THE COUNCIL OF STATE GOVERNMENTS, FUNDAMENTALS OF NATURAL GAS POLICY ACADEMY SEPTEMBER 25 27, 2014 Natural Gas Transport and Storage Steve Tillman General Manager, Federal Government Affairs
Spectra Energy: Our Footprint Natural Gas Transmission Pipe: 19,000 mi Natural Gas Storage Capacity: 300+ Bcf Natural Gas Gathering Pipe: 69,000 mi Crude Transmission Pipe: 1,700 mi NGL Transmission Pipe: 1,500 mi SE Gas Processing Capacity: 3.7 Bcf/d 2013 DCP Gathered and Processed: 6.4 Tbtu/d 2013 DCP NGLs Produced: 425 MBbl/d Distribution Pipe: 39,000 mi Union Gas Retail Customers: 1.4 million Gas storage facility Gas processing plant Propane terminal NGL storage Shale gas formations Crude storage Major oil pipeline terminal The Council of State Governments 2
Natural Gas Value Chain The Council of State Governments 3
Natural Gas Environment Economy Energy Greenhouse gas emissions decreased from 2007 to 2012 by 12 percent largely driven by increased natural gas utilization EPA estimates that natural gas systems accounted for 17 percent decline in greenhouse gas emissions between 1990-2012 Methane emissions from the transmission and storage sector decreased nearly 12 percent during the same time, due to increased voluntary reductions Approximately $890 billion, in midstream investments will be required to accommodate the development of natural gas, oil and natural gas liquid resources through 2025 The economic impacts between 2014-2025 associated with infrastructure investment, will help support 900,000 jobs and $59 billion in labor income Natural gas represents approximately 25 percent of all energy used in the U.S. More than half of new power generated this year has come from natural gas The Council of State Governments 4
Bcf/d Bcf/d Shale Gas Supply Changing Market Dynamics 90 Unconventional Natural Gas 100 Natural Gas Demand 80 70 60 50 90 80 70 60 50 LNG Exports Other Power Generation 40 30 40 30 Industrial 20 10 0 2010 2012 2014E 2016E 2018E 2020E 2022E 2024E 20 Commercial 10 Residential 0 2010 2012 2014E 2016E 2018e 2020E 2022E 2024E Source: ICF 3Q 2014 The Council of State Governments 5
Driving Significant Infrastructure Growth 1000 Cumulative Direct Capital Investments Base Case ($B in 2012$) 900 800 700 600 Crude Oil 500 400 300 Natural Gas 200 100 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 NGL Processing Rail & Marine (NG, NGL, Crude) Refined Products Common Infrastructure Source: IHS Global, 2013 The Council of State Governments 6
U.S. Natural Gas Pipelines The Council of State Governments 7
Changing Gas Flows to Meet Market Demands Flexibility in gas flow direction is achieved at existing compressors modified with additional pipes & valves Bi-directional Flow Traditional flow Bi-directional flow Compressor station The Council of State Governments 8
Infrastructure s Role in Narrowing Price Disparity Between Neighboring Regions Texas Eastern Algonquin Maritimes &NE BOSTON Winter 2012-13 64% Premium paid by NYC consumers vs Non-NYC consumers NEW YORK NJ-NY Expansion Project Winter 2013-14 13% Premium paid by NYC consumers vs Non-NYC consumers The Council of State Governments 9
Sample Pipeline Project Schedule Sep 2014 Obtain market commitment Sep 2014 Engage stakeholders Oct 2014 Begin Survey Permissions Nov 2014 Execute Binding Agreement Jan 2015 Conduct surveys Apr 2015 Initiate FERC Pre-file Process Apr 2016 File FERC 7(c) Application Jun 2017 FERC issues certificate Jun 2017 ROW Acquisition Nov 2017 Construction Begins Jul 2018 Pipeline Commissioned Sep 2018 In-Service Successful execution is dependent upon: Scheduling reasonable and realistic time frames for project activities Establishing a comprehensive stakeholder outreach plan Ensuring a quality FERC 7(c) application & promptly responding to staff inquires Thorough ROW acquisition plan and environmental permitting preparation Disciplined project management The Council of State Governments 10
Approach to Stakeholder Engagement 1 2 3 Inform elected officials of potential project and seek feedback Develop core execution team Develop list and engage Tier One key stakeholders local, state and federal officials Conduct study route risk assessment/due diligence/feasibility Document feedback/concerns, suggestions/our responses Collaborative effort to engage stakeholders Engage Tier Two stakeholders - agencies Refine scope with stakeholder feedback Prepare detailed presentation materials Refine study corridor with alternative routes FERC Pre Pre-File meeting Advancing the project Refine permitting and regulatory strategy Engage Tier Three key stakeholders nongovernmental organizations (NGOs) Notify community with voluntary public informational meetings Request survey permission Commence field work Continuous route review The Council of State Governments 11
Pipeline Permitting: The Players Federal Energy Regulatory Commission Federal and state agencies Non-Governmental Organizations Federal, state, local elected officials Landowners / Communities The Council of State Governments 12
Natural Gas Pipeline Construction Initial site preparations 1 Survey & staking 4 Right-of-way topsoil stripping 2 Clearing 5 Digging the trench 3 Front-end grading The Council of State Governments 13
Natural Gas Pipeline Construction Final trench preparations & getting the pipe ready 6 7 8 Padding the trench bottom Stringing pipe Field bending pipe The Council of State Governments 14
Natural Gas Pipeline Construction Connecting & inspecting the pipe before laying it in the trench 9 Lining-up pipe 12 Field coating 10 11 Welding process X-ray or ultrasonic inspection & weld repairs 13 Final inspection & coating repairs The Council of State Governments 15
Natural Gas Pipeline Construction Laying pipe, testing before use & final site restoration 14 15 16 17 Lowering pipe into trench Backfilling Hydrostatic testing Site restoration The Council of State Governments 16
Natural Gas Storage Types of storage Reservoir and salt dome storage Operational benefits Ability to access gas supplies when needed and store supply during offpeak cycle Insurance against unforeseen supply disruptions Large storage hubs allow customers to serve load or manage supply across multiple pipelines Economic benefits Highly flexible systems designed to meet changing market conditions Liquidity Steckman Ridge storage facility located in Bedford, PA The Council of State Governments 17
Legal and Regulatory Issues Climate change/ghgs Upstream production Segmentation/connected actions Cumulative impacts Alternatives/purpose and need Health effects of air emissions Land values Safety More challenges to non-ferc permits/approvals Waters of the U.S. Notice of Proposed Rule Making The Council of State Governments 18
Asset Management Long standing commitment to pipeline integrity and reliability Manage facility throughout the life-cycle Design > Construction > Commissioning > Operation > Retirement All levels of operations organization are involved Processes are under continuous improvement The Council of State Governments 19
Guiding Principles of Pipeline Safety Our goal is zero incidents - a perfect record of safety and reliability for the national pipeline system. We will work every day toward this goal. We are committed to safety culture as a critical dimension to continuously improve our industry s performance. We will be relentless in our pursuit of improving by learning from the past and anticipating the future. We are committed to applying integrity management principles on a systemwide basis. We will engage our stakeholders - from the local community to the national level - so they understand and can participate in reducing risk. The Council of State Governments 20
Public Awareness and Engagement Regulatory oversight Pipeline operators Pipeline Safety is a shared responsibility Public safety officials Public Excavators The Council of State Governments 21
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