No quorum until at least late-May

After approving seven pipelines in 2017 FERC lost quorum with the resignation of Norman Bay, halting all project approval. Bloomberg Intelligence held an analyst briefing today to discuss the state of pipelines and FERC, with former FERC Commissioner Tony Clark and Baird Senior Research Analyst Ethan Bellamy providing their views on the topic.

Bay’s resignation, which came in January, left the agency one short of its three-member quorum. Bay announced his resignation within hours of the Trump administration’s naming of Commissioner Cheryl LaFleur as acting chair of the agency.

The seven pipelines approved this year represent 7 Bcf/d of new capacity. Largest among them is the Rover Pipeline, a $4.2 billion 3.3 Bcf/d line that will transport gas from the Utica to Ohio, West Virginia, Michigan, and Ontario. The second largest pipeline that was approved is the $3 billion 1.7 Bcf/d Atlantic Sunrise. This will take gas from the Marcellus all the way to Alabama.

$16.7 Billion in Pipeline Projects Awaiting FERC Approval

Source: EIA

However, according to Baird, nearly 12 Bcf/d of pipeline projects with a total cost of $16.7 billion are awaiting FERC approval. FERC increased its power to approve smaller activities without a quorum, but final project approval still requires one. Baird estimates that restoring a quorum will likely take two months, and currently no appointees have been nominated.

Without quorum issues are piling up

According to former FERC Commissioner Tony Clark, about one FERC order per day is held up by a lack of quorum. This means that there is a backlog of about 35 orders already, with more arriving each week. Clark expects that even if someone was nominated today, a quorum will not be achieved until late May or early June, if not later. This would mean that there would be perhaps 85 pending issues when FERC becomes able to rule on them. Therefore, it will take a significant amount of time before FERC is able to quickly respond to new applications.

It does seem likely, however, that the current administration will nominate people that favor development, meaning that it will be more likely to approve projects. Clark expects that one person from Capitol Hill, one person from a state regulatory agency and one person from the private sector will fill the three open seats in FERC. Given the current administration’s propensity to look for outsider input, it is likely that the private sector nominee will be the chairman.

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