August 2022 Vol. 77 No. 8

Washington Watch

FERC Considering Pipeline Sales of ‘Responsibly Sourced Natural Gas’

The Federal Energy Regulatory Commission (FERC) appears likely to approve the first application from a pipeline company to sell “responsibly sourced natural gas” (RSG) at a premium price. Tennessee Gas Pipeline (TGP), a major delivery pipeline on the east coast has in essence been trying to work out an acceptable tariff with FERC for sales of RSG.

FERC has been concerned about the lack of minimum environmental standards that establish metrics for certifying any gas is at a suitably low methane level 

FERC rejected TGP’s PCG (producer certified gas) pooling service option for its Rate Schedule Supply Aggregation, without prejudice, on April 29, 2022. According to a blog post by the law firm Sidley Austin, this was because it included proposed tariff language defining PCG criteria. 

TGP re-filed the proposed tariff in May, retaining key attributes concerning RSG pooling, while removing the PCG criteria from its tariff. 

“In summary,” wrote Carlos J. Oblitas, director of rates and regulatory affairs, TGP, in his May 11, 2022, letter to FERC, “Tennessee’s PCG Pooling Service Option proposal will encourage the transportation of RSG on the Tennessee system by providing market participants with transparent and liquid trading points at which to buy and sell producer certified natural gas. 

“Tennessee’s new pooling points will also enable market participants to independently trade, on a bi-lateral basis or by using a third-party platform or registry, the environmental attributes associated with the producer certified gas.” 

Gas producers are beginning to consider how they can sell RSG, due to both pressure on the industry to reduce methane emissions and demands from buyers, whether local gas companies or utilities. Latest evidence of that strain was President Biden’s mid-June announcement of the U.S. and European Union’s Global Methane Pledge Energy Pathway, a commitment to drive down methane pollution in the oil and gas sector, and eliminate routine flaring as soon as possible. 

There is indication of burgeoning RSG interest from buyers, too. Recently, Southwestern Energy Company, the largest dual-basin natural gas producer in the U.S., announced a multi-year, certified (RSG) sales agreement with the North American subsidiary of Uniper, one of Germany’s largest publicly listed energy supply companies. 

But development of measurement methodologies, standards and certification is something of a Wild West right now. 

In April, Kinder Morgan, the parent of TGP, announced a collaboration with Cheniere Energy Inc., several other midstream operators, methane detection technology providers, and leading academic institutions, focused on quantifying, monitoring, reporting and verifying greenhouse gas emissions associated with the operation of natural gas gathering, processing, transmission, and storage systems. 

Sempra is a founding member of Veritas, a GTI Energy Differentiated Gas Measurement and Verification Initiative. The Initiative supports Sempra Infrastructure and other customers’ desires for responsibly sourced natural gas that is produced and transported using proven technologies that minimize GHG emissions. 

Sempra Infrastructure is also a sponsor of the Collaboratory to Advance Methane Science, a research alliance to advance technological solutions that enable methane emission reductions.

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