Concerns About Natural Gas Expansion Ease As OSHA Crane Concerns Persist

The Petrash File…

Jeff Petrash, National Propane Gas Association (NPGA) vice president and general counsel, handles multiple issues affecting the propane gas industry at any given time. Recently, BPN spoke with him about priorities he is working on as the end of 2018 approaches.

“It’s all hands on deck regarding the OSHA Crane Rule. We’re pressuring the agency [OSHA], Congress, and the White House,” he explained. “This has the potential to really affect marketers financially. If we can’t get propane exempted by Congress or the agency, this will go to court and that’s one way I could get more involved as general counsel.” NPGA has been fighting the obstacle of the added OSHA certification for nearly 10 years, Petrash noted. “This type of challenge in Washington happens more often than many realize. The government leaders take no action, so lobbyists have to fight for a plan that will work for the clients they represent.”

“We’re dealing with fewer natural gas expansion challenges this year,” Petrash said. “We’ve had issues in Colorado, Maryland, Utah, and Pennsylvania.” The efforts of Washington Gas Light in Maryland represent its third attempt at natural gas expansion. “We previously fought off bills in the House and Senate there. [Washington Gas Light] later filed with the Public Service Commission, and we stopped [its] expansion proposal before the Public Service Commission. Subsequently, [Washington Gas Light] built natural gas expansion into a merger application at the PSC. Propane again objected, and objections of the industry have been totally ignored. There will now be a fight with the governor and legislature there.”

Over the last year, Petrash has been highly focused on the National Association of Regulatory Utility Commissioners (NARUC), as a task force was formulating a stance for NARUC on the concept of subsidized expansion for natural gas. Following his extensive travels to meet individually with most of the task force members, the outcome was a neutral stance on subsidized expansion. “This year has had few new developments with NARUC, but we do feel it is an important venue for us as it formulates planning for natural gas expansion. [In response to the need for a presence at NARUC’s] three annual meetings and many regional meetings, a new NPGA staff member [was] hired in August. Jacob Peterson, based in Minneapolis, will be attending more NARUC meetings on behalf of NPGA.”

The National Association of State Energy Officials (NASEO) is another venue where NPGA is beginning to have a stronger presence. Eric Sears, another new staff member also hired in August, will focus on state issues for NPGA and will attend more of the NASEO meetings. “With propane representing 10% of the energy portfolio and sometimes presenting supply challenges, they like having us in the room,” Petrash said.

“A recent simulation at NASEO, in conjunction with the Department of Energy, was a polar vortex and the issues it presents. Drew Combs of CHS helped us lead the presentation and it was well received. It’s important for us to have good relations with the Department of Energy as supply issues like those in early 2014 could arise again.”

Michigan Gov. Rick Snyder recently reached a tentative deal to put an aging pipeline in the Great Lakes into an underground tunnel. However, his successor, who will be known following this month’s election, will have the final say on the decision. Once details are negotiated, Enbridge Inc. will create the tunnel under the Straits of Mackinac, which connect Lakes Michigan and Huron, to house a new section of its Line 5 system. The cost is estimated at $350 million to $500 million. Enbridge also plans to begin improving the pipeline at river and stream crossings throughout Michigan and increase the monitoring of the existing twin-pipeline section through the straits.

Since the deal only requires state officials and Enbridge to begin discussions about the project, a final decision will come after Snyder leaves office. The Democratic nominee for governor, Gretchen Whitmer, who had a healthy lead as of mid-October, expressed concerns that Snyder was binding the hands of the next governor. She has pledged to have Line 5 removed from the straits and is concerned Enbridge will seek public money.

Petrash will continue to attend meetings about Enbridge Line 5. “There is much at stake here for the propane industry,” he said. “Groups like the National Wildlife Federation have sought to diminish expectations for the damage a removal of Line 5 will do to Michigan residents, saying it would only increase the cost of propane by five cents per gallon. We believe the cost increase would be much higher.”

A recent American Gas Association (AGA) study showed replacing natural gas and propane with electric heat pumps is difficult and costly. While natural gas is a competitor, the propane industry is working more and more closely with AGA to challenge the “Electrify Everything” movement.

“The Federal Energy Regulatory Commission (FERC) is another organization where NPGA needs to have a good relationship,” Petrash said. “We currently have two petitions awaiting action at FERC and action has been slow while there have been a number of personnel changes on the commission. FERC was without four commissioners at one point, but now there are new commissioners.” Two petitions from NPGA both seek additional transparency. One request seeks better reporting of data on the pipeline including products shipped, costs, and revenues. The other seeks a wall between the liquids pipeline and its affiliates engaged in market transactions such as selling propane. “We’ve had reports from members about situations on the pipeline that are suspect,” he added.

Petrash noted that amid personnel changes, FERC did turn down a request from the Department of Energy to authorize subsidizing coal and nuclear availability for national security purposes. “There are several Republicans behind this request on behalf of Murray Energy, which is interesting considering Republicans are typically all for a free market. The issue may not be over as the request was actually authored by a potential new commissioner for FERC, [who comes] from the Department of Energy. He may not get confirmed due to Republicans in the Senate typically promoting a free market. This is also opposed by most in the electric industry where they are typically opposed to turning the clock back.” —Pat Thornton