PennEast ceases development of New Jersey pipeline project

PennEast Pipeline

PennEast Pipeline Company, the consortium focused on natural gas development of the Marcellus shale, announced this Monday it would cease all further developments of the proposed pipeline from Pennsylvania to New Jersey.

The decision comes as the project did not receive necessary permits for its construction, including the water quality certification from New Jersey. Consequently, after the company thoroughly discussing its case, it “determined further development of the project no longer is supported.” The company noted in an email seen by Reuters that all further development would stop.

As we have reported previously, the $1,2 billion project was proposed back in 2018. Since then, it faced opposition and various hurdles. Firstly, back in 2019, the U.S. Court of Appeals blocked the company from using eminent domain and seizing properties in New Jersey. The state argued that PennEast did not have the authority to use the lands.

Thereafter, the company took the case to the Supreme Court, backed by midstream companies and former President Donald Trump. When president Biden took office, his administration urged the Supreme Court to overturn the ruling by the Court of Appeals, saying that stopping the project would set a precedent for other states to do the same thing.

By June, the Supreme Court backed PennEast and allowed the company to claim eminent domain upon New Jersey’s lands. However, other vital permits for the project to go ahead with construction were still needed. Bu August, the company said it still hoped for the project to reach construction. It said that 2022 would be the year.

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PennEast pipeline cancells the project amid spiking natural gas prices

Consequently, the decision to stop development from PennEast and partners is somewhat surprising; considering that even the Biden administration, other companies, and the Supreme Court backed the project. According to Reuters, analysts warned that gas could soon become trapped in the Appalachian shale region unless companies built new pipes.

Moreover, the natural gas prices spiking to multiyear highs and a coming crisis afterward, the stopping of the project could add further pressure to the market and the industry. Specially the heavy industry like steel and cement manufacturing.

On the other hand, the project was to be developed in two phases, the first one with an estimated investment of $1,2 billion. It was going to be 120 miles long and designed to deliver up to 1,1 billion cubic feet per day of gas from the Marcellus shale to customers in Pennsylvania and New Jersey.

Finally, the company has not yet revealed an official statement on the cancelation. PennEast partners for the canceled project include units of New Jersey Resources, South Jersey Industries; also, Southern Co., Enbridge Inc, and UGI Corp.

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