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Gas Storage Areas Oversight Divides Environment, Energy Agencies

Jan. 11, 2022, 11:00 AM

Underground natural gas reservoirs—in depleted oil and gas fields, aquifers, and salt formations—have emerged as a flashpoint for federal energy regulators as they work to finalize a new policy on pipeline reviews.

Two gas storage projects under review highlight the Federal Energy Regulatory Commission’s challenge in assessing emissions impacts from individual gas facilities. Spire Storage West wants to expand its Wyoming gas storage field fivefold, while LA Storage wants to fill four salt caverns in Louisiana with gas.

The projects’ supporters say storage is essential to smooth out pipeline flows and keep consumers warm during times of peak demand. Gas is deposited into nearly 400 storage facilities in 30 states through warmer months and withdrawn during the winter heating season from November to March.

But that gas would be drilled, leaked, and ultimately burned, requiring FERC to take a broader look at emissions, officials with the Environmental Protection Agency and other critics argued in filings.

“EPA has concerns with the lack of adequate discussion of methods and analyses to support many of the conclusions about the significance of impacts throughout the document,” the agency said about the Spire Storage West project’s review.

Pipelines have come under greater scrutiny amid recent court rulings instructing FERC to take a harder look at the economic need and environmental impacts of proposed projects. Legal delays have caused some pipeline developers to back away from big-name projects like Keystone XL, Atlantic Coast Pipeline, PennEast Pipeline, Pacific Connector Pipeline, and others.

‘Incomplete’ Estimates

The commission’s draft environmental impact statement for the Clear Creek Expansion Project in Wyoming has “incomplete” estimates of greenhouse gas emissions and climate damages, Philip S. Strobel, director of the EPA’s National Environmental Policy Act Program, wrote in comments filed Dec. 21.

The Clear Creek field, developed in the late 1990s, is connected to five interstate pipelines and operated by a subsidiary of Spire, a St. Louis-based gas utility.

FERC should avoid presenting a project’s emissions as a percentage of state or national emissions, which would express each project as a disproportionately small percentage. Instead, it should highlight the “increasing conflict” between national zero-emissions goals and projects that “expand and lock in fossil fuel consuming infrastructure,” Strobel said.

The commission should postpone any decision until after it finalizes an update of its 1999 natural gas certificate policy, which is widely expected to scrutinize projects more closely, he said.

The EPA hasn’t yet commented on FERC’s Dec. 17 draft environmental impact statement for LA Storage’s Louisiana proposal. The project has drawn filings from the Sierra Club and other groups that urged FERC to document climate impacts of the gas industry as a whole.

Following its Clean Air Act responsibilities, “EPA reviews and comments on the environmental impact of any matter relating to NEPA and EPA authorities and expertise, including air quality, greenhouse gas emissions, water quality, and environmental justice,” an agency spokesperson said in a statement.

Difficult Assessments

FERC has so far declined to weigh broader climate impacts or use the social cost of carbon, an estimate of the economic costs, or damages, of emitting one additional ton of carbon dioxide into the atmosphere.

The commission’s gas certificate policy for interstate pipelines and connected storage facilities weighs the economic need against environmental impacts identified in analyses required by NEPA.

The legal debate over climate impacts of gas storage facilities is essentially the same as in pipeline challenges, said Romany M. Webb, senior fellow and associate research scholar at the Sabin Center for Climate Change Law at Columbia Law School.

But FERC’s climate analysis of the greenhouse gas emissions from stored gas can be “so much more complex,” given the difficulty in tracking where the gas ends up, Webb said.

The LA Storage proposal intends to support Gulf Coast liquefied natural gas export terminals as they meet fluctuations in demand from other countries.

Determining where that gas will end up—and whether it’s replacing dirtier fuels like coal or oil or instead slowing deployment of renewable energy—is “really very complicated and presents, frankly, a real challenge,” Webb said.

The Sabin Center filed comments urging FERC to widen its climate review of LA Storage’s facility. The agency “just hasn’t grappled with those more different nuanced questions,” she said.

Meeting Peak Demand

The industry has warned delays in reviewing storage facilities and pipelines could affect a gas utility’s legal obligation to serve customers.

FERC could “delay the availability of facilities intended to add additional security and diversity of supply, and increase the reliability and resilience of the local system,” said Matthew Agen, assistant general counsel for the American Gas Association.

The Wyoming project is positioned along five interstate pipelines and the $244 million expansion would serve a continued appetite for natural gas, Spire Storage West, a subsidiary of Spire, a St. Louis-based gas utility, told FERC.

The additional gas storage would also be a “bulwark against the intermittent nature” of renewable energy like wind and solar power, Spire said.

The Louisiana project is needed to serve LNG export terminals, with more than a dozen new or expanded LNG export projects under development in the area, LA Storage said.

Stricter Reviews Looming

FERC staff found the projects wouldn’t result in significant environmental impacts but was unable to determine significance with regards to climate-change impacts.

Its certificate policy review, launched initially in 2018 and renewed last year by Chairman Richard Glick, could make some environmental reviews tougher.

The commission is moving to establish a new greenhouse gas emissions standard that would subject pipelines to more stringent environmental reviews, while allowing other projects to proceed with a quicker review, Glick, a Democrat, told Congress in September.

The emissions standard would serve as a dividing line between environmental assessments, which often take weeks or months, and environmental impact statements, which can take years, Glick said.

FERC would pursue a more stringent review “if there is any question as to whether there is a significance of greenhouse gas emissions,” he said.

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.

To contact the reporter on this story: Daniel Moore at dmoore1@bloombergindustry.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloombergindustry.com; Chuck McCutcheon at cmccutcheon@bloombergindustry.com