Altogether, the demand for electricity is expected to rise about 2 percent a year for the foreseeable future. All sorts of new infrastructure will be required, including 38,000 miles of natural gas pipelines and 225,000 miles of distribution lines, says the Bush administration. Right now, natural gas comprises about 15 percent of the country's electricity demand. Despite the depletion of existing wells and the difficulty winning access to restricted areas, natural gas is expected to take on a larger role.

"While gas produced in traditional basins such as the mid-continent, onshore Louisiana and the shallow waters of the Gulf of Mexico will continue to be important sources of supply, by themselves they will not be sufficient to satisfy growing demand over the next two decades," says a report released by the Interstate Natural Gas Association of America that focuses on pipeline-related issues. To meet future demand, gas from deepwater offshore in the Gulf of Mexico along with unconventional domestic sources and liquefied natural gas imports must be pursued.

The association says that at least $60 billion must be invested in new pipelines or repairing older ones over the next couple decades. But, developers are hard-pressed to invest that capital if the impediments to construction are too onerous and there is not enough gas to keep the new lines filled to capacity. Developers also want to make it easier for gas distributors to enter into long-term contracts that help pay for the lines.

Regulators are, largely, sympathetic. The Tampa region, for example, will sport a new natural gas pipeline. Construction on the Gulfstream Natural Gas System is scheduled to begin next January and run underwater to a power plant in St Petersburg owned by Progress Energy. The nearly 18 mile extension, which is part of an existing 645-mile line started in 2002, will be completed one year later.

All projects are contentious, but the Gulfstream line was particularly so. The proactive answer for any developer is to estimate what future demand will be at the time of initial construction and then to work to accommodate that potential growth. Once that design reaches capacity, the matter must be addressed before problems occur by establishing neighborhood meetings and creating a common communications strategy.

Inclusive Process

The federal government is concerned about potential energy shortages and any subsequent rolling blackouts. To cope, the Federal Energy Regulatory Commission is trying to get all regulatory agencies to coordinate their schedules and reviews under the Bush administration's fast track initiative. The goal is not to subvert the permitting process but rather, to streamline it.

"We've taken six months off the old process," says Robert Cupina, with FERC, in a prior talk with this writer. "It's more thorough and there's no corner-cutting."

The first step for developers is to determine whether new pipelines are needed and whether the price of natural gas supports construction such that companies can obtain firm contracts to finance them. The next step is to propose a route the line will take. Overall, there still must not be any significant affect on either the natural habitat or the landowners who lease their rights-of-way. Those precautions will inevitably lead to the rerouting of any transmission line or pipeline system, although in some cases the federal government may exercise its right of eminent domain.

California, Florida and New England have a strong need for new natural gas supplies. Spectra Energy is a developer that wants to expand its pipeline system through markets in the Northeast. Altogether, the Waltham, Mass.-based company says that it plans to invest about $1.5 billion in expansions that will bring incremental natural gas supplies to the Northeastern states, all with the support of the public it expects to serve.

As new supplies begin to enter the Northeast and new infrastructure is placed into service, the region will then have access to significant sources of Eastern U.S. seaboard liquefied natural gas and Western U.S. natural gas. "We're connecting supply from all compass points and moving it to the Northeast region," says Fred Fowler, Spectra Energy's CEO. "These are real projects that offer customers supply choice and reliability, and will bring competitive pricing to the region."

While sentiments are changing, the opposition to new construction is almost always intense. The process to get the permits and to overcome the environmental and zoning questions is lengthy and expensive. Consider that the Long Island Power Authority just recently said it would forego building a pipeline and instead rely on an existing line owned and operated by neighboring Keyspan Corp.

But, generally, the need for new gas supplies and the infrastructure to carry the gas remains an urgent matter. Achieving a consensus is the key. Producers and pipeline developers must be willing to meet with various constituencies early in the process and to incorporate their views into business plans. Developers must then be able to adapt to changing conditions, which will increase their chances of winning new pipeline permits along with the necessary financing.

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