John H. Shafer
Manager, Sustainable Natural Resource Practices
NiSource Corporate Services Company
Appearing on Behalf of
Interstate Natural Gas Association of America
Before the Committee on Resources
United States House of Representatives
Hearing on The Role of NEPA in the Mid-Atlantic States
September 17, 2005
John H. Shafer
Testimony before the Committee on Resources, U.S. House of Representatives related to The Role of NEPA in the Mid-Atlantic States
My name is John H. Shafer and I reside in Benton, Louisiana. I am currently employed by NiSource Corporate Services as Manager of Sustainable Natural Resource Practices. As an energy sector professional, I have over 35 years of experience in environmental and regulatory planning and permitting. This experience includes the siting, permitting and construction of petroleum and natural gas facilities such as pipelines and terminals. I also served as Assistant Director of Environmental Policy at the White House in 1993, during which time I created the President’s Council on Sustainable Development.
NiSource Inc. is a fully integrated energy company and it engages in natural gas transmission, storage and distribution, as well as electric generation, transmission and distribution. NiSource operating companies deliver energy to 3.7 million customers located within the high demand energy corridor that runs from the Gulf Coast through the Midwest to New England. NiSource pipelines and distribution subsidiaries are active in several Mid-Atlantic States such as Maryland, Virginia and West Virginia. NiSource distribution companies are experiencing growth in the Mid-Atlantic region and its pipelines are experiencing opportunities for growth to meet market demand.
NiSource is a member of the Interstate Natural Gas Association of America (INGAA) and I am pleased to appear here today to represent INGAA in these proceedings. INGAA is a trade organization that represents virtually all of the interstate natural gas transmission pipeline companies operating in the U.S., as well as comparable companies in Canada and Mexico. Its members transport over 95 percent of the nation's natural gas through a network of 180,000 miles of pipelines.
First, I would like to thank you, Representative McMorris for your leadership in Chairing this Task Force, and House Resources Committee Chairman Richard Pombo, and the other Task Force Members and the staff for your willingness to review NEPA and look for opportunities to improve the environmental review and mitigation process.
Many of you are acutely aware that natural gas markets are currently in a delicate balance of supply and demand, which is driving up prices. This tight supply/demand balance makes the natural gas market even more sensitive to supply disruptions such as the one that occurred with Hurricane Katrina two weeks ago. Our industry is still assessing the damage from the storm, and we will clearly be working for some months on repairs, but I would like to share some initial thoughts today.
Natural gas pipelines in the Gulf region did sustain some damage as a result of Hurricane Katrina, although most of the damage was minor and natural gas deliveries to other regions of the country have largely continued. However, a number of off-shore production facilities were damaged, and perhaps most troubling, several key natural gas processing facilities in the area sustained major damage. While off-shore production in the Gulf is gradually coming back on line, these processing plants may be out for as long as six months. Natural gas processing is critical, especially during cold weather periods, to ensure that the gas has acceptable quality and does not damage pipelines and end-use equipment. Getting these processing facilities back into operation before the winter heating season should be a priority.
In addition, the nation’s natural gas storage has been impacted by the hurricane. Natural gas storage is a critical component to meeting winter peak demand; on the coldest days of the year, a given market area may be meeting 30 to 50 percent of its natural gas demand through storage withdrawals. Therefore, it’s important that gas storage reservoirs be filled during the fall in order to be ready for winter. With gas production and processing at reduced levels, however, current storage injections have slowed, and in fact some storage in the Gulf region has already been withdrawn in order to meet immediate demand. This is yet another reason to get pipelines, production and processing back on line as soon as possible.
As you can see, the delicate balance that exists for the natural gas industry to meet energy demand in the U.S. is reason enough to eliminate unnecessary permitting delays for gas infrastructure. Our economic security often depends on the timely expansion, or repair, of these energy facilities. In fact, a study completed by the INGAA Foundation last year, which looked at delays in needed natural gas infrastructure projects, suggested that a two-year delay in getting such projects built would cost American consumers $200 billion by 2020. Let me repeat that: $200 billion by 2020, and that is only for delays, not project cancellations. I would be happy to provide a copy of this report to the Committee for the record.
This leads me to the topic of today’s hearing, the National Environmental Policy Act (NEPA). In the 35 years since its enactment, compliance with NEPA has taken progressively longer and longer for natural gas projects. We do not, however, propose to alter the objectives of the NEPA. On the contrary, NEPA remains an important environmental safeguard, balancing the needs of economic development with the need to protect environmental quality. Our suggested solutions deal with the implementation of NEPA, and in particular, the ways different federal and state permitting agencies should work together under the Act.
I am happy to report that a number of these solutions were part of the recently enacted Energy Policy Act of 2005 (Public Law 109-58), at least with respect to natural gas projects approved by the Federal Energy Regulatory Commission (FERC). Our association has grappled with the issue of NEPA compliance for many years, looking specifically at ways to reduce unnecessary delays and improve cooperation among the many federal and state agencies that might be reviewing a proposed project. These suggestions do not alter existing environmental quality standards. They do, however, increase the level of accountability, cooperation and efficiency among permitting agencies – hardly an unfair or unreasonable set of expectations. We hope the Committee will look at extending these ideas to all types of energy project reviews under NEPA, not just FERC-approved natural gas projects. Here are our suggestions: