Note: The perfect storm is going to stop fracking, tar sands and other extreme energy extraction. People are protesting, regulators are responding, Saudi Arabia wants to destroy US shale and prices are dropping. Sounds like a lousy place to invest. Much better if people and the government put money into solar, wind, ocean and thermal energy. That is the future, why invest in the past?
HOUSTON — While cheap prices might be slowing production of natural gas, it’s political fights that are really hurting the midstream sector, said Williams Co. chairman and chief executive officer Alan Armstrong.
The decline in prices hasn’t changed the need for pipelines, as the continued position of natural gas as a cheep feedstock for electricity generators and other producers has offset any slowdown in drilling, Armstrong said in an interview with FuelFix.
Instead, he said, it’s political hassles and complex regulation that make moving natural gas from the wellhead to the market more uncertain and expensive.
“It used to be pretty limited to just going through the federal process, which was pretty bureaucratic and from our vantage point more cumbersome than it needed to be. We’d like to see the FERC have more control now, because there are so many local entities,” Armstrong said, referring to the pipeline-regulating Federal Energy Regulatory Commission.
“You get stuck in this loop of having so many opinions that need to be reconciled, without having certainty of who’s in charge from a jurisdictional perspective, that’s really the challenge.”
The Williams Companies, which are made up of several corporate entities — including a tax-advantaged master limited partnership — own a range of midstream assets: storage, pipelines and natural gas processing plants across the U.S. The company recently narrowed its focus to transporting and processing natural gas, and embarked on several expansions of its largest line, the 10,500-mile Transco system running from the Gulf Coast to New England.
Those expansions have run into some delays and lengthy permitting applications, especially in the Northeast. Williams said that building the Constitution Pipeline — running 122 miles from Northeast Pennsylvania to Upstate New York — cost $4.8 million per mile, compared to a $1.7 million-per-mile price to lay a pipeline at the bottom of the Gulf of Mexico.
Echoing several others natural gas producers and shippers who have also spoken out on the topic, Armstrong said that blanket opposition to pipelines was increasing the cost of fuel and forcing some sectors to rely on high-carbon alternatives such as coal.
Delays and constrained infrastructure have also hurt locals markets, he said, which have paid a premium for gas as demand has risen. The effect has also been felt amid downstream producers and electricity generators, who have been hesitant to spend billions on natural gas-fueled projects while the specifics of how that gas might arrive have remained somewhat uncertain, Armstrong said.