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Welcome to Grid Brief! Today, we’re looking at transmission legislation in Indiana, the Haynesville shale play’s record-breaking output, Sec. Haaland and Sen. Hawley’s recent face-off about mining, and more.

Indiana Utilities Gain “Right of First Refusal” for Transmission

Indiana Governor Eric Holcomb has signed a bill that gives incumbent utilities the right of first refusal (ROFR) to build transmission lines approved by a regional transmission organization, effectively blocking out competition from other transmission companies.

The "right of first refusal" means that if a third party wishes to provide electricity to customers within an incumbent utility’s service area, the utility has the right to match the offer and continue providing service to those customers. Utilities such as AES Indiana, CenterPoint Energy, Duke Energy Indiana, and Northern Indiana Public Service Co. will be the primary beneficiaries of the law.

Critics have argued that this is an anti-competitive move that could lead to more costly transmission facilities. The Electricity Transmission Competition Coalition chair, Paul Cicio, called the legislation “anti-consumer and inflationary.”

“Indiana’s grid is mainly in the MISO’s footprint. MISO last year approved a roughly $10.3 billion transmission expansion plan that includes segments running across Indiana,” reports Utility Dive. “MISO is developing a second expansion round slated to be approved in mid-2024 that could cost $20 billion to $30 billion. In states without ROFR laws, the projects will be put out to bid.”

Haynesville Hits Record Output

The Haynesville shale play, located in northeastern Texas and northwestern Louisiana, has hit new production records. In March this year, it averaged 14.5 billion cubic feet per day (Bcf/d), a 10% increase from the previous year.

The Haynesville play makes for 14% of all U.S. dry natural gas production, making it the third-largest shale gas-producing region in the country. It follows the Marcellus play in the Appalachian Basin and the Permian play in Texas and New Mexico in size. “In 2022, dry natural gas production averaged 25.2 Bcf/d from the Marcellus play (83% of Appalachian Basin production) and 15.4 Bcf/d from the Permian play. The Marcellus, the Permian, and the Haynesville plays combined account for 55% of U.S. dry natural gas production,” reports the Energy Information Administration.

Generally, production costs in the Haynesville run higher because the natural gas wells in the region are deeper than in other regions. But as natural gas prices rose in 2022, the profitability of new wells in the region drew investors and added more rigs.

“In the Haynesville, an average of 65 rigs were in operation in 2022, a 43% increase compared with 2021. In the first three months of 2023, as natural gas prices fell, the number of active rigs in the Haynesville plateaued at about 68 rigs,” reports the EIA.

Three new pipeline projects are set to be completed by the end of 2024, which will add 5.0 Bcf/d of takeaway capacity out of Haynesville. These projects include Williams' Louisiana Energy Gateway, Momentum Midstream's New Generation Gas Gathering (NG3), and TC Energy's Gillis Access project.

The EIA expects Haynesville to continue to grow with the addition of new pipeline projects.

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Haaland, Hawley, and Energy Trade-Offs

All industrial development involves trade-offs; perfection exists nowhere. Most debates in energy are conflicts—informed or not—about trade-offs. Secretary of the Department of the Interior Deb Haaland’s recent conflict with Republican Senator Josh Hawley is a perfect example of this.

The Biden administration has been pushing to gets more electrical vehicles on the road. In fact, Energy Secretary Jennifer Granholm recently expressed the administration’s desire to electrify the military’s vehicles. EV production demands incredible resources, much of which can be mined in America. But the DOI has obstructed such developments in favor of ecological conservation, as it did with the Twin Metals mine in Minnesota.

When Hawley asked Haaland why the DOI has pursued this course of action, she replied, “It's an iconic place. Of course [the boundary waters near the proposed mining site are] very valuable ecological system to many plants, animals, and species.”

So then where will the minerals come from? Hawley asked Haaland if she knew who the biggest producer of refined lithium and cobalt is, or who exports the most natural graphite.

She replied that she did not know. The answer? China.

Trade-offs.

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