PennEast Shipper Enerplus Pushes PennEast Forecasted In-Service Date Back Another Year

Oil & Gas company Enerplus recently made a presentation at an industry conference about their corporate outlook and the state of the markets from their point of view, in particular the situation with various shale deposits, drilling, and take away capacity.

They are also a “shipper” on the PennEast pipeline, they have engaged in long term precedent agreements to transport gas along it.

Their presentation included this slide highlighting upcoming Pennsylvania Shale projects:

Screen Shot 2017-10-04 at 11.51.39 AM

I’ve annotated the slide in red to show the portion on PennEast.

According to Enerplus’s internal projections, they think at best PennEast is going to be delayed all the way back into the second quarter of 2019. Note that this is not PennEast’s estimate, but Enerplus’ own internal estimate based on their knowledge of the project and permitting headwinds.

This is of course good news for PennEast opponents, and is another in a very long string of delays.  Remember, according to PennEast’s original timelines, they would already be in service right now!  And now we are seeing it being pushed out yet again.

It Was the Best of Times, It Was the Worst of Times…..

The Trump Administration has thrown many government agencies and long standing patterns and practices into utter chaos, and we live now in a time of great uncertainty.  I think this fact itself is uncontroversial, and can be acknowledged whether you support or dislike the current President.

On the environment, we know the Administration thinks environmental regulation is holding the country back, and that it inhibits corporate growth.  As a result, we see the leader of the EPA blatantly trying to destroy his own agency from within, and dismantle decades of environmental law and regulation.  Some of you may cheer this, others recoil in horror, but the end result is chaos and uncertainty.  There is no perfect counter this, but at the same time there has been no “clean kill” of environmental laws either.  It’s a snarling cloud of a knife fight, where everybody loses.

There is a heavy push to accelerate fossil fuel exploitation from “fast” to “ludicrous speed”, including a head-shaking attempt to revive the coal industry of all things.  Attempts to revive coal have many industry experts shaking their head, and is putting question marks on many plans (like around natural gas, which has been perceived as a slam-dunk for some time now).

Other departments like the State Department is facing even bigger issues, such as 40% of slots laying unfilled within the agency.

And then there’s Health Care – no, I won’t go there, but let’s just put in a mention as another destabilizing effect.

So as I said, there is a lot of uncertainty, confusion, and not a little panic in many areas.

At the same time, many of these Administration policy goals are being clumsily stated, and even more clumsily executed.    FERC is a prime example.  While the Trump Administration has pushed infrastructure and fossil fuel industries as keys to job growth and America’s overall success, his administration’s own incompetence ended up taking FERC from a pipeline-approving machine to being an utterly impotent agency with no quorum and no ability to advance fossil fuel interests like natural gas pipelines.  The result was six months of no FERC quorum, six months of projects piling up a mile high within the FERC offices.

Again, this should not be controversial to anyone, pro- or anti- Trump.

Months later, the quorum has been restored, but even that was done in a ham-handed way.  Seats were filled, but the to-be Chairman wasn’t one of them (he’s still in the queue), and the current Chair has been put into a holding pattern.  As a result of this confusion, FERC’s first open meeting on September 20th contained no major items, only cursory decisions of little import.  The commissioners barely went through the motions before adjourning, accomplishing bupkis for the past month.

And while this has been going on, States have not been sitting still, and neither have the courts.  Even FERC has managed to get some punches in of their own.  Here are some of the key decisions and actions that have happened in the past several months around natural gas pipelines and environmental law.

Important Energy and Environmental Actions in the Past Few Months

FERC found to have inadequate analysis of Green House Gas emissions resulting from pipeline build out

In the U.S. Court of Appeals for Washington, DC recently found FERC’s Final Environmental Impact Statement (FEIS) for the Southeast Market Pipelines Project to be inadequate, stating “We agree that FERC’s environmental impact statement did not contain enough information on the greenhouse-gas emissions that will result from burning the gas that the pipelines will carry…We thus grant Sierra Club’s petition for review and remand for preparation of a conforming environmental impact statement.”

https://www.cadc.uscourts.gov/internet/opinions.nsf/2747D72C97BE12E285258184004D1D5F/$file/16-1329-1689670.pdf

