improve co-ordination among the agencies, Podesta said.

In another move, the administration is taking advantage of a 2005 law that allows the US Department of Energy (DOE) to accelerate transmission permitting, Podesta said.

It works by allowing the department to coordinate all federal authorisation to build transmission lines that pass through public land and water.

The administration will also try to speed up permitting by lumping together projects that are being developed on federal land.

CERAWeek runs through Friday.

Insight article by Al Greenwood

Thumbnail shows pipe. Image by Global Warming Images/REX Shutterstock.