News stories periodically highlight flaws in the U.S. energy infrastructure, from northeast natural gas deliverability problems and high consumer prices during cold weather to railroad accidents involving crude oil tank cars.
All of us also are aware that our energy supply is changing, and our infrastructure will need to provide for increasing domestic production in new areas of the country, decreasing total energy demand and the shift from coal to natural gas and renewables.
Concerns over aging or inadequate infrastructure and changes in the energy mix led the Obama administration to focus the first Quadrennial Energy Review (QER) on transmission, storage and distribution infrastructure.
The QER defines the goals for the U.S. energy infrastructure as:
- Enhanced resilience.
- Asset security.
The assessment looks specifically at natural gas pipelines, the electric grid, the Strategic Petroleum Reserve and the problems of the rail and barge systems shared by coal, oil, ethanol, grain and other goods.
The review also recognizes several crosscutting needs, including:
- Increasing the energy workforce.
- Expediting infrastructure siting.
- Improved integration of the North American energy markets.
Infrastructure improvements are constrained by the size of the system: The U.S. energy infrastructure includes approximately 2.6 million miles of interstate and intrastate pipelines.
To put this in perspective, there are 2.6 million miles of paved roads in the country.
We also have about 640,000 miles of transmission lines; 414 natural gas storage facilities; 330 ports handling crude petroleum and refined petroleum products; and more than 140,000 miles of railways that handle crude petroleum, refined petroleum products, liquefied natural gas and coal.
Modernization of the energy infrastructure also is complicated by the long operational life and slow turnover of aging or obsolete pipelines or electric grids; high initial capital costs; predominantly private ownership; a patchwork of local, state and federal policy and regulation; a lack of timely investment; and individual (home or business) production of electricity that does not contribute revenue for grid operation.
The potential for terrorist attacks on infrastructure – including cybercrimes – is a real but poorly quantified risk.
The QER, consistent with the Obama administration climate action plan, also considers ways to reduce greenhouse gas (GHG) emissions from infrastructure.
Cast iron and bare steel pipelines represent 9 percent of national natural gas distribution systems but contribute 30 percent of methane leaks. Replacement of these leak-prone pipelines is estimated to cost $270 billion.
Many states have infrastructure modernization initiatives, but these programs may require many decades.
In addition, QER recommends increased research into the volumes and sources of GHG emissions from natural gas infrastructure and proposes grants to help reduce diesel emissions around ports and rail yards.
The need to construct new electricity transmission lines over the next 15 years is estimated to be comparable to historical construction levels. New electric grid investments will replace aging infrastructure, help maintain reliability and aid in meeting policy objectives such as state renewable energy goals.
Smart grid technology, improved electric storage and growth in distributed generation all are expected to help reduce construction requirements.
Shared transport – especially rail and barge – for crude oil, ethanol, coal and grains continues to be under strain despite a recent decline in crude oil shipments. The QER recommends increased data acquisition and analysis to understand the causes and impacts of delayed rail shipments.
(Government and industry already are implementing changes in railcar design and operational procedures.)
The QER proposes about $15 billion in federal spending and tax credits over a decade – a figure Congress is unlikely to support, even though the amount is a fraction of the private sector spending that is envisioned.
Most of the proposed federal funding is designated for research, analysis, improved data for decision-making, and grants to state and local governments.
Many recommendations in the QER require congressional action to be implemented. Congress has independently determined that it needs to act to improve U.S. infrastructure, although the congressional leadership is approaching the subject in a different way from the executive branch.
At a hearing on the QER, Sen. Lisa Murkowski, R-Alaska, commented that infrastructure improvements depend on private funding commitments that require regulatory certainty and predictability. That would include:
- A reduction in subsidies and preferences for renewable energy sources.
- An end to new environmental regulations and multi-year project delays caused by lawsuits.
At the same hearing, several senators complained that the QER did not consider the possibility – and infrastructure impacts – of oil exports, which they view as having strong potential benefits to the U.S. and North American economies.
The Strategic Petroleum Reserve (SPR) upgrades also may be subject to congressional-administration disagreements. SPR was designed in 1975 – when oil was not a global commodity, and before oil production from shales – and is designed to move oil to Gulf Coast refineries that currently have a surplus of crude.
The QER recommends new facilities, some pipeline reversals and new U.S.-flagged ships to move oil between U.S. ports and refineries in the event of a domestic or international supply disruption.
Alternatively, some in Congress question whether we should sell off some SPR oil to pay for repairs, or reduce our storage from 140 to 90 days of imports, or eliminate the reserve.
Congress agrees with the QER goals to increase the energy workforce, expedite infrastructure siting and improve integration of North American infrastructure. In addition, Murkowski and Energy Secretary Ernest Moniz have committed to cooperating on the QER legislative goals.
New bills and a fact-finding hearing have been announced for this spring and early summer.