By Rod Hirsch | Inside Business | December 2015
A consortium of six New Jersey and Pennsylvania energy companies and their parent corporations are forging ahead with a plan to tap into vast reserves of natural gas in Pennsylvania that have transformed the energy market while driving down prices for residential customers and businesses.
The proposed PennEast Pipeline from Pennsylvania into New Jersey will bring an abundance of clean and cost-effective natural gas to New Jersey utilities and their end users.
The proposal requires approval from no fewer than 11 federal, state and local agencies, which are poring over thousands of pages of diagrams, charts and text before rejecting or signing off on stringent safety protocols, the design of the delivery system, building permits and engineering plans, as well as environmental and rights- of-way approvals.
The gauntlet of approvals is intended to ensure the safety and reliability of the 118-mile long pipeline, which will transport natural gas from Dallas, Pa. in Luzerne County to Pennington in Mercer County, NJ. Existing transmission lines will then distribute the natural gas throughout the state.
The pipeline will consist of 36-inch pipe, buried underground, with less than 40 miles of pipeline in New Jersey. It will run through six New Jersey municipalities in Hunterdon and Mercer counties – West Amwell, Alexandria, Kingwood, Hopewell, Delaware Township and Pennington.
Introduced in August 2014, the project must comply with requirements imposed by the Pipeline and Hazardous Materials Safety Administration. PHMSA is responsible for developing and enforcing regulations for the safe operation of the 2.6 million-mile network of natural gas and oil pipelines that crisscross the country, according to Jim Benton, a pipeline safety expert and executive director of the American Petroleum Institute.
“They (PHMSA) make certain there is a stringent review process for pipeline safety and any improvements necessary,” he said. Industry standards demand the latest in computer technology, from sensors and digital monitoring to welding and maintenance, according to Benton, with regular inspections and emergency procedures in place. The API regularly publishes updated safety guidelines for the industry, with its most recent report released in July.
“Pipelines are safe and efficient but we are always looking for new ways to make them better, which is why the industry is embracing this new standard,” said Robin Rorick, API midstream director. “It’s also a great example of what can be done when industry, regulators and all key stakeholders work together to achieve a common objective, which is to protect the public, the environment and provide the fuels Americans need.
“We continue to be committed to safety and this standard raises that bar even further,” Rorick added. “This new standard gives operators a holistic framework to identify and address safety concerns for a pipeline’s entire life cycle.”
The latest set of guidelines builds upon existing safety requirements to further monitor and measure the effectiveness of pipeline activities with a “plan, do, check, and act” philosophy, according to Rorick.
“People can take comfort in knowing that the industry and government agencies are committed to ensuring pipeline safety and integrity – and the products within them,” Benton said.
PennEast will meet all safety and environmental standards and requirements, according to Pat Kornik, spokesperson for the company.
“We don’t want to cause harm to the environment or create a safety issue,” she said. “We want to minimize the impact on the community and the environment.”
PennEast has solicited comments from residents of those areas that will be impacted by the pipeline construction and made adjustments to the planned route in response, according to Kornick.
“We looked at 10 route options, made adjustments and re-routed,” she said. In tandem with the regulatory review process, PennEast also continues to work with landowners whose property could be affected by construction of the pipeline, according to Kornik.
“We’ve been directly involved with many of them the last couple weeks,” she said. “We’ve started negotiations. Landowners retain ownership of their property and surface rights. They will be compensated but are prohibited from building structures or planting trees on the right-of-way.
“We are not taking people’s land,” she added. “Throughout the survey and preliminary process we’re being asked, ‘Can you move my tree,’ things like that. We can accommodate those requests.”
Homeowners and businesses will benefit from lower prices, according to Brian MacLean, president of Elizabethtown Gas, whose parent, AGL Resources, is one of the project partners.
There are 3 million natural gas customers in New Jersey. The proximity of the natural gas produced from the Marcellus Shale region in Pennsylvania will greatly reduce the transmission costs for utilities that now purchase supply from a variety of sources throughout the country, according to MacLean. The greater the distance from the source of the natural gas, the higher the price, which is passed along to the consumer.
Recovery of natural gas in the Marcellus Shale region is outpacing the ability to ship it to market because the transmission infrastructure needs to expand. The oversupply will mean lower prices once the PennEast pipeline is up and running, according to MacLean.
“There is real dollar value coming back to New Jersey in terms of competitiveness,” he said. “Clearly, right now we’re in the middle of a tremendous shift in energy supply. You need to upgrade your systems to move product. As an American industry, we’ve discovered one of the largest natural gas reserves, the Marcellus Shale region in Pennsylvania, and what we have in New Jersey is some of the highest-cost prices in the nation.
“With that kind if resource in close proximity, it’s no wonder you’re talking about moving some of the product to this market to help our residents and state economy get moving again.”
Pending approvals and assuming there are no delays in that process, PennEast expects to begin construction on the 118-mile pipeline in Spring 2017, with completion by the end of that year.
The Gateway Regional Chamber of Commerce has expressed strong support for the project.
“This underground pipeline project will provide a significant statewide benefit to businesses and citizens, assist in bolstering our state’s economy and improving access to a plentiful supply of domestically-produced natural gas,” Jim Coyle, Gateway president, said in a letter to Kimberly Rose, secretary of the Federal Energy Regulatory Commission.
“The Gateway Chamber enjoys many members in the chemical and chemistry industry – a sector that is highly energy-intensive. Securing a safe, affordable and reliable natural gas supply is crucial to chemistry companies and the good-paying jobs they provide,” he added. “The PennEast pipeline, when completed and operational, will help meet the energy demands of this important economic engine for our region.
“We also feel strongly that providing access to these vital energy supplies and the reduction in overall costs, particularly for large-scale manufacturers, has the very real potential to move jobs back to the United States from overseas, due to the cheaper cost of producing materials like plastics.”
Coyle also emphasized the importance of the project to New Jersey’s construction industry.
“During the design and construction phase, the pipeline will generate $1.6 billion in total economic impact, generating over 12,000 good-paying jobs,” Coyle said. “This type of economic ‘shot in the arm’ to New Jersey’s construction and labor trades cannot be overemphasized.”
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