NY DEC denies Clean Water Act permit for pipeline, FERC overrules it saying decision came too late

In this case, a pipeline company got a FERC Certificate, applied for a 401 CWA permit to NY State DEC, and then the DEC issued several notices that the application was incomplete.  Ultimately, NYDEC denied the 401 permit, but it did so several months beyond the CWA 1-year deadline.  There was disagreement here on when the 1 year “clock” begins, complicated by the incomplete application.  The lesson here, at least to me, is that states should simply deny incomplete applications, rather than risking exceeding the CWA regulatory clock and losing their power entirely.

http://www.utilitydive.com/news/ferc-overrules-new-york-permit-denial-for-millennium-gas-pipeline/505099/

NYDEC Denial of Constitution Pipeline CWA Permit Upheld by Second Circuit Court

On the flip side, the Second Circuit upheld NYDEC’s denial of the Constitution Pipeline’s CWA permit (which was done in under a year).

https://www.pipelinelaw.com/2017/08/31/second-circuit-upholds-state-veto-constitution-pipeline-project-via-denial-water-quality-certification/

NJDEP Denies PennEast Pipeline CWA permit due to incomplete application

Our own DEP in NJ has followed NYDEC’s example, and denied the PennEast pipeline it’s CWA application on the grounds that the application was exceptionally incomplete. If PennEast receives a Certificate of Public Convenience and Necessity from FERC, it is widely expected that PennEast will then reapply for its CWA 401 and 404 permits once it gets eminent domain and survey access to properties that have denied them so far to date (which includes the vast majority of properties in NJ, something in excess of 65%).

http://www.nj.com/mercer/index.ssf/2017/06/nj_dep_denies_permits_needed_for_penneast_pipeline.html

West Virginia revokes CWA 401 permit in wake of Hurricanes Harvey and Irma

In a surprise move, in early September, 2017, West Virginia changed their mind and withdrew their CWA certificate fo rthe Moutain Valley Pipeline. The withdrawal was done in a very terse two sentence letter from the West Virginia DEP “This is to advise you that the West Virginia [DEP]…hereby vacates and remands the Section 401 Water Quality Certification issued on March 23, 2017, relating to the Mountain Valley Pipeline to construct a natural gas pipeline in West Virginia”.  No reason was given for vacating the decision, though many suspect Hurricanes Harvey and Irma’s unprecedented size and damage may have played a role in the decision.

http://www.huffingtonpost.com/entry/pipelines-bombshell-west-virginia-revokes-approval_us_59bb2c3ae4b06b71800c380c

http://www.documentcloud.org/documents/3989670-DEP-MVP-Vacate-Letter.html

Trump Wants to Reverse Clean Water Rule

Not directly on point, but strongly related, Trump has issued executive orders about weakening Environmental protections, and the head of the EPA is now examining getting rid of regulations such as the Clean Water Rule.  This is not quite the same as the CWA 401 and 404 sections, but it shows the danger environmental regulations are in in the Trump era.

http://www.sightline.org/2017/09/20/trumps-epa-wants-to-reverse-clean-water-protections/

Republicans pass bill to streamline Natural Gas Pipeline Permitting and Change cross-border permitting

In July, the Republican-lead congress voted 248-179 to pass a bill giving FERC more authority over natural gas pipelines.  In a nutshell, this bill allows FERC to put its own arbitrary deadlines on other agencies for pipeline-related permits.  If those agencies are late, the permit is issued automatically. This is a transparent attempt by the fossil fuel industry to make it cheaper and easier to get pipeline permits, and to give them much more certainty that their applications will succeed, while ignoring legitimate concerns of climate and other impacts.

https://www.congress.gov/congressional-report/115th-congress/house-report/223/1

http://thehill.com/policy/energy-environment/342793-house-votes-to-streamline-pipeline-reviews

Delaware River Basin Commission considering permanent Fracking Ban in Delaware Watershed.

