Sierra Club Michigan Chapter
Kimberly D. Bose, Secretary
Federal Energy Regulatory Commission
888 First Street NE, Room 1A
Washington, DC 20426
Dear Ms. Bose,
The comments submitted below are pursuant to the proposed Nexus
Pipeline (Docket #CP16-22-000). These
comments are submitted on behalf of the Sierra Club Michigan Chapter, 109 E
Grand River Avenue, Lansing, MI 48906.
Nancy Shiffler
Chair, Michigan Beyond Natural Gas and Oil Committee
December 21, 2015
The Michigan Chapter of the Sierra Club opposes the proposed
Nexus pipeline for the following reasons:
Questionable
need for this pipeline
• The AEO 2015 Early Release forecasts that
Marcellus gas production will remain relatively flat from 2015 thru 2030. http://www.eia.gov/forecasts/aeo/workinggroup/oil-naturalgas/pdf/oilandnatgas_presentation_91614.pdf
• Natural
gas demand in Eastern Canada is in decline.
In spite of phasing out coal, natural gas
declined to only 7% of Ontario’s 4th quarter 2014 electric
production. Hydro and nuclear accounted for 87%, and wind 6%. (In Quebec, almost all electricity comes from
hydro.) http://www.ontarioenergyreport.ca/pdfs/Energy%20Quarterly_Electricity_Q4.pdf
• Few US and Canadian LNG export plans will be realized. According to analysts, “Huge cost overruns, poor planning,
changing market conditions and emerging skinny margins will likely kill many
projects across the world, or postpone their materialization to an uncertain
future; Canadian projects likely will be the hardest hit. Of the 15
proposed Canadian LNG export facilities, none have reached a final investment
decision.” http://theadvocate.com/news/business/10650285-123/falling-oil-prices-put-proposed
• Based on a February, 2015 Department of
Energy report (“Natural Gas Infrastructure Implications of Increased Demand
from the Electric Power Sector”—http://energy.gov/sites/prod/files/2015/02
/f19/DOE%20Report%20Natural%20Gas%20Infrastructure%20V_02-02.pdf), only
54% of current pipeline capacity is being used.
One of their key findings:
“Higher utilization of existing interstate natural gas pipeline
infrastructure will reduce the need for new pipelines.” Even so, FERC is in the process of approving
far more pipeline capacity than the DOE and EPA say are needed. For example, FERC is reviewing applications
for 48 Bcf/d additional Marcellus pipeline capacity to be built over the next
few years. The DOE finds only 8.4 Bcf/d
is needed over the next 15 years.
• Analysis of SNL Energy data finds these pipelines are underutilized
most of the time. “We definitely can
see slowdowns already in Midwest — Rover and Nexus pipeline expansions, the Prairie
State pipeline to deliver REX gas to Chicago city gates. It's not clear from today's standpoint that
the market needs these pipelines, and we're already starting to see them slow
down a bit, as well as some LNG projects."…. "Demand growth itself, as a result of conservation and demand-side
management and lower GDP growth post financial crisis, is really taking the
wind out of the sails of generation demand growth that natural gas can
accommodate." https://www.snl.com/InteractiveX/article.aspx?ID=34292452&KPLT=4
• According to
Robert Huffman, Spectra Energy’s business development director, "Going forward, there's been such a
buildout already in commitments to realign and re-pipe the grid," Huffman
said. "Maybe we're reaching a point where things have caught up." http://www.platts.com/latest-news/natural-gas/pittsburgh/appalachian-gas-pipeline-developers-
facing-more-21310494
• FERC must consider that Nexus’ binding shipper agreements were signed over a year ago, and
FERC must evaluate the current soundness of these agreements and
companies. Nexus must present FERC with
“legally binding precedent agreements showing that the pipeline will be fully
or nearly fully (85%) subscribed for a minimum of ten years.” http://www.naruc.org/Grants/Documents/ICF-EISPC-Gas-Electric-Infrastructure-FINAL%202014-12-08.pdf.
It is doubtful that many Nexus shippers are financially sound enough to fulfill
this requirement. Many Marcellus/Utica
E&P companies are predicted to go bankrupt
(unless they sell themselves or otherwise sell off major assets). Here
is a “ Death list” report
listing very risky companies and their unacceptably high debt-to-earnings
ratios:
Antero Resources
(4.99), EV Energy
Partners (6.54), Halcon Resources
(7.81), Magnum Hunter Resources
(52.29), REX Energy
(5.06), Vantage Drilling
(6.16), and Warren Resources
(5.50). http://www.investorvillage.com/uploads/77263/files/OXFORD19CODEBTHITLIST.pdf?cmpid=verticalcontent
• FERC needs to do more evaluation of the Certificates of Need policy:
“The
Commission balances the public benefits against the potential adverse
consequences. ... the applicant's responsibility for unsubscribed capacity, the
avoidance of unnecessary disruptions of the environment, and the unneeded
exercise of eminent domain in evaluating new pipeline construction.” http://www.ferc.gov/legal/maj-ord-reg/PL99-3-000.pdf. Given
that considerable environment, quality of life and billions of dollars are at
stake, it would be a travesty for FERC to approve a pipeline that would later
be greatly underutilized or abandoned because of neglectful disregard of risky
shipper financials.
