PennEast Pipeline to Supply Marcellus Natural Gas to Mid-Atlantic Region
A new proposed pipeline project will supply homes and businesses in Pennsylvania and New Jersey with lower cost natural gas from the Marcellus shale.
PennEast Pipeline Co. LLC announced Aug. 12 plans to construct the 100-mile pipeline, which is a joint project of AGL Resources, NJR Pipeline Co. (a subsidiary of New Jersey Resources), South Jersey Industries and UGI Energy Services (UGIES), a subsidiary of UGI Corp.
The PennEast Pipeline is designed to provide natural gas service to the equivalent of 4.7 million homes, up to 1 billion cubic feet (Bcf) per day, offering consumer savings in lower energy and gas transportation costs. The pipeline will begin in Luzerne County in northeastern Pennsylvania and end at Transco’s Trenton-Woodbury interconnection in New Jersey. PennEast is investing nearly $1 billion to build the pipeline with the costs split among the four entities. UGIES is the project manager for the development of the project and will operate the pipeline.
“In response to the abundant supplies and low price of natural gas, customer demand has increased significantly,” said John Walsh, president and CEO of UGI Corp. “This project serves to meet that growing demand in the mid-Atlantic marketplace, while providing greater system resiliency and reliability for local utilities.”
Prior to the development of the Marcellus Shale play, natural gas lines were constructed to bring gas primarily from the Gulf of Mexico region and Canada into the Northeast. Pennsylvania is the fastest growing natural gas producing state in the country, according to the U.S. Energy Information Administration, and the PennEast sponsor companies recognized the opportunity to use locally produced gas to serve growing markets in the mid-Atlantic.
This past winter, natural gas prices in New Jersey traded as high as $100 per dekatherm. Natural gas in the area that PennEast will access traded in the range of $3 to $4 per dekatherm. The proposed pipeline will help reduce this price volatility to the benefit of New Jersey’s nearly 3 million natural gas consumers.
Pipelines are also the safest, most environmentally-friendly and efficient mode of transporting natural gas, according to the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA). In fact, data shows that while natural gas demand has increased by 55 percent over the last three decades, serious pipeline incidents have decreased by 90 percent over the same period, primarily as a result of the significant efforts by pipeline companies to upgrade and modernize their infrastructure.
Additionally, the new pipeline is expected to benefit the region’s economy and create jobs. During the seven-month construction phase, the PennEast project is estimated to create in excess of 2,000 new jobs, as well as many other ancillary jobs.
PennEast will begin preliminary engineering studies in the coming months, along with a formal application before the Federal Energy Regulatory Commission (FERC). If all local, state and federal approvals are timely approved, construction of the pipeline could begin in 2017.