Bacon's Rebellion

Democracy Thrives in Sunlight

Which Would You Prefer: Pipelines or Trucks?

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by

James A. Bacon
in

Scania LNG trucks

Don’t like gas pipelines? Maybe you’ll like LNG trucks better.

As the Atlantic Coast Pipeline and Mountain Valley Pipeline endure the legal agonies of the damned here in Virginia — the odds are increasing that neither will be built — a Pennsylvania company has begun liquefying natural gas for delivery by tractor-trailer.

Edge Gathering Virtual Pipelines 2 LLC began well-site production of LNG and making truck-delivered LNG sales in May. States a company press release: “Without the need for pipeline access, EDGE expects to make LNG a viable and competitive physical energy solution for end-use consumers and gas utilities across the U.S.”

Within the next year, EDGE expects to obtain and deploy a fleet of LNG-fueled tractors, to make customer deliveries even more cost effective.

Bacon’s bottom line: LNG trucks have a couple of big advantages. They don’t require eminent domain to cross peoples’ land. They don’t create an erosion and water-quality problem. They don’t require the same difficult-to-obtain regulatory approvals of pipelines. And they don’t require a massive up-front capital commitment to meet a supply for natural gas that may or may not be around 30 years from now.

On the other hand, I’m guessing, a lot of people won’t be happy with large fleets of 40-foot, LNG-bearing trucks crowding their already-congested highways. Moreover, the EDGE press release makes no mention of cost. Assuredly, the cost per thousand cubic feet is higher than for a pipeline — a cost that electric and gas utilities will pass on to rate payers.

EDGE’s first delivery is to a New England gas utility 300 miles away from the Marcellus shale production site in Pennsylvania. Pipeline capacity to New England is far more constrained than it is in Virginia, so the economics of the EDGE gas delivery system may work be better there than here. On the other hand, near- and intermediate-term capacity is increasingly constrained in the southern Mid-Atlantic as well. One thing Virginians might want to think about: If the ACP and MVP pipeline projects are scuttled, what are the odds that we’ll start seeing LNG trucks on Interstates 95, 81 and 64?

Hat tip: Rick Gechter

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23 responses to “Which Would You Prefer: Pipelines or Trucks?”

  1. Peter Galuszka Avatar
    Peter Galuszka

    Not sure I understand the logic here. If ACP and MVP fail, then the roads will be clogged with LNG trucks. Who says? Where’s the demand?

    1. James A. Bacon Avatar
      James A. Bacon

      Argh. I didn’t say that the roads would be clogged with LNG trucks. I raised the possibility. As the post concludes: “If the ACP and MVP pipeline projects are scuttled, what are the odds that we’ll start seeing LNG trucks on Interstates 95, 81 and 64?”

  2. LarrytheG Avatar
    LarrytheG

    Good Lord. What will happen if the ACP and MVP are “scuttled”?

    We won’t have LNG for trucks?

    This sounds suspiciously like it came from Dominion!

    To be honest I’d rather see hybrid electric trucks! They can go anywhere
    there is electricity and they can use diesel for backup!

    Dominion ran an arrogant gamble.. and it may well still succeed but talking about LNG trucks make it sound pretty desperate.

    1. James A. Bacon Avatar
      James A. Bacon

      “This sounds suspiciously like it came from Dominion!

      Wrong as usual.

