Kinder Morgan Abandons Northeast Direct Pipeline Project
Citing an inability to attract sufficient firm capacity commitments from utility companies and other users, Kinder Morgan has abandoned it Northeast Direct Pipeline project, according a company statement and media reports.
The project was in coordination with Tennessee Pipeline Company, a Kinder Morgan subsidiary, and would have expanded their current pipeline network, bringing natural gas from the Marcellus Shale formation in Pennsylvania through New York State, Massachusetts, New Hampshire and ultimately connecting to Maine. The 181-mile pipeline was estimated to cost New England ratepayers an estimated $3.3 billion.
While several governors in the New England states were supportive of the project and the Massachusetts Public Utility Commission (PUC) had given approval for Kinder Morgan to sell firm capacity contracts for the pipeline, those additional capacity contracts never materialized. The project also faced firm opposition from elected officials, environmental groups, ratepayers and homeowners from throughout the region.
The New England Fuel Institute (NEFI) and its affiliated state associations all opposed the pipeline project, pointing out that the current liquid fuels infrastructure has provided sufficient diesel fuel for regional power production needs, especially in the cold winter months, whenever natural gas pipelines were incapable of meeting demand for natural gas for electric power production.
NEFI found a partner in the Conservation Law Foundation (CLF), a national and regional environmental group who also opposes regional pipeline expansion. Upon the Massachusetts PUC approval for Kinder Morgan to sell firm capacity contracts, CLF had filed suit to void the ruling.
Last year, Massachusetts Attorney General Maura Healey commissioned an independent study of New England’s energy needs by the Analysis Group. The study, published in November 2015, found that the regional liquid fuels infrastructure, along with free market economics for hedging commodities, would provide enough fuel to secure the region’s power generation needs until 2030, thus there was no need to expand the pipeline capacity of the region and bill ratepayers for the multi-billion project. NEFI and the Massachusetts Energy Marketers Association (MEMA) met with members of the Attorney General’s staff early in 2015 and provided them with information relative to our industry’s concerns about the pipeline project. NEFI and MEMA have informed Healy’s staff that they were pleased that the independent report had validated their long-held position.
Locally, the U.S. Senators from Massachusetts and New York all came out opposed to the Northeast Direct Pipeline Project. Massachusetts Senators Edward Markey and Elizabeth Warren opposed it from an environmental standpoint and the fact that Kinder Morgan was planning to use the pipeline to move natural gas through New England to a Canadian port for overseas export. Senator Markey stated yesterday, “Using New England as a throughway to export U.S. gas to overseas markets might be good for the bottom lines of pipeline companies, but it could raise prices and be a disaster for consumers and businesses in our region.”
New York Senators Charles Schumer and Kirsten Gillibrand had sent a letter to the Federal Energy Regulatory Commission (FERC) last month stating that the people of New York would take on all the environmental risk associated with the pipeline but receive none of the benefits, as the natural gas from Pennsylvania would ultimately end up being delivered in New England and potentially exported from the United States. The Senators further noted that Kinder Morgan did not reply to numerous inquiries concerning the routing and safety of the project. This announcement is great news for the home heating oil industry, whose members and leaders have consistently spoken about the ability of the liquid fuels infrastructure to help meet all the home heating and power generation needs of the region.
Some advocates for continued pipeline expansion now believe that Kinder Morgan’s exit from the Northeast Direct Pipeline Project will provide fuel for the National Grid and Spectra Energy Access Northeast Pipeline expansion project, which will expand the Algonquin Gas Transmissions and Maritimes and Northeast Pipeline offering more natural gas capacity through Connecticut, Massachusetts, Rhode, New Hampshire and Maine, especially since both companies have financial commitments for the project.
NEFI will stayed focused on the regional pipeline issues and keep its members informed on pertinent news.
For more information, contact Michael C. Trunzo, NEFI's Advisor for Public Policy and Industry Relations, at Michael.Trunzo@srclawoffices.com or 518-407-5800.