PennEast becomes last to scuttle gas pipeline project

A gas pipeline in Chino Hills State Park, California, United States, April 21, 2021. REUTERS / Lucy Nicholson

Sept. 27 (Reuters) – PennEast Pipeline on Monday said it would stop developing a proposed Pennsylvania-New Jersey pipeline, the latest in a series of natural gas lines to run aground due to legal issues and regulatory.

The project was one of many projects proposed in recent years to extract gas from the rapidly growing Appalachian region, to meet local or environmental opposition to more fossil-fueled infrastructure. Gas prices have increased around the world due to increased demand and lack of supply.

In the United States, there are many products available for heating and power generation. But with the cancellation of PennEast and other pipelines, the industry is increasingly concerned that additional production from the Marcellus / Utica shale in Pennsylvania, Ohio and West Virginia will be trapped.

Much of the growth in gas production in the United States over the past decade, which has made the country from a gas importer one of the largest exporters in the world, has come from the Appalachian region. . The United States exports about 10% of the gas it produces.

“The Marcellus / Utica has been the growth engine of natural gas production for many years and this has slowed down considerably over the past two years,” said Luke Jackson, director of natural gas for North America at S&P Global Platts, noting that the region was already constrained by a lack of pipelines.

PennEast was canceled, the company said, because it had not yet received all of its required permits, including a New Jersey water quality certification. The project was one of the last major projects to extract gas from the Marcellus / Utica formation, the largest shale gas basin in the United States.

“PennEast partners, following extensive evaluation and discussion, recently determined that further development of the project is no longer supported,” PennEast said in an email, noting that it ” had ceased any further development of the project “.

U.S. natural gas prices are at their highest level in seven years, driven by foreign demand for U.S. exports of liquefied natural gas (LNG). In other markets, gas prices are trading at record highs due to low storage in Europe and insatiable demand in Asia.

Other east coast gas lines blocked by regulators and legal battles include improving Northeast supplies from Williams Cos Inc (WMB.N) 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. read more

PennEast decided to halt development even though the United States Supreme Court ruled in its favor in June in a lawsuit allowing the line to seize state-owned or controlled land in New Jersey. Read more

As late as August, PennEast said it still hopes to complete the first phase of the $ 1.2 billion Pennsylvania pipe in 2022. read more

The 193 km (120 mile) pipe was designed to deliver 1.1 billion cubic feet per day of Marcellus shale gas to customers in Pennsylvania and New Jersey. One billion cubic feet is enough to power about five million American homes per day.

PennEast had initially hoped to complete the project in 2019.

Reporting by Scott DiSavino; Editing by Bill Berkrot, Mark Potter and Jonathan Oatis

Our Standards: Thomson Reuters Trust Principles.

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