Q&A: Making Midstream’s Case in DC

The political and legal environment in the U.S. has thrown plenty of challenges at midstream businesses. Sarah Miller, the new leader of the GPA Midstream Association, one of the sector’s most venerable organizations, spoke with Oil and Gas Investor at the organization’s annual conference in September in San Antonio about working within the industry and defending the sector in Washington, D.C.

Miller, an attorney, took over the organization’s role as president and CEO from Joel Moxley, who had been in the position from 2019 and retired in September. Miller’s career includes 17 years with Williams Cos. Miller had been GPA Midstream’s outside general counsel since 2019 and was a shareholder and director at the Hall Estill law firm in Tulsa.

Sandy Segrist, senior editor of midstream, Hart Energy: How do you feel about taking over the organization at this point in time?

Sarah Miller, president and CEO, GPA Midstream Association: I’m excited about it. I’ve spent my whole career either in or supporting the midstream industry. I think it’s a very dynamic time. We are a very important part of the solution for the energy needed not only in the U.S. but around the world, and we are eager for that to be as reliable and sustainable and affordable as possible. We have challenges in front of us, but I think we’re the solution providers that we always have been, and we’re members of the same community that wants us to have a sustainable world. And so, it’s really exciting to be able to be part of the organization and to have our members solve some of those issues.

SS: Joel Moxley’s been the GPA president and CEO since 2019. How do you feel about taking over his position and priorities?

SM: Joel and I have worked together since he came on board because he hired me as outside general counsel. I’ve had the opportunity to not only work with him but work with the executive committees and boards over the past several years in order to understand what their priorities are.

I raised my hand, having interest in joining the organization on staff, already fully aware of what those priorities were and eager to be part of jumping in and continuing to support them. So, I would say some of those priorities are not only just making sure the organization continues to run smoothly from a governance and employer standpoint—within budget and all those sorts of organizational goals—but the big-picture item for our members is to make sure that we’re being heard in Washington, D.C., as legislation and regulations are being developed, because we have the technical know-how to help guide those laws or regulations to be practical, technically feasible, cost-effective and developed within statutory mandates.

I want to continue working on all those things with our members, staff and outside advisers.

Similarly, our communication goal is to help the world understand our invisible industry and how everything that we enjoy in our daily lives, our standard of living, really pivots on what midstream supplies through our infrastructure.

And then, we also need to make sure that we are continuing to build on our roots, which is our technical know-how. We’re the organization that was originally formed to develop standards to help the industry function well—you know, what are the specs for a product? We wrote those in the beginning and we’re here still building on that knowledge today, but meeting the next challenge, too.

SS: Many in the industry have talked about how midstream has a negative image with a lot of people outside of the sector. Going back to your law background, how do you plead your case to the public?

SM: I think we can keep doing what we’ve been doing. We want to operate our assets safely.

We do not want to have emissions. Think about our own self-interest. We work hard to keep the natural gas within our system and the liquids within our system. We don’t want to lose any gas or liquids. Those are our products that we want to be able to provide to the market and make money. This is not something that we take cavalierly. We also are members of the community. We live here. We’re parents and grandparents, and we want a sustainable future for ourselves and our employees and our communities. So, we’re good partners for all those self-serving reasons.

But we also are wanting to make sure that we’re fairly treated when the regulations are addressing our industry. We want to make sure that regulators are staying within the scope of what legislation has determined, including when there are benefits intended within the legislation, that we get the benefits of the legislation. It needs to be cost-effective too.

It’s always very interesting when we think about the importance of energy for all of our communities and how there’s an ever-growing need for more and more and more energy to do all that we’re going to need to do—that we all want in our everyday lives as well as all the products that make our lives very simple, that bring us joy. Those things come out of our industry and it’s overlooked that we are the supplier of that. We have the convenience of electricity on demand every day. Well, natural gas is one of the primary sources of that energy.

It’s just kind of unbelievable sometimes that we’re not recognized for it, but I think it’s in some ways to our own credit that we’ve done our job so well, for so long, and we’ve just kept our head down and been a successful supplier of a great portion of the energy in our world today. We haven’t spoken up for ourselves.

So, back to your point. I think we just need to make ourselves more visible on how integral we are to not only energy but to the conveniences we have in our lives today.

And that demand is growing. You think about how there’s more and more demand for electricity. Whether it’s coming from data centers or growing economies, everybody wants the standard of living we enjoy today. Our allies want that, too.

We can be part of that solution, and we need to be proud to stand up and say so.

SS: There’s been a lot of legal action happening lately: the LNG pause, the D.C. Court of Appeals vacating the permits for two LNG projects and the Williams Regional Energy Access project.

SM: We’re more involved with the Regional Energy Access project right now. Certainly, we think it’s prudent for LNG exports to happen.