For many years, there has been a de-facto fracking ban around the Delaware.  Not explicit, there simply has been no rule enforced by the DRBC, but the net result is that without a rule about fracking, fracking has not been allowed.  That could be codified into DRBC regulations soon though, as the DRBC is now officially considering to draft regulations to ban fracking in our water shed.  While not directly impacting pipelines like PennEast, it sends a clear message that fracking is harmful to water resources, and adds impetus to anti-fracking causes.  This matters to PennEast, because PennEast is being sourced entirely from fracked gas from wells in PA.

https://stateimpact.npr.org/pennsylvania/2017/09/07/ap-drbc-planning-to-propose-permanent-fracking-ban/

Conclusion

The gist of all this is to point out that we’re in a roiled, chaotic mish-mash of a political climate, and that this is a time of great confusion and also great change.  We need people to be aware of it, and guard against “the other side” sneaking stuff in, while at the same time “our side” should be alert for opportunities for US to make unexpected pushes and get wins that the other side never anticipated.  This is a time when “norms” no longer exist, and you can’t rely on old patterns of behavior to guide you through treacherous waters.  This is both good and bad.

When looking at complex and controversial projects like Penn East, we can no longer take the same-old, same-old approach to resistance.  “The States” and agencies like the NJ DEP have power today, but that power could vanish with remarkable speed if we are not careful.

We can’t assume the Clean Water Act will save us in perpetuity, because the EPA and the CWA are under attack and may cease to exist at some time in the near future.  At the same time, FERC is not omnipotent, and has weak points, as recent court decisions against it have demonstrated.  FERC can be beaten, and the rules can be changed.  The NJDEP was seen for years as pro-pipeline, pro-industry.  But in 2016-2017 there seems to have been a sea-change in the agency, culminating with the NJDEP rejection of PennEast’s CWA application.  And that swing may continue assuming NJ elects a Democratic Governor in November.

Related to that election, the DRBC’s composition would also change if a Democrat wins the NJ Governorship, and they are already moving to be more aggressive against the fossil fuel industry.

I know when Trump was elected President, many environmentalists despaired, and the fossil fuel industry cheered.  But things are not always as they seem, and there is no certainty on either side anymore.  The Trump Administration has sent mixed-signals to many industries, and totally botched up the government on many levels, with a result that the Federal Government is now tripping over its feet more often than not.  So despite his pro-fossil fuel ideas, we have not seen the total dismantling of regulation that everyone feared.  At least not yet.

At the same time, we see States and other agencies waking and reacting against the new Administration.  We see more state DEP and related agencies standing up and wading in where they fear the Feds are stepping away.  But they are using fundamental powers, such as the CWA, which are in jeopardy.

Then there are Congresscritters trying to hamstring environmental agencies, by allowing FERC to force them to arbitrary and short permit deadlines.

This is a time of great danger, and of great hope.  In volatile times, you can lose your shirt for sure, but there are also once-in-a-lifetime opportunities lurking in the most unlikely of places.  For those who despaired at Trump’s Election, take hope.  Out of this chaos there are still many chances for us to defeat the PennEast Pipeline.

And remember, in troubled times help sometimes comes from the most unlikely of places.  Keep the faith people, and keep that hope alive and well.

Market reacts to NJDEP news, look at that NJ Resources stock graph

As everyone knows by now, on Wednesday the NJDEP rejected PennEast’s 401/404 water quality and wetland permits as being incomplete, and through out their request for an extension for good measure.

The markets noticed, particular those trading around beleaguered New Jersey Resources.  Here’s the Wednesday trading day graph for NJR:

Screen Shot 2017-06-30 at 4.12.25 PM

The stock peaked intra-day at 41.95 as shown in the graph above.

Around 12:00pm, Politico reported that NJDEP had rejected the PennEast application.  You can see the quick downward slide leading from exactly that point.

The close was at 40, by the end of the week it was down to 39.75.

That’s a loss of almost 5% of value in a few hours and nearly 6% for the week.

About $140 million in market cap was shaved off the company.

NJDEP rejecting the PennEast application is what they call a negative surprise and markets don’t like those.  And it looks like the market doesn’t believe Pat Kornick “this was all expected” excuse.

 

New Jersey Resources Appears to Be Losing Faith in PennEast

On Friday, May 5th, New Jersey Resources held their 2Q 2017 earnings conference.  This is one of the regularly quarterly conferences the company holds to announce to financial analysts how they did for the quarter, and to take any questions the analysts may have.

