PennEast Gas Project Halted in Latest U.S. Pipeline Casualty

(Bloomberg) -- A $1 billion project to haul natural gas from Pennsylvania to New Jersey has become the latest casualty of opposition to pipelines across the U.S. 

PennEast Pipeline Co., a joint venture of five companies including Southern Co. and Enbridge Inc., halted development on the proposed 116-mile (187-kilometer) conduit after failing to receive water-quality certification and other wetland permits for the New Jersey section. 

“The PennEast partners, following extensive evaluation and discussion, recently determined further development of the project no longer is supported,” PennEast said in an emailed statement. “Accordingly, PennEast has ceased all further development of the project.”

The decision adds to a series of gas-pipeline projects scrapped amid fierce opposition from environmental groups pushing for a faster transition away from fossil fuels and an increasingly burdensome approval process. It also comes amid growing concerns about energy reliability, with prices for natural gas surging because of tighter supplies. 

Proposed pipeline routSource: PennEast Pipeline website

In 2020 alone, Dominion Energy Inc. and Duke Energy Corp. scrapped an $8 billion Atlantic Coast gas project, and Williams Cos. abandoned its Constitution gas pipeline and its Northeast Supply Enhancement plan. Completion of the Mountain Valley Pipeline, a 303-mile conduit spanning from northwestern West Virginia to southern Virginia, has been pushed into 2022 due to permitting delays.

Limited pipeline capacity makes it harder to bring gas from shale fields in Appalachia, where producers including EQT Corp. are forced to sell supplies at a discount. Meanwhile, costumers in places such as New England pay stiff premiums for gas because only limited supplies can reach the region.

The inability to build new pipelines will slow down the energy transition and leave costumers with higher energy bills, the Interstate Natural Gas Association of America said in a statement. Consumer Energy Alliance said the pipeline cancellation will force New Jersey consumers to “find another source of affordable energy or otherwise face reliability problems and price-hiking shortages.”

The decision on PennEast comes despite a June Supreme Court ruling that gas pipeline projects with federal approval can seize state-owned land, and support from the Federal Energy Regulatory Commission. The pipeline would have carried as much as 1.1 billion cubic feet of the fuel a day, enough to serve 4.7 million homes, from northeastern Pennsylvania to a Transco pipeline interconnection in New Jersey. 

The project has “encountered significant legal and regulatory obstacles and we no longer believe the project can be efficiently completed,” Enbridge said in a separate emailed statement, adding the project was designed to help deliver “much-needed” gas in New Jersey and Pennsylvania. 

(Updates with comments from trade groups in seventh paragraph)

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