Energy Construction
Developers Cancel $1B PennEast Natural Gas Pipeline
Developers of the PennEast natural gas pipeline, intended since 2014 to carry fracked gas 120 miles from the Marcellus Shale in Pennsylvania to New Jersey for New York area markets, cancelled the estimated $1.1 billion project on Sept. 27, announcing they have “ceased all further development.”
Despite a favorable U.S. Supreme Court decision in June that allowed PennEast to condemn state-owned land for construction, the project faced strong opposition from environmental groups and New Jersey officials. It had been set to come on line in 2017.
The line was designed to deliver 1.1 billion cu ft per day of natural gas.
Company and state officials reached agreement on Sept. 20 to drop the land seizures, but Acting Attorney General Andrew Bruck still challenged the pipeline’s 2018 Federal Energy Regulatory Commissions approval in federal court, and the project has not received water quality certification and wetlands permits under Section 401 of the federal Clean Water Act.
In a statement, Bruck said pipeline construction "would have harmed New Jersey’s residents, businesses, and fragile natural resources. We have always said that this pipeline was dangerous and unnecessary, and our office was proud to fight PennEast all the way to the U.S. Supreme Court in an effort to block the construction."
PennEast said after extensive evaluation and discussion among the development partners related to the still outstanding permits, the consortium determined that "further development of the project is no longer supported."
PennEast partners include energy giants Enbridge, Southern Co. Gas, New Jersey Resources, SJI Midstream and UGI Energy Services. Each partner owns 20% of the project.
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New Jersey Resources and the other partners, except Enbridge, together wrote down $354 million of their PennEast investments in a recent quarterly results filing, citing ongoing legal and regulatory challenges.
UGI, which was lead developer and would have operated the pipeline, took a $93 million impairment charge in August.
“The partnership still firmly believes that New Jersey needs another source of natural gas, but what is in question now is the timing,” Robert Beard, UGI natural gas executive vice president, said during the company’s third-quarter earnings call in August. He noted multiple hurdles to cross before the pipeline could be built.
"PennEast, which was designed to help deliver much-needed natural gas to the region, has encountered significant legal and regulatory obstacles and we no longer believe the project can be efficiently completed," said Max Bergeron, a spokesman for development partner Enbridge.
Hinson Peters, a spokesman for the Natural Gas Supply Association told ENR that "adequate infrastructure must be in place for energy to reach consumers," He said that infrastructure, particularly in the Northeast, "is essential to alleviate regional constraints and give customers access to lower energy prices available in other regions."