The presentation is available below:

Click here for NJR 2Q 2017 Earnings Presentation

And the transcript of the earning call with analysts is available here:

Click here for NJR 2Q Earnings Call Transcript

Traditionally, PennEast has been a big part of these quarterly presentations.  They have been regularly featured in each one with dedicated slides touting how awesome the project will be for the company, and in some cases with slides showing optimistic timelines for the pipeline permitting.

But not in this one.

In this most recent quarterly report, NJR has removed the PennEast specific slides, and only mentions it in passing.  Specifically they say:

“Southern Reliability Link and PennEast Pipeline projects reach significant milestones”.

An analyst noticed the discrepancy, and in the Q&A portion asked NJR about it.  Here’s the exchange:

Brian Russo (of the firm Ladenburg Thalmann)

Yes, okay. Great, and then, I didn’t see any slide on PennEast. I was wondering if you could provide an update on that.

Pat Migliaccio (CFO, New Jersey Resources)

Sure, PennEast, as Larry has said during his narrative that they’ve receive their final environmental impact statement on April 7 and then next step in that process is to receive our final FERC certificate which is supposed to come in 90 days. We are certainly waiting for a quorum to be established at FERC in order to receive that certificate. So that’s the next step in the process. So we are moving forward and hopefully that project will reach another milestone here in the next few months.

Here the CFO mentions the positive Final EIS which was issued on April 7th.  But they do not mention that they applied to NJDEP on April 6th, nor do they mention that NJDEP put them on notice that their application was deficient and was about to be rejected.  And they didn’t mention that U.S. Army Corps of Engineers  told PennEast that their application to them was also deficient.

What’s going on here?

So this is all of a pretty big deal.  NJR used to have big slides touting how awesome PennEast would be, and the CEO or the head of Midstream would field questions about it.  Now PennEast has been reduced to a footnote in their presentation, with no dedicated slides, and now the CFO (and not the CEO or head of midstream) is fielding questions about the project, and omitting vital information about it like “Oh, hey and gee two agencies said our application was insufficient, one is going to put us into regulatory limbo and the other is about to deny it.”.

This, to me, signals that NJR has suddenly had a severe loss of confidence in the chances of PennEast ever seeing the light of day.  To show what I’m thinking here, let me show you NJR’s discussion of PennEast in its financial presentations over the years.

The NJR Presentation Progression

Let’s look at the progression of what NJR has shown about PennEast in their presentations over time.

2014 Q4

2014 Q4 Presentation

At the end of 2014, PennEast had been announced, had their “open season” bidding for contracts, and had just gone into pre-filing with FERC.  NJR was giddy in anticipation of what was come, and had a fancy schmancy slide reserved for it in its year end presentation.  They’d blast this thing through regulatory and be in-service by late 2017!  PennEast! PennEast!  Huzzah!  Huzzah!

Screen Shot 2017-05-06 at 2.36.42 PM

2015 Q2

2015 Q2 Presentation

By Q2 2015, NJR was so optimistic it started putting in timelines for its various projects.  PennEast had slipped a bit, but it was all good.  They showed a steady progression of PennEast going from permitting into construction and finally in-service.  Smooth sailing for PennEast!

Screen Shot 2017-05-06 at 2.17.18 PM

2015 Q4

2015 Q4 Presentation

Fast forward a couple of quarters, and the force of opposition and repeated setbacks with FERC and other agencies has forced NJR to go from making firm projections to conveying limp platitudes.  “Fiscal 2018 PennEast Pipeline in service” has morphed into “2018 PennEast Continued Progress”.  In fact all of the PennEast milestones had be relabelled “PennEast Continued Progress”!

Translation: Someone in NJR is getting nervous.

Screen Shot 2017-05-06 at 2.32.56 PM

2016 Q4

2016 Fiscal Year End Strategic Outlook

By the end of 2016, PennEast opposition as fierce and the PennEast owners were digging in for a hard battle.  NJR ditched their timeline slide entirely, but continued to feature PennEast in a dedicated slide that said “we are awesome, we are awesome, those doo-doo heads in opposition are…well, they’re do-do heads.  We’re awesome!”.

