Sept. 27 (Reuters) – The PennEast Pipeline said Monday it will cease development of a proposed Pennsylvania to New Jersey pipeline, the latest in a series of natural gas pipelines that are aground due to legal and regulatory challenges.
The project was one of several proposed in recent years to source gas from the rapidly growing Appalachian region, only to encounter local or environmental resistance to stronger fossil fuel infrastructure. Due to the increasing demand and the lack of supply, gas prices have skyrocketed around the world.
There are many heat and power generation products in the US. But with the shutdown of PennEast and other pipelines, the industry is becoming increasingly concerned that additional production from the Marcellus / Utica shale in Pennsylvania, Ohio and West Virginia will be trapped in the basin.
Much of the growth in US gas production over the past decade, which has transformed the country from a gas importer to one of the largest exporters in the world, has come from the Appalachian region. The United States exports approximately 10% of the gas it produces as liquefied natural gas (LNG).
“Marcellus / Utica has been the engine of growth in natural gas production for many years, and that has slowed significantly in the past two years,” said Luke Jackson, North America Natural Gas manager, S&P Global Platts, pipelines.
PennEast was canceled because it had not yet received all of the required permits, including a water quality certification in New Jersey. It was one of the last major pipeline projects under construction to produce gas from the Marcellus / Utica Formation, the largest US gas slate basin.
“After extensive evaluation and discussion, the PennEast partners recently decided that the further development of the project will no longer be supported,” said PennEast in an email, noting that “any further development of the project has been discontinued”.
US natural gas prices are at a seven-year high, fueled by foreign demand for US LNG exports. In other markets, gas prices are at record levels due to the low storage capacity in Europe and the insatiable demand in Asia.
Other east coast gas pipelines held up by regulators and litigation include Williams Cos Inc’s (WMB.N) Northeast Supply Enhancement from Pennsylvania to New Jersey and New York and Dominion Energy Inc’s (DN) Atlantic coast from West Virginia to Virginia and North Carolina. The latter was canceled in 2020. Continue reading
PennEast decided to halt development despite the U.S. Supreme Court ruling in its favor in June on a lawsuit that allowed the line to seize state-owned or controlled land in New Jersey. Continue reading
Back in August, PennEast said it still hoped to complete the first phase of the $ 1.2 billion pipeline in Pennsylvania in 2022. read more
The 193 km pipeline is designed to deliver 1.1 billion cubic feet of gas from the Marcellus Shale to customers in Pennsylvania and New Jersey every day. One billion cubic feet is enough gas for about five million US households for one day.
PennEast initially hoped to complete the project in 2019.
PennEast partners include entities from New Jersey Resources (NJR.N), South Jersey Industries (SJI.N), Southern Co (SO.N), Enbridge Inc (ENB.TO) and UGI Corp (UGI.N).
Reporting by Scott DiSavino; Editing by Bill Berkrot, Mark Potter, and Jonathan Oatis
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