PennEast cancels New Jersey pipeline; deliberates future of Pa. segment

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The developers of the controversial PennEast natural-gas pipeline are considering the fate of a 68-mile segment in northeastern Pennsylvania now that the crucial tie-in with New Jersey has been canceled.

PennEast Pipeline Co. abruptly announced Monday that after seven hard-fought years, it was pulling the plug on the $1 billion project that would have shipped gas from the Marcellus gas fields to Mercer County, New Jersey, where it would connect to other gas lines serving the greater New York City market. The decision was made after PennEast earned a victory in the U.S. Supreme Court in June that it could condemn state lands over the objection of state governments.

The statement indicated that the company was not prepared for yet another regulatory battle to obtain the necessary wetlands and water-quality permits required under the federal Clean Water Act.  “Therefore, the PennEast partners, following extensive evaluation and discussion, recently determined further development of the project is no longer supported,” said the statement. “Accordingly, PennEast has ceased all further development of the project.”

The company also said, however, it was still discussing the future of the first phase of the 120-mile pipeline, which includes a 68-mile route in Pennsylvania from Luzerne County to the Church Road Interconnect in Northampton County where it would tie in with the Adelphia Gateway and Columbia Transmission lines. Phase One had originally been scheduled to become operational in November, but that target was pushed into 2022 earlier this year amid regulatory delays. The company said it was “examining the proper next steps in the regulatory process as it pertains to the Phase One Amendment pending at FERC.”

A PennEast spokesman told Pennsylvania Business Report that the Endbridge Texas Eastern Transmission pipeline – Enbridge is the majority partner of PennEast – was “well-positioned” to meet gas demand in both New Jersey and Pennsylvania. “Enbridge and the four other equity partners in the PennEast Pipeline Project have decided that despite the sustained need for additional access to natural gas in the region, the Project will no longer be pursued in its current form,” the e-mailed statement said.

New Jersey Gov. Phil Murphy indicated Monday in a statement that PennEast may indeed have had a difficult time gaining the necessary permits in his state. “For the last four years, my administration has fought back against the unnecessary construction of the PennEast Pipeline, which was wrong for New Jersey and would have destroyed acres of New Jersey’s conserved lands and threatened species.”

Business interests in Pennsylvania, however, were unanimous in expressing disappointment and laying the blame on environmental organizations and zealous regulators who were misguidedly targeting the fossil-fuel energy industry in order to promote renewable energy sources.

“While it may be a good day for extreme politicians and anti-energy activists, it’s a terrible day for consumers, our regional building trades, and our American energy security,” said Dave Callahan, president of the Marcellus Shale Coalition.

The Pennsylvania Chamber of Business and Industry said New Jersey’s opposition to a project with a capacity of around 1 billion cubic feet per day was puzzling since a new source of gas would benefit its consumers through lower prices and greater reliability in a region where a lack of pipeline capacity has kept supplies tight and expensive.

“The increased production of natural gas has directly led to substantial reductions in utility bills for businesses and working families in our state and region, as well as historic reductions in greenhouse gas emissions and a significant improvement in air quality,” said PA Chamber President and CEO Gene Barr. “Unfortunately, pipeline constraints due in no small part to misguided political opposition from activists have precluded neighboring states from reaping the benefits of this critical infrastructure development, despite regulated utilities in New Jersey noting to their public service commission that they may not have enough gas to meet winter demand.”

The Chamber also emphasized that natural gas was still a key source of energy, particularly for some companies in the state where “renewable energy is not a solution.”

“We must afford companies and consumers the option of energy choice,” Barr said. “Our economy will not get back on its feet through heavy-handed mandates that raise energy costs and discourage innovation.”