Liberty Utilities angles for 20-year natural gas contract
A pumpjack sits on the outskirts of town at dawn in the Permian Basin oil field on Jan. 21, 2016, in the oil town of Midland, Texas. (Spencer Platt/Getty Images)
Last year, Liberty Utilities withdrew what had turned into a very contentious proposal to construct a large, expensive pipeline called the Granite Bridge Project. Critics said it was too big, too expensive, and that it would harm the environment. It led to protests and drew fierce opposition from climate-change activists who oppose building new fossil fuel infrastructure.
In the wake of that failed proposal, Liberty has put forward another project that is now being considered by the Public Utilities Commission – a 20-year agreement to increase its natural gas capacity in the state by about 20 to 25 percent through a purchase agreement with Tennessee Gas Pipeline.
The company says it needs to increase its capacity in order to meet customer demand. The new proposal was put forward in January, and it has been proceeding quietly ever since, with none of the dramatic opposition that Granite Bridge garnered. But some environmental advocates still oppose the 20-year contract as an unacceptable option in the face of climate change.
“This is a major step in the wrong direction,” said Nick Krakoff, a staff attorney at the Conservation Law Foundation. The foundation is one of the parties involved in the docket at the utilities commission.
While burning natural gas emits less carbon dioxide than coal, methane leaks can occur while the gas is moving through the pipelines, harming the environment. Methane leaks can also happen when the gas is being extracted. A 2020 study by the Environmental Defense Fund looked at natural gas produced in the Permian Basin in Texas and found that 3.7 percent of the gas extracted was leaking into the atmosphere. Once methane is released into the environment, it is a much more potent greenhouse gas than carbon dioxide.
From Krakoff’s standpoint, 20 years is a long time; he is pushing for a shorter contract. Along with climate change activists, he has argued that the issue is urgent.
“We need to start transitioning now to a fossil fuel-free future,” Krakoff said.
The 20-year contract would likely necessitate infrastructure improvements that would cost $45 million, he said, a cost that ratepayers would have to shoulder for decades. The cost of infrastructure upgrades is not a part of the 20-year contract docket, but Krakoff expects that Liberty will use the capacity increase to push for the upgrades.
And he takes issue with Liberty’s assumption that it will keep doing business as usual. President Joe Biden recently announced a nationwide target of reaching net-zero emissions by 2050, which would require significantly reducing the burning of fossil fuels like natural gas.
The $45 million price tag is an order of magnitude less than the Granite Bridge proposal, which would have cost $340 million. The scaled down project has won over some Granite Bridge critics.
State Consumer Advocate Don Kreis – who opposed Granite Bridge – said the scope of this new project is a much more reasonable proposition for the state.
“This idea is the cheapest and therefore the most customer-friendly option the company has found,” Kreis said. “The amount of capacity is reasonable, and the price is right.”
Kreis said that any transition away from natural gas would likely be gradual. “It isn’t tenable to suggest that tomorrow or even next year we can flip the switch,” Kreis said.
The natural gas in question will be used for heating fuel. According to the company’s filing, Liberty is currently using truck deliveries of liquid natural gas to meet demand.
“Such reliance is not appropriate for the long term,” the filing states.
The contract is a capacity contract, which means that Liberty is not purchasing the supply itself, but the opportunity to have it available in case it is needed.
“It was a great day for New Hampshire when Liberty changed course and said, you know what, forget about Granite Bridge, let’s do this instead,” Kreis said. “That was good news.”
Pipeline Awareness Network for the Northeast is among the groups that oppose Liberty’s new proposal.
Kathryn Eiseman, the president of the organization, said the project “would involve unnecessary infrastructure and would be moving us in the wrong direction when we should be focusing on renewable energy and demand-side solutions.”
“These smaller projects keep springing up across the region, and there is a better way if we can all move in the renewable and sustainable direction,” Eiseman said.
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