Fuel Oil News

Fuel Oil News - June 2016

The home heating oil industry has a long and proud history, and Fuel Oil News has been there supporting it since 1935. It is an industry that has faced many challenges during that time. In its 77th year, Fuel Oil News is doing more than just holding

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14 JUNE 2016 | FUEL OIL NEWS | www.fueloilnews.com EFFORTS TO EXPAND THE NATURAL GAS PIPELINE infrastructure in the Northeast have been going on for some time. Heating oil and propane marketers, who have a vested interest in opposing expansion, criticize the natural gas industry, saying it aims to avoid paying for its own market expansion, and instead get taxpayers or existing customers (who have limited alternatives) to pay for it. A further criticism is that, in many cases, taxpayers and natural gas customers would likely be fund- ing efforts that would do as much—or more—to serve export opportunities as they would any local need. Several developments on this front featured in the news recently: Kinder Morgan, Houston, Texas, has apparently abandoned its Northeast Direct Pipeline project (in coordination with Tennessee Pipeline Company, which Kinder Morgan owns). New England Fuel Institute noted that Kinder Morgan cited an inability to attract sufficient capacity commitments from utility companies and other potential users. The project would have expanded Kinder Morgan's current pipeline network, bringing natural gas from the Marcellus Shale formation in Pennsylvania through New York State, Massachusetts, New Hampshire and ultimately Maine at a cost to rate payers of $3.3 billion. Separately, the 124-mile Constitution Pipeline planned by Williams Companies, Tulsa, Okla., was halted by the New York State Department of Environmental Conservation over water quality issues. The pipeline was to run from Susquehanna County, Pa., into Broome County, N.Y., Chenango County, N.Y., and Delaware County, N.Y. And at the federal level, S. 2012, the Energy Policy Modernization Act, has just passed out of the Senate. Among other things it promises to loosen permitting requirements for new pipe- line construction. Fuel Oil News spoke with Michael Trunzo, NEFI's advisor for public policy and industry relations, about the state of pipeline expansion today. FON: What was behind the Kinder Morgan pull back? It was pushed to meet the fuel needs of regional power producers. Trunzo: From NEFI's standpoint, we've been monitoring the natural gas pipeline expansion projects in the area for a num- ber of years and we have always opined that the petroleum and energy distribution infrastructure meets the needs of the power producers today and moving forward. Traditionally, deliveries have always been able to provide what's needed for the power producers. So we said that the Kinder Morgan Northeast pipeline was not needed, particularly if it was being subsidized by the ratepayers of the region. Last year the Massachusetts attorney general, Maura Healy, came out with a report that pretty much said the free market can sustain the region's power energy needs for the next 15 years. If it was a project that was that valuable to the company, they should have been spending their own money to build it. And since that's apparently not the case, it saves ratepayers and allows the free market to exist in New England the way it should. FON: Ultimately, in your opinion, what is really driving these efforts? They claim a lack of capacity for electrical generation, or home heating prices but then you have these export opportunities. Trunzo: Some of the governors that were supportive were look- ing to provide the least expensive electric power production for a region which has ostensibly some of the highest rates in the country. However, as the commodities market changed that whole equation changed. The question of was this done for that one reason—yes, I believe so. Was it done for the potential to ship LNG overseas? Yeah, I believe that's another piece of the puzzle that was not spoken about a lot. But Sen. [Ed] Markey (D-MA) brought that out in his comments in opposition to the [Kinder Morgan] pipeline and honestly discussions that I've had with the Department of Energy raised concerns over what the end goal really was. Building a pipeline to have capacity for power production, but BY KEITH REID Michael Trunzo IN THE PIPELINE An interview with Michael Trunzo on pipeline expansion developments

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