This is a pretty major issue, and I think the Army Corps is on the right track.
JBK
"Donald C. Strimbeck" dcsoinks@comcast.net 6/25/2011 4:23 AM >>>
Army Corps of Engineers, Marcellus Shale firms spar Marcellus companies worry new permitting rules may delay pipeline projects Premium content from Pittsburgh Business Times - by Anya Litvak Date: Friday, June 24, 2011, 6:00am EDT
The U.S. Army Corps of Engineers is butting heads with some Marcellus Shale companies who say the agency’s latest permit rules will delay pipeline projects.
The federal agency, which regulates construction that involves dredging or filling of U.S. waters, has issued a clarification on how projects, such as pipelines that cross such waters, should be evaluated on their environmental impacts.
The Corps says the clarification, which defines what constitutes a single project big enough to require the agency’s approval, won’t have an impact on how the Corps functions and is meant to be a guide to applicants.
Yet, some in the Marcellus Shale industry are convinced the agency’s approach will mean more projects will fall under its scope and more of them will be delayed because of it.
“Under the new (standard) they’re saying everything from the wellhead to the transmission line is a single project,” said Rob McHale, manager of environmental regulatory affairs at MarkWest Liberty Midstream & Resources LLC, a division of Denver-based MarkWest Energy Partners LP. McHale said the staffing constraints at the Corps and at other agencies required to review pipeline projects, such as the Pennsylvania Historic and Museum Commission, will mean, “the timing (of permits) will slow significantly.”
But Wade Chandler, Pennsylvania permits chief for the Corps’ Baltimore District, which processes two-thirds of Marcellus activity applications in the state, cautions that if there are more permits coming his way, it’s because there’s simply more activity in the Marcellus shale.
“Our scopes are limited to our permit areas,” which have not changed, Wade said. “We’re not expanding anything else.”
WHAT MAKES A PROJECT Since 1988, the Army Corps, which regulates impacts to rivers, streams and wetlands, has allowed the Pennsylvania Department of Environmental Protection to unilaterally issue permits for projects whose impact to such waters is limited to less than 250 feet. If the impact is more than that, the application must be sent to the Corps for approval before the DEP can permit it.
This program, which is revised every five years, is starting a new iteration July 1, with the definition of what constitutes a single project now spelled out in a newly added definitions section to make sure each permittee and regulatory agency is administering the law the same way.
Whether a gas pipe will be judged as a single and complete project depends on the Corps’ new standard of whether it has independent utility: That is, would it be built even if other pipelines around it weren’t?
According to Mark Haibach, vice president of ecological services with Civil & Environmental Consultants Inc., some Corps districts considered each stream crossing as a single and complete project, so a pipeline crossing five streams would be counted as five projects, with each one’s impact judged against the 250-foot threshold. Other districts, especially those in the area of the Marcellus within the past year, have treated all five crossings as part of a single project, summing up impacts and thereby making more projects fall under the Corps’ domain.
The Army Corps’ new guidance makes it clear that regulators should consider as a single project all stream crossings that fit into a single pipeline project.
INDUSTRY CONCERNS Currently, MarkWest’s stream crossing projects that don’t reach the 250-foot threshold get a DEP permit within 45 to 60 days, according to McHale. Those that need Army Corps approval take 60 to 75 days for MarkWest, though McHale said other companies have complained of longer waiting periods.
MarkWest has had only a handful of projects go through the Corps review thus far, but McHale expects that number to jump once everything is consistently evaluated as a combined impact.
For CONSOL Energy, getting a pipeline permit takes between nine months to a year, according to Katharine Fredriksen, vice president for environmental strategy and regulatory affairs, because many of its projects go through exceptional quality waters and require a more in-depth review.
“Right now, pipelines are really the biggest bottleneck to actually getting Marcellus gas to market,” she said.
The increased activity in general and what Fredriksen described as the Corps’ “expanded role” in pipeline projects will cause further delays, she said.
Last year, testifying before the state’s House Republican Policy Committee, Ted Wurfel, Chief Oil & Gas’ environmental, safety and regulatory affairs manager, spoke on behalf of the industry, saying the “Marcellus Shale Coalition believes the DEP should return to … considering individual stream crossings as single and complete projects consistent with the applicable regulations.”
“There’s always some difference in the way individual Corps districts will implement regulations,” Haibach said.
But if the new permit program will cause the Corps to review more projects, it will be following a trend already in motion, he said.
“For the last year, the Corps kind of reacted to the Marcellus Shale activity and the increase in project activity by increasing their scrutiny of projects,” he said. “Especially on pipeline projects, they’ve been opting to review projects more frequently.”
Not everyone is convinced the Corps’ regulation will cause problems.
The issue may be less about the actual permitting time lines than a general “sense that this is an attempt to federalize gas collection projects,” said Tom Johnston, assistant VP for environmental services with Harrisburg-based engineering group Skelly and Loy Inc., who dismissed the sentiment.
“I don’t know that this is going to add as much burden to the gas companies as the gas companies think it is,” he said.