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Christopher R. Vaccaro
America enjoys an embarrassment of fossil fuel riches. The U.S. is easily the world’s largest producer of natural gas and petroleum. The Marcellus shale formation in Pennsylvania and West Virginia is a big part of this wealth. It is the most productive source of natural gas in the United States, approaching 20 billion cubic feet per day.
However, the benefits of the formation are mostly unavailable in Massachusetts, where efforts to expand gas pipeline capacity have stalled.
Energy companies once doubted the feasibility of extracting Marcellus natural gas, which is imbedded in small pockets of shale deep in the earth. The development of hydraulic fracturing techniques, commonly known as “fracking,” removed such doubts. Fracking injects a pressurized mixture of water and chemicals thousands of feet underground to release natural gas from the shale. Fracking opponents warn of groundwater contamination, toxic chemical releases, and possible earthquakes. Nevertheless, fracking continues, and natural gas is plentiful and relatively inexpensive.
The Marcellus formation is closer to Massachusetts than other natural gas sources. According to the U.S. Energy Information Administration, Massachusetts obtained 37 percent of its energy from natural gas in 2014. Demand is expected to increase as coal-fired and nuclear power plants are retired and more natural gas is used to generate electricity. Pipeline capacity has not kept up with increased demand, and gas prices become volatile during winter months when consumption spikes. Although renewable energy use is growing in Massachusetts with incentives under the Green Communities Act, wind and solar power remain expensive compared to natural gas. The demise of Cape Wind, which would have placed 130 giant turbines in the yachtsmen’s playground of Nantucket Sound, shows the difficulties of developing major wind projects locally.
Under these circumstances, it seems logical to build pipelines transporting Marcellus gas to Massachusetts. The Natural Gas Act allows federally licensed pipeline companies to acquire easements over private land by eminent domain. Indeed, pipeline companies such as Kinder Morgan and Spectra Energy drew up ambitious plans for Massachusetts, but pipeline companies will not break ground until customers commit to purchasing enough natural gas to justify the investment.
A Challenge To DPU’s Authority
The Massachusetts Department of Public Utilities (DPU) tried to assist the pipeline companies with this predicament when it issued an order in 2015 claiming authority to approve 20-year natural gas supply contracts between pipeline companies and electricity distributors. Such arrangements would have allowed Kinder Morgan and Spectra to pass along pipeline costs to Massachusetts electricity ratepayers. However, DPU’s authority to saddle ratepayers with long-term contracts was questionable.
ENGIE Gas & LNG LLC and the Conservation Law Foundation (CLF) filed separate petitions with the Massachusetts Supreme Judicial Court challenging DPU’s order. ENGIE is a French firm that ships liquefied natural gas in tankers from Trinidad to a terminal in Everett, near downtown Boston. It no doubt saw expanded pipelines as threats to its strategic position in New England’s natural gas supply chain. The CLF, uninterested in corporate profits, opposes major development projects that threaten the environment. Pipeline projects transporting fracked natural gas are anathema to CLF.
Both petitions were consolidated before the SJC last year. Despite ENGIE’s and the CLF’s disparate motives, they together persuaded the SJC that DPU took liberties when interpreting its authority under applicable statutes. Last August, the SJC vacated DPU’s order authorizing ratepayer-backed pipeline contracts. Kinder Morgan and Spectra have placed their projects on hold.
Meanwhile, Kinder Morgan secured federal approval (with eminent domain powers) for a pipeline expansion connecting Connecticut to Marcellus natural gas. The commonwealth of Massachusetts opposed the Connecticut expansion, because the pipeline route runs through Otis State Forest in Sandisfield. The commonwealth lost its challenge to the pipeline in Berkshire Superior Court, which ruled that the federal Natural Gas Act holds supremacy over state laws against private use of public land. The commonwealth dropped its opposition last December, in exchange for a $640,000 settlement payment from Kinder Morgan. While pipeline protests continue, for now it appears that Connecticut consumers will get their share of Pennsylvania natural gas.
Regardless of what happens in Massachusetts, the Marcellus formation’s vast output is finding its way to market. If Massachusetts is to participate, local stakeholders should be asking how to expand pipeline infrastructure, not whether to do it.