In other words, this was not a slide of a confident company.  This was a slide of desperation, trying to spin PennEast in a  positive manner to investors when most insiders knew it was in deep trouble.

On the downside for NJR and PennEast, the PJM slide they showed showing NJ getting no benefit and the gas flowing right out of our state to points North and South.

Screen Shot 2017-05-06 at 2.05.25 PM

2017 Q1 Presentation

2017 Q2 Presentation

The following quarter showed a similar slide, with an emphasis on the “Project Importance”.  They put greater emphasis on the PJM slide (which still shows all the PennEast gas flowing right out of the state).

But NJR also noted “a 6-week extension” for the Final EIS.  But, hey, despite yet another delay it’s still all good, right?

Right?

Screen Shot 2017-05-06 at 2.14.58 PM

2017 Q2 Presentation

Click here for NJR 2Q 2017 Earnings Presentation

[ No PennEast Slide At all! ]

To Sum it All Up

Fast forward to now.  Between Q1 and Q2, here’s what’s happened:

  1. PSEG pulled out of the project
  2. NJR and SJI (both PennEast owners) enter merger talks
  3. PennEast applies to NJDEP for Clean Water Act permits
  4. FERC issues favorable Final EIS
  5. US Army Corps of Engineers dumps all over PennEast’s application, says it’s crap and will be put into the same storage unit they stashed the Ark of the Covenant from the Indiana Jones Movie.
  6. NJDEP tells PennEast it’s application is crap.  Goes further than USACE and says the application is invalid and will be rejected because PennEast has no authority to apply for it in the first place.
  7. NJR takes nearly all PennEast references out of its quarterly report, fails to mention USACE and NJDEP debacles to financial analysts

That is quite a progression.  NJR has gone from trumpeting PennEast, to pulling back on its projections, to surging back with desperate justification of just how important the project is, to entering merging talks with a competitor and wiping PennEast references from most of its materials.

You can draw your own conclusions on all this stuff.  To me, I see both NJR and SJI have been desperate to give a growth story for some time.  For the past couple of years, PennEast was supposed to be that story, but it’s pretty clear they think the chances of it actually coming to fruition are fizzling.  So now they’re moving on to the next big thing for them, a merger so both sides can crow “growth!” to their investors.

PSEG walking away from PennEast was our first firm indication of trouble in PennEast paradise.  This move by NJR is the next domino to fall.  I can’t wait to see the upcoming SJI quarterly report….

The Natural Gas Act does not exist in a bubble

For quite some time people involved in the fight against PennEast have despaired that FERC seems to possess nearly omnipotent power when it comes to natural gas pipelines.  They seem to hold all the cards, and are prone to sticking their fingers in their ears and going “la la la la la la la la” when residents impacted by pipeline proposals make objections.

It is well known that their Final Environmental Impact Statements are more-or-less copied and pasted from one decision to the another, and that they kick the can down the road by issuing “conditions” on their recommendations.

In fact, as much as we whine about how horrible FERC is, a big part of the problem is something called the Natural Gas Act of 1938.  That act (along with some amendments over the years), gives FERC incredibly broad authority when dealing with natural gas pipelines.  Here’s what the law says on FERC using a Certificate of Public Convenience and Necessity:

… a certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operation, sale, service, construction, extension, or acquisition covered by the application, if it is found that the applicant is able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of this chapter and the requirements, rules, and regulations of the Commission thereunder, and that the proposed service, sale, operation, construction, extension, or acquisition, to the extent authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied.

The key words are basically that FERC can give a certificate to anybody who appears to be qualified, who adheres to some extraordinarily simple rules in the Natural Gas Act itself, and which satisfies FERC’s regulations.

This means that FERC is (almost) the sole arbiter of whether or not you get a Certificate from them, under rules that FERC writes itself.

Ouch.

It gets worse though.  The Act continues with this statement:

The Commission shall have the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require.