  3. J. Abbate Avatar
    J. Abbate

    Dominion got caught with a very poor proposal, with poor data and inadequate submissions for the ACP. Time has passed and the situation that may have led to any justification for the ACP has critically changed. Five years of researching the Atlantic Coast Pipeline has provided no factual proof of regional demand for an additional pipeline. Likewise, here doesn’t appear to be any evidence for any demand for large LNG trucks carrying additional natural gas supplies throughout the region. Providing subscriptions from Dominion and Duke’s wholly-owned subsidiaries does not constitute demand for the ACP and Dominion is being called out on that in court. Williams/Transco’s pipeline is currently underutilized and can bring more than adequate additional supply of natural gas to the regions targeted by the ACP, at a $4 billion dollar less of a cost to ratepayers who would not have to pay for the gas plus the unnecessary cost of building a pipeline. While the conditions of supply and need have changed for the pipeline, Dominion continues to be driven by the opportunity to reap the 15% net return on investment for simply building the pipeline whether it’s needed or not. Now with the bloated cost overruns for the ACP, the continued litigation, and dysfunctional permitting process facilitated by the VA DEQ, both the MVP and ACP are exposed for their corporate profit grab at the ratepayers’ (and property owner’s along the routes) expense. Without someone providing honest domestic demand data demonstrating true need for additional pipelines and large LNG trucks, this is an imagined issue based on an overreach for profit.

    1. James A. Bacon Avatar
      James A. Bacon

      Question. Let’s say the ACP and MVP don’t get built, and let’s say Transco submitted a proposal to build an extension from its interstate pipeline to serve under-supplied markets in Virginia and North Carolina? Do you think environmentalists would endorse or oppose it?

      1. TomH Avatar
        TomH

        A connection to Columbia Gas or Transco could be made to Virginia Natural Gas over existing rights-of-way at a tiny fraction of the $2 billion that VNG customers will pay for just 20 years of service from the ACP (not including the cost of gas).

        With little to no disruption to new property, perhaps using existing easements, this option would have far less impact than the ACP pipeline would cause to the region.

        But that might not be the best solution for southeast Virginia.

        Wall Street, the energy industry, federal regulators and agencies in the executive branch are doing everything they can to expand gas infrastructure and raise gas prices.

        The top 60 U.S. oil and gas producers, in aggregate, have lost $36 billion each year for the last ten years. Many bad decisions, including the rush to export, have been made recently to reverse that trend.

        The Hampton Roads region does not need to increase its dependency on natural gas. That is the path to higher costs and would be a bad strategic decision. This region could reverse its financial fortunes and become a hub for modern energy solutions. This would reduce the cost of occupancy for federal installations and attract new innovative businesses, as well as make a significant boost in local employment.

  4. TomH Avatar
    TomH

    Jeeva is right. Without the ACP and the MVP, Virginia and the Carolinas have already expanded the capacity of existing pipelines more than what would be provided by the ACP and the MVP. Most of the new capacity went into service in 2018. No trucks filled with LNG would be required to meet the needs of this region. We have plenty of pipeline capacity right now.

    Not only does all the necessary capacity already exist, it is much cheaper to use than the ACP and MVP. The new pipelines will add billions to energy costs in the region for no added value.

    Besides, the demand is now considerably less than what was expected when the new pipelines were proposed. Power plants have been canceled or postponed. The cost-competitiveness of gas-fired power plants has severely declined, as indicated by the utilities themselves.

    It would be best to abandon both projects and cut the losses before they double in size. These were ill conceived projects to begin with. Undertaken for private profits at the expense of families and businesses and the state economy.

    The portable LNG trucks might have some short-term advantage. Massachusetts currently experiences gas supply constraints about 12 days per year. This is not enough to justify the construction of a multi-billion dollar pipeline that will take 40 years to pay off. Especially since effective energy efficiency programs and renewables have been consistently reducing demand.

    Having locally available LNG injections could keep reliability high during times of peak demands in the Northeast. Weather forecasts are accurate enough far enough in advance to dispatch trucks in time to meet the need.

    The modern age should be filled with low-cost innovative solutions that should displace the expensive and disruptive solutions left over from the 20th century. We will use what we have for some time to come. But there is no reason to build more old-style energy facilities. Many other lower-cost, more effective alternatives are now available.

  5. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    Demand for gas is soaring worldwide with no end in sight for fierce rising demand. Plus these pipe lines are absolutely critical to our national security, and the national security of our allies, all as on vivid display this very day. Meanwhile, the renewable energy revolution is faltering world wide, performing far below all projections as its hidden snakes scatter out of the woodpile now being tested and exposed by operations in the real world, exorbitant costs being only one of its many problems and rising obstacles to success.

