Proposed 105-mile pipeline would bring more shale gas to region

A consortium of New Jersey and Pennsylvania utilities wants to develop a 105-mile pipeline to deliver low-cost Marcellus Shale natural gas to East Coast customers, easing bottlenecks that caused price spikes last winter.

The PennEast Pipeline Company L.L.C. on Tuesday announced plans to build a $1 billion, 30-inch-diameter pipeline from Luzerne County to the Trenton area. Utilities and customers in Pennsylvania and South Jersey would be the beneficiaries.

UGI Energy Services, a subsidiary of UGI Corp., of Valley Forge, would build and operate the interstate pipeline. UGI's gas utilities serve 45 Pennsylvania counties, including outlying portions of Bucks, Montgomery and Chester Counties.

Affiliates of South Jersey Gas, New Jersey Natural Gas, and Elizabethtown Gas in New Jersey are also investors in the project.

"This project serves to meet that growing demand in the mid-Atlantic marketplace, while providing greater system resiliency and reliability for local utilities," John Walsh, UGI's chief executive, said in a statement.

Planning and regulatory approvals are expected to take more than two years. Construction would begin in 2017.

Business leaders hailed the plan as a boost to Pennsylvania's natural gas industry. PennEast said the project would employ 2,000 people during construction.

The pipeline is the latest effort to build out infrastructure to deliver gas from the shale region to customers. The gas price in the Marcellus typically trades at a discount to national markets because of pipeline constraints.

But the pipelines increasingly have attracted opposition from adjoining landowners, anti-drilling groups, and climate-change activists. The New Jersey Sierra Club and the Delaware Riverkeeper Network denounced the PennEast project Tuesday.

"The latest pipeline pronouncement will, as with all pipelines, cut a damaging path through public and private lands for the private profits of industry," said Maya van Rossum, head of the Delaware Riverkeeper Network, which has challenged several similar ventures.

The lack of pipeline capacity in the region hit home dramatically this past winter when gas prices in coastal centers such as Philadelphia spiked sharply even though there was plenty of fuel in the shale region. Electricity prices, which are tied to natural gas costs, shot up.

The pipeline would connect with UGI's gathering system in Luzerne County and terminate at Transcontinental Gas Pipe Line Co.'s Trenton-Woodbury Lateral in Mercer County, N.J.

The pipeline's four partners - UGI, AGL Resources, the pipeline subsidiary of New Jersey Resources, and South Jersey Industries - have committed to take about half of the pipeline's proposed daily capacity of 1 billion cubic feet (bcf) of natural gas.

PennEast on Monday announced a one-month "open season" for prospective shippers to buy the remaining capacity.

As an interstate pipeline, the PennEast project would have eminent domain rights to claim rights-of-way from landowners with which it is unable to negotiate an easement.

Northeast gas customers historically were served by long-distance pipelines from Gulf Coast gas fields. But that has changed with the dramatic growth of Appalachian shale drilling, which uses hydraulic fracturing, or fracking.

Williams Co. is currently seeking approvals for its proposed 178-mile Atlantic Sunrise Project to deliver gas from Lycoming County to southern states. Columbia Gas is expanding its pipeline in eastern Pennsylvania, including the Philadelphia suburbs.

And Sunoco Logistics Partners L.P. plans to begin shipments of natural gas liquids late this year on its 300-mile Mariner East project from western Pennsylvania to a sea terminal in Marcus Hook.