Spectra Energy Partners LP, a major pipeline operator in the region, will acquire PSEG Power LLC's 10 percent stake in the $1.2 billion PennEast Pipeline, which would deliver Marcellus Shale natural gas from Northeast Pennsylvania into New Jersey, PennEast announced Monday.
Although PSEG Power is selling its ownership share in the project, it remains committed to pay for 125 million cubic feet of the pipeline's 1 billion cubic-feet-per capacity. PSEG Power supplies gas to its affiliated company, Public Service Electric & Gas, New Jersey's largest utility.
Pipeline opponents, who claim the 119-mile pipeline will raise costs for retail customers rather than benefit consumers with greater access to low-cost Marcellus gas, said PSEG Power's sale of its equity demonstrated that the project is losing momentum.
“PSEG’s sale of its stake in the PennEast pipeline is a reflection of the intense and growing opposition in New Jersey,” said Tom Gilbert, a spokesman for ReThink Energy NJ and NJ Conservation Foundation.
But PennEast said the pipeline's capacity remains fully committed, regardless of which entities own the project.
“PSEG’s unwavering commitment to its subscribed PennEast capacity underscores the need for lower cost natural gas to power New Jersey's future, and directly rebuts the notion this project is about excessive returns, rather
than a need for the gas,” said Dat Tran, chairman of PennEast's board of managers.
Spectra's acquisition, which would increase its stake in the project to 20 percent, could close in the second quarter of 2017, pending approval by the PennEast Board.
Spectra, which was acquired in February by Canadian energy giant Enbridge Inc., operates several large gas pipeline systems, including one of the major supply routes to Philadelphia, the Texas Eastern system.
In addition to Spectra, PennEast's four other remaining shareholders each hold 20 percent stakes: UGI Energy Services LLC, SJI Midstream, Southern Company Gas and NJR Pipeline Co.
Those companies are affiliates of utilities that would be served by the pipeline: UGI Gas, South Jersey Gas, Elizabethtown Gas and New Jersey Gas.
UGI Energy, which is subsidiary of UGI Corp. of Valley Forge, is the project's developer.