    1. TBill Avatar
      TBill

      Reed last I knew nat gas growth has slowed to 1-2% both USA and global. That is still significant growth, but possibly less demand than might have been thought when the pipelines got started. LED lighting etc. is slowing electric demand, and renewables are growing quite well. So I envision we are in a pause period of electric demand. But there is a potential future issue when the nukes shut down and either must be replaced in-kind or substituted for.

  6. TBill Avatar
    TBill

    New York/New England use a lot of natural gas for home heating whereas Virginia tends to have a lot more electric heat pumps. Also those Yankees have well known shortage of pipelines. The truck approach potentially adds an important element of reliability to their natural gas supply.

    If we look at Virginia, Maryland, etc, we import much electric power from Pa. and WV. Both PA and WV look well positioned to maintain that leadership. Just today Southeast Energy News said that House Democrats are challenging an Energy Department plan to use a $1.9 billion loan guarantee for a natural gas storage and plastics hub in Appalachia. So the implication is Virginia is opting out and Va. will continue importing electricity if not more importing in the future. I am trying to find the map of Appalachia to see if we are in it, but that’s where the action may be. We are cloud here.

  7. J. Abbate Avatar
    J. Abbate

    There are multiple reports showing that cost of renewable energy is now dipping below fossil fuel generation.

    Lazard’s annual Levelized Cost of Energy (LCOE) analysis reports solar photovoltaic (PV) and wind costs have dropped an extraordinary 88% and 69% since 2009, respectively. Meanwhile, coal and nuclear costs have decreased by 9% and increased by 23%, respectively. Even without accounting for current subsidies, renewable energy costs can be considerably lower than the marginal cost of conventional energy technologies.

    https://www.forbes.com/sites/dominicdudley/2018/01/13/renewable-energy-cost-effective-fossil-fuels-2020/#71d20dde4ff2

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Except when ever its deployed the cost to consumers always goes sky high.

  8. Jim Loving Avatar
    Jim Loving

    Not to mention, these trucks are the perfect terrorist vehicle for mass explosions – either by normal truck accidents on the beltway (hmm not too many of those), or simple hijack and usage at convenient high impact target.

    I would imagine since DHS saw this risk 15 years ago, they will again look at this risk before allowing this to gain much traction. https://www.cfr.org/backgrounder/liquefied-natural-gas-potential-terrorist-target

    1. LandLover Avatar
      LandLover

      Given the current pipeline network in VA, I find it difficult to imagine that high numbers of LNG tank trucks will be moving on VA roads, unless of course, Dominion builds an export facility near Hampton. That said, it’s a good idea to consider the dangers you refer to above, but you might want to consider the dangers of our current/future pipeline systems. Do some internet searches on the vulnerability of our current systems to terrorist attacks. These systems are operated largely by computers which have a history of cyber attacks, and the consequences are frightening. For example, a cyber attack has the potential to lower the pressure or shut it down entirely, translating to a loss of electricity generation at gas fired power plants. And, I shutter at the thought of a widespread increase in pressure on a large capacity transmission pipeline.

  9. LarrytheG Avatar
    LarrytheG

    re: “demand” for LPG.

    That’s an economic argument – a private sector supply/demand argument not one to give Dominion the right to take private property for their own “needs”.

    Here we have libertarian types arguing FOR a private company taking land from other owners – to “meet demand”.

    The real question is – is the ACP and MVP justified on pure market demand ?

    So here’s a hypothetical question.

    What if a cost-effective process was discovered that allowed solar to create hydrogen gas from water? So you could produce hydrogen fuel anywhere there were solar panels and water……….

    The fossil fuel world as we know it would change massively.

    don’t laugh: https://bigthink.com/robby-berman/researchers-announce-breakthrough-in-separating-hydrogen-from-h2o

  10. J. Abbate Avatar
    J. Abbate

    Market forces are now working to expand renewable energy usage in the U.S. One immediate example is in Florida, where utilities are buying solar because it is cheap compared with fossil fuel alternatives like natural gas and coal.