Adverse Environmental
Impacts
• The pipeline and related infrastructure construction would cause
irreversible damage to thousands of acres of forests, wetlands, and
fields. Relevant to this issue is
the June 2014, decision by the U.S. Court of Appeals for the District of
Columbia, Delaware Riverkeeper Network,
et al. v. Federal Energy Regulatory Commission, Tennessee Gas Pipeline Company,
which noted FERC’s responsibility to consider cumulative impacts. FERC should consider the cumulative impacts
of the entire length of the Nexus pipeline and the activities that produce the
gas to be transported through the pipeline.
• Farmlands would be impacted
through potential damage to drainage tiles, soil compaction, and destruction of
orchards and productive woodlands in an area that has some of the highest
agricultural land values in the state.
Soil compaction affects the structure of the soil and can reduce productivity
for years beyond the actual construction of the pipeline. Temporary plugging or damage to drainage
ditches and underground tiling could have affects extending beyond the
construction area. Impacts on drainage
into Lake Erie would be of particular concern.
• Air pollution from construction
and operation of the pipelines is a health hazard. FERC has already determined that the
estimated construction emissions for the Rover pipeline would exceed the
thresholds for ozone and particulate matter in the Detroit-Ann Arbor
maintenance area. Once in operation, the
pipelines, and particularly the compressor stations, produce emissions of
methane and volatile organic compounds.
In addition, the gas produced from the Marcellus is known to have
potentially significant concentrations of radon; this should be factored into
the chronic losses of pipeline gas, particularly from compressors.
• As part of its environmental
review, FERC should estimate the green house gas impacts from the production,
transport, and usage of the gas, including methane leakage from the production
sites, the pipeline and compressor stations, and the CO2 releases from
increased burning of natural gas. This
analysis would be in line with the President’s recently announced targets to
cut net greenhouse gas emissions 26-28 percent below 2005 levels by 2025.
• Finally, FERC should consider
the potential environmental impacts of increased use of hydraulic fracturing in
the Marcellus region as a result of the new markets targeted by this and
similar projects. These impacts include:
air and water quality (http://files.dep.state.pa.us/OilGas/BOGM/BOGMPortalFiles/OilGasReports/Determination_Letters/Regional_Determination_Letters.pdf);
health impacts (Concerned
Health Professionals of New York. (2014, December 11), Compendium of
scientific, medical, and media findings demonstrating risks and harms of
fracking (unconventional gas and oil extraction) (2nd ed.). http://concernedhealthny.org/compendium/); and worker safety (http://www.eenews.net/login?r=%2Fenergywire%2F2014%2F10%2F20%2Fstories%2F106000753).
Adverse Impact on Landowners
and Local Communities
• Safety impacts are of paramount concern. The required setbacks from homes and other
buildings are insufficient to account for the potential impact radius in the
event of an explosion. Of particular
concern is the potential impact on dense residential areas such as the
Ypsilanti area.
• Rural areas served by small fire departments
would be stretched thin in the event of a major explosion or a fire.
• Local government concerns over the impact of
heavy equipment on local roads and bridges must be addressed. The potential costs to local communities
should be fully assessed.
• Individual landowners are rightfully
concerned with the impact of the project on their property values, access to
mortgages, and insurance coverage.
Estimates of these costs should be available from previous pipeline
construction projects.
FERC’s own guidelines state “Landowners should not be
subject to eminent domain for projects that are not financially viable and
therefore may not be viable in the market place.” We should not be pitting the safety, economic
value, and environmental health of local property owners and communities
against pipeline projects that are neither viable nor needed.
In summary, we oppose this project as having little or no
demonstrated “public convenience or necessity” in light of the potential
environmental and human costs. FERC
appears to have a very limited view of its responsibilities for rationalizing
pipeline capacity or addressing climate change and cumulative environmental
damage. Consequently, we believe this
project should be denied.
Thank you for your consideration of these concerns.
Energy Policy
has also been successful. For every $1 invested in our energy efficiency program, ratepayers have saved $4.38. Energy efficiency is the most cost-effective way to reduce spending on electricity, costing $11 per MWh, cheaper than any form of new generation. The 2008 law also set a cap on how much utilities could spend on energy efficiency.