Natural gas is a safe and clean and sustainable energy source, particularly compared to the alternatives that our allies around the world might otherwise tap into. It doesn’t seem prudent to the aims of good environmental stewardship to suspend LNG exports like that.

The suspension has been at least temporarily lifted by court action.

But, focusing back on where we’re spending our energy and time: We did join in an amicus brief that was just filed at the D.C. Circuit to highlight the need for [Williams’] Transcontinental Gas Pipeline’s [Transco] vacatur of its permit to be reconsidered by the full en banc court.

We believe, and Transco believes, the panel made errors when it did vacate that permit.

For example, in the amicus brief we joined with some other organizations, we highlight that there’s longstanding FERC policy and also court precedent that when FERC is determining market need, it can look at precedent agreements—meaning that the customers who are purchasing the gas or purchasing capacity on that pipeline, which Transco had in this case—that’s the best evidence of market need.

FERC actually doesn’t have authority to go behind state-regulated utilities to question whether they are serious in their need. Independently negotiated contracts, which Transco had with multiple unaffiliated utilities, that’s the best evidence, and that’s what the history has been. So, to change that and create uncertainty about what the requirements are, to suggest that there’s a change of rules in the middle of the game is really difficult for the long planning process for capital investment in infrastructure that New Jersey needs, that the New Jersey utilities are saying they need.

So that’s one of the errors we believe exists there.

The second error is that the action that that panel took was to actually vacate the permit. But that permit governed not only new capacity being built on the pipeline, but also, they replaced some of the older facilities on the system that were serving the existing customers—right as we go into the winter. To vacate that permit would suggest that existing customers would not be able to access the capacity they already had on the pipeline, which is a little bit nuts.

They did that on the suggestion that the FERC couldn’t remedy what it claimed were the supposed errors in issuing the permit, when the long-standing practice is to remand it, so FERC can correct the record but allow the permit to continue.

Those are the two key things we highlighted as errors.

Of course, Transco itself has other positions that it notes, and there are other amicus briefs filed, as well. But I think the point about this is that infrastructure is really important for our energy to be delivered, as we all expect it to be. We don’t want rolling blackouts. We don’t want to be cold when a terrible winter storm hits. And it takes a long time for infrastructure to be built.

Having clear, predictable, understandable requirements that our industry follows is really important. The rules can’t change in the middle of the game.

SS: What are operators talking about right now?

SM: We’re talking a lot about the regulations that are coming out, particularly the methane emission and reporting requirements, and then the waste-emission charge. The final rule is not published yet, but we expect it soon. It’s going to have a significant financial impact on our operators.

We are talking about what can we, and the GPSA (service and suppliers to midstream organization) members as well, do to make sure we understand how we can technically improve our operations. It is our goal as well to reduce emissions and make sure we’re operating as efficiently as possible.

But then we also need to make sure that we understand whether those rules have been written in compliance with the scope of the agency’s authority, that they’re technically possible, that we understand the rules and the factors behind them, so that we have the technology possible to be able to best understand the data, and that it’s based on empirical data.

We have technical committees, of course, that were meeting all across this convention this week. And they—as well as our advocacy groups who are meeting independently—they are thinking about how we can collaborate, both to help our members be compliant with rules, that the rules make sense and that we all understand them well.

SS: What is the time frame for those new laws to take effect?

SM: For one example, the waste emissions charge—its final rules are not published yet—the final rule is expected in December. Under the legislation, the Inflation Reduction Act, the charge is to be $900 per metric ton (of waste emissions) reported in 2024, and then it’ll be $1,200 per metric ton reported in ’25 and then $1,500 per metric ton in 2026.

The charge is going to be real for our members soon. It’s just that we don’t have all the regulations about how the emissions are going to be identified to be reported. So, it’s kind of like the industry and regulators are flying the plane while we’re building it.

SS: Beyond that, has the organization been involved in discussing technical advancements?

SM: Yeah, we definitely have been talking about things. We had a couple of presentations during the course of this convention about how artificial intelligence can help us do our jobs better.

For example, we had one operator who shared some of the findings that they had using artificial intelligence to make sure that our equipment operates with the safest processes.

Certain equipment can have, for example, cycling errors or failures and we want to make sure we understand. There’s been so much data out there, it’s been difficult for our operators in the past to identify the patterns that would help us understand where there are risks. AI has been helpful in doing that.

SS: Overall, how did you think the convention went this year?

SM: I thought it was really exciting because I’ve never been to a full convention before. I’ve come for board meetings before to do my job as an outside counsel, but now I got to go to the whole thing starting on Saturday and meeting with our research committees, and then I got to spend time with our members and really hear from them about the hard work that they’re doing to help us solve the issues that are in front of the organization and are in front of our operators—technically.

I heard how our members are really fired up about engaging with regulators and finding our partners in the legislature who understand the importance of our industry and partnering with us to make sure that we’re able to continue to solve the challenges to supply the energy the world needs. It’s been really fun to see.