This means that FERC is allowed to attach arbitrary conditions to a Certificate (so long as they are “reasonable”, which is a rather broad standard).  This allows FERC to basically shirk it’s duty and grant eminent domain power to companies who barely have any idea about the project they are proposing (e.g. like PennEast).  They do this by simply saying “please figure out the details before construction starts”.

Double ouch.


Those Conditions Have Teeth

However, there is a reason for those conditions to be there, and that is where companies like PennEast are vulnerable.  You see, the Natural Gas Act does not live in a  bubble.  FERC does not have exclusive jurisdiction over natural gas companies, nor does FERC’s word have ascendency over other agencies or laws.  They lead the permitting process, but other agencies don’t have to listen to them or agree.

In PennEast’s case, the Final EIS contains about 60 recommended conditions before implementation is allowed.  Some of them are a rather minor, but others are biggies.  For example, they must get Clean Water Act 401 permits from PA and NJ.  They must get a Clean Water Act 404 permit from the Army Corps of Engineers in PA, and from NJDEP in NJ.  They must adhere to SHPO for historical impacts, the Endangered Species Act, and a laundry list of other acts and agencies.

And this is where PennEast is running into trouble.

Clean Water Act Permits

The CWA is very interesting, in that it is a Federal Law that is nominally owned by the EPA.  But, in fact, the administration of the Clean Water Act is mostly delegated to the States.  So this is a rare area where State Governments and agencies have federal powers equal to that of the Federal Government and its agencies themselves.

Clean Water Act Permits in PA

For the CWA 401 and 404 permits in PA, PennEast applied jointly to both the PADEP and the US Army Corps of Engineers (USACE) for the CWA permits.  PADEP approved the 401 portion several months ago.  But this week, the USACE issued a letter to FERC & PennEast stating that the application lacked sufficient information for the Corps to do anything with it, and they were refusing to do anything more (or even put together a timeline) until such time as PennEast gets the information USACE needs.

And let me tell you, that USACE letter was much worse for PennEast than it may seem. The Corps’ letter was extraordinarily harsh and remonstrative to PennEast.  They are sending a clear signal to PennEast that the Corps’ does not look favorably on this project at all.

Keep in mind that the Corps’ official motto is “Essayons”, which is French for “Let Us Try”.  They are a gung-ho, can-do group who prides themselves in doing impossible engineering feats.  These are the guys that go out and build bridges under enemy fire.  They are brave, resourceful, courageous and incredibly inventive.

And they just told PennEast to stop bothering them.

Ouch on PennEast.

Clean Water Act Permits in NJ

In NJ, PennEast needs to apply to NJDEP for both the 401 and 404 CWA permits (NJ is one of the very few states to do 404 permitting; USACE does it in nearly every other case).  PennEast did so the day before the FEIS was issued by FERC.

It is mystifying why PennEast made such an application.  During the DEIS comment period, NJDEP repeatedly stated that PennEast lacked sufficient on-the-ground surveying data, that their application would almost certainly be incomplete and rejected, and to basically not bother to do anything until they actually had the data.

But PennEast went ahead and applied anyway.

This week, NJDEP did exactly what they said they would do.  They issued a notice to PennEast stating that their application was incomplete, they were missing huge amounts of required data.  And, most critically, NJDEP ruled that PennEast’s application was made without having the legal authority to actually enter all of the impacted properties on the permit.  PennEast “crossed out” the compliance section for legal authority to access and wrote in their own B.S. justification.

NJDEP called them out on this (sorry PennEast, you cannot make up your own regulations), and said they have 30 days to fix it.

NJDEP also said that even if they did acquire legal authority (which would be eminent domain authority via a FERC certificate), NJDEP would still require voluntary sign off from all impacted landowners before they would consider the application.

And, as with the USACE letter, the NJDEP’s response was not a mild bureaucratic objection to some minor items missing here or there.  This letter is a warning shot directly across PennEast’s bow.

Let’s explore what that means.  NJDEP says they have 30 days to both obtain “legal authority” to survey the entire route in NJ; and PennEast has 30 days to get signatures from everyone along the route – including many abutters who have wetlands or other features (like my property!).

If PennEast does not give NJDEP this information, NJDEP will deem the application to be officially dead.  PennEast would have to re-apply at some future data when they had all of this information.