    (Reuters) – The U.S. solar energy industry lifted its installation outlook for this year and beyond thanks to robust demand for large-scale projects by utilities buying the clean energy source for its low cost, according to a report published on Tuesday.

    https://www.reuters.com/article/us-usa-solar-outlook/u-s-solar-installation-outlook-brightens-on-falling-costs-report-idUSKCN1TJ09G

  11. LarrytheG Avatar
    LarrytheG

    What would be an interesting study – done by an independent 3rd party would be to see how much of Virginia’s electrical demand could be met by PGM alone.

    Dominion is in the business of generating electricity and they prefer to do that rather than get it from PJM because they make a profit on what they generate.

    One of our electric cooperatives – NoVEC in NoVa apparently gets ALL of it’s electricity from PGM. What are the chances that the other Co-ops could buy it also from PJM instead of buying it from ODEC/Dom?”

    And a question here to Tom.Acbar/Rowinguy –

    Does Dom sell power to PJM and if so is it auction priced and if so – does Dom make a profit on it?

    1. TomH Avatar
      TomH

      As has been discussed here by Acbar on many occasions, every utility in Virginia buys all of its electricity at wholesale prices from PJM.

      Each Load Serving Entity (utility) must own or have under contract enough generation to meet its annual peak load, plus a required reserve.

      All generation is dispatched by PJM in order of cost, the lowest cost units bid at the daily auction are dispatched first.

      It is unlikely, on any particular day, that a utility generates exactly what it uses, because there are other less expensive units available through PJM (merchant generators and other utilities).

      In this way, PJM provides high reliability – there is enough capacity to meet peak demand; and lowest cost – by using the cheapest sources of electricity first.

      There is a constant import/export of energy going on across Virginia’s borders. This concept of Virginia needing to “import” energy from outside the state misrepresents how PJM’s system really works.

      For example, Dominion has more generating capacity than it needs to meet it peak loads, plus reserve. Even though the Mt. Storm coal plant that Dominion owns is in West Virginia, it is considered Virginia jurisdictional generation.

      When Dominion sells more electricity to PJM than it purchases, 75% of the profits go to the ratepayers, offsetting fuel costs, and 25% of the profit is kept by the utility. This is a great deal for the utility since the power plant and its financing is repaid in full by ratepayers, plus about twice the cost of the plant in profits. So overbuilding capacity, which is exactly what Dominion is doing, provides a huge stream of profits via the RAC and “free” profits from a generating unit that has been paid in full (plus profits) by the ratepayers.

      That is one reason Dominion wants to build 5000 MW of solar. By putting it in the ratebase they earn a big profit and they head off the loss of load if someone else builds it. This is a good protective financial strategy for Dominion, but it raises the cost of energy for its customers higher than it would otherwise be. That is why we need to reset the rules, so Dominion does not have to make choices that are good for them but bad for us.

  12. LarrytheG Avatar
    LarrytheG

    That’s what I feared. So it’s MORE “profitable” for Dom to build more generation than they actually need because then they get even more profit than if it sold to ratepayers?

    How come Jim B doesn’t mention this when he’s advocating for Dom?

    😉

  13. S. Nitka Avatar
    S. Nitka

    Do you need any more evidence beyond this story* to demonstrate that Bacon is a nothing more than a shill for Dominion? It’s a shame that otherwise excellent journalism from this publication is so compromised when the topic involves Dominion.

    * Let’s not forget that BR also is financially supported by Dominion.

    1. James A. Bacon Avatar
      James A. Bacon

      Let us not forget that Dominion has not sponsored this blog for almost a year.

  14. djrippert Avatar
    djrippert

    Let’s see ….

    Dominion exports LNG from Cove Point on the Western Shore of the Chesapeake.

    https://www.reuters.com/article/us-dominion-cove-point-lng/dominion-maryland-cove-point-lng-facility-exports-first-cargo-idUSKCN1GE1SM

    The Chesapeake is navigable from Cove Point to Hampton Roads.

    Rather than build new pipelines or truck gas in semis – why not put the LNG on ships at Cove Point and ship it to Norfolk?

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