Here are the obvious problems for PennEast here:

  1. PennEast can’t get legal authority without eminent domain.
  2. PennEast can only get eminent domain from a FERC Certificate Order
  3. FERC can’t  issue a Certificate Order because it lacks a quorum
  4. There is no nominations to FERC in site from the Trump Administration
  5. THERE IS NO WAY IN HELL PENNEAST WILL GET MY SIGNATURE, OR THOSE OF THE REST OF THE 65%+ OF IMPACTED LANDOWNERS WHO HAVE REFUSED ACCESS.

Implications

So there you have it.  On PennEast’s side, they have a favorable Final EIS from FERC.  And they have a permit from PADEP.

On the negative side, you have USACE saying the joint PA permit is severely lacking (which puts PADEP in a very awkward situation I might point out).

You have NJDEP saying that not only is their application missing a ton of data, but that the application is invalid on its face because PennEast lacks authority to do what they are asking to do.

Assuming the FERC quorum isn’t going to happen anytime soon, and assuming that FERC is piling up a huge backlog of decisions, this puts PennEast into a really, really bad spot.  Right now they are STILL claiming they will be in-service by 2018.  But for that to happen, they need to get a FERC certificate, and then satisfy all 60+ conditions (including NJDEP and USACE permits) before they can clear cut trees.

And they need to clear cut those trees by March, 2018 to meet their deadlines.

In my mind, this is pretty simple.  PennEast is totally stuck until FERC gets a quorum and issues a certificate.  One that happens (when? In two months? 6 months?  9 months or more!?), they need to then go to the courts to demand survey access to properties.  They need to go into condemnation proceedings.  And they need to do all the on-the-ground surveys that USACE and NJDEP needs (so full surveys for the entire line, not just in NJ).  They need to then reapply to NJDEP with all that info (plus all our signatures!), and submit all the PA data to USACE.

THEN USACE and NJDEP start their reviews – after all of that happens.

And I seriously – very seriously – doubt that there is any way for that to happen.

Oh, and One More Thing….

Meanwhile, while all this is going on, we have a Gubernatorial election in NJ.  And all of the likely candidates firmly believe PennEast is a bad idea.

The next governor will help shape NJDEP policy.  And the new governor is also  one of the 5 members of the DRBC board of commissioners – who also have a permitting say against PennEast.  Right now the DRBC board is 3 members pro-pipelines (PA, NJ, and USACE) 2 members anti (DE, NY).  The likely new governor will swing that to three anti-pipeline states.

The question in my mind now is “when will stockowners in the PennEast member companies stand up and demand that stop throwing good money after bad and withdraw from PennEast just as PSEG had?”.

Seriously – if you own stock in New Jersey Resources, or South Jersey Industries, or The Southern Company, or UGI, or Enbridge, when do figure these companies are throwing your money away chasing and impossible PennEast dream?

 

FERC State of the Markets Report provides another body blow against PennEast

Yesterday FERC released their annual State of the Markets report, which I’ve talked about before.  The full report is available here:

Click here for FERC 2016 State of Markets Report

Keeping in mind PennEast’s avowed purpose and need, here are some facts FERC found for 2016:

  1. 2016 saw record low natural gas prices
  2. 2016 also saw near record low electricity prices
  3. While natural gas production dropped, demand was met anyway
  4. Renewables account for majority of electric generation capacity add-ons
  5. In our region, Transco Zone-6 NYC fell all the way to 32 cents.  The average for the nation was $2.48 for comparison
  6. Natural gas exports continued to grow.  The vast majority was pipeline exports to Mexico.  The rest is a small market in LNG export, averaging .635 billion cubic feet/day in exports.
  7. Natural gas storage reached record highs for the 2nd year in a row e.g. we’re producing too much gas so they have to store it somewhere for later use during peak periods.
  8. In our electric region, PJM, prices fell 47%.

The key take away here is this: all of this happened without PennEast.  We are literally hitting a floor in prices at this point.  If commodity prices drop any lower, it will be uneconomic for drillers to actually keep on drilling.

When people tell you “we need PennEast”, show them this report, and when they’re done reading it, ask them if they’re opinion has changed.  I’ll bet it will.