The pipeline will carry 1 billion cubic feet of natural gas through it per day. PennEast says that’s “enough gas to serve more than 4.7 million homes”. In their FERC filing under “Purpose and Need” they state that “…the Project is designed to bring lower cost natural gas to homes and businesses in Pennsylvania and New Jersey”. They repeatedly state that this pipeline is for the benefit of New Jersey and Pennsylvania.

Here’s some facts taken from the U.S. Energy Information Adminstration (http://www.eia.gov/).

The entire state of NJ has approximately 2.6 million natural gas residential consumers. All of Pennsylvania also has about 2.6 million natural gas residential consumers.  Combined that’s 5.2 million residential consumers.

PennEast is delivering enough gas for “4.7 million homes”.  Wait, what?  This pipeline carries enough gas to supply 90% of all consumers in both states?  Why do we need this pipeline?  We already have sufficient supplies for both states.  In fact this is a smokescreen, this pipeline is vast over kill for NJ/PA residential use.  Unless PennEast thinks NJ and PA will double the number of natural gas consuming homes, which seems a bit ridiculous on its face.

Maybe we should factor in all uses of natural gas in both states, both residential and commercial.  eia.gov has those numbers too.  In total NJ averages 1.8 billion cubic feet of natural gas consumption per day across all consumers, and 3.0 billion in PA.  So that’s 4.8 billion cubic feet used by both states per day.  These numbers still don’t add up – this one pipeline represents 20% of our total commercial and residential consumption in the two states combined.

Worse – since 2011 PA has been a net-exporter of natural gas, thanks to the Marcellus Shale fracking operations going on there.  This means they already have an EXCESS of natural gas and certainly do not need more locally.

In fact the backdoor PennEast is trying to sneak in through is price volatility.  In January 2014  there was a sharp price spike in natural gas prices for a couple of days, peaking out near $120 when it is normally $4-$8.  From January 2009 to October 2013 there were 8 other short spikes of much smaller magnitude.

This is PennEast’s true justification.  Because natural gas spikes a few days a year, we should get this 108 mile long, 3′ wide, high pressure natural gas pipeline.  This will indeed reduce or eliminate those spikes.

Do you really think PennEast is spending a billion dollars to eliminate 10 days worth of price spikes over a 5 year period?

Of course not.  Their justification is those 10 days in a 5 year span.  Their real motivation is that they’ve already sunk a ton of money into Marcellus Shale production, and they want to ship that gas somewhere.  We sure as heck don’t need it in NJ and PA, and they know that.  Look at the eia.gov web site graph for total consumption in NJ and it’s been effectively flat since 1998.  FLAT.

Their FERC submission highlights NJ and PA companies that will be using the gas provided.  There are indeed some.  But it doesn’t mention the non-NJ/PA companies.

You see companies like Spectra Energy, a part-owner in PennEast.  Spectra has a grid of pipelines across the entire eastern sea board of the U.S.  They show in their presentations that PennEast gas could go anywhere they want in that grid – including to LNG (Liquid Natural Gas) sites.  Once in LNG form it’s shippable over seas.

It’s for companies like Crestwood.  It’s proposing a new pipeline to connect to PennEast called the MARC II Pipeline Project.  Pipelines begetting yet more pipelines.

It’s for companies like New Jersey Natural Gas and their Southern Reliability Link project.  The Southern Reliability Link is yet another pipeline they’re connecting to PennEast.  More pipelines!

Take a look at what energy analysts in the market place think.  Here’s an article from research firm Sterne Agee.  It states:

Things are already ugly in U.S. natural gas markets, and its only going to get worse, according to research firm Sterne Agee. SA analysts Tim Rezvan and Truman Hobbs argue that the double whammy of continued supply growth amid weak demand mean that natural gas prices are still not done dropping, and slash 2015/2016 estimates across the board for the natural gas firms in their coverage universe.

Rezvan and Hobbs lower their 2015/2016 Henry Hub natural gas forecast “to $2.70/$3.20 per mcf from $3.40/$3.70. We also trim our 2015/2016 WTI forecast to $58/$65 from $63/$70. The glut of oil and gas in the U.S. will require a lengthy, at times painful, healing process for coverage companies and E&P investors. Investors should remain bottoms-up focused, commodity agnostic, and prepared to look beyond 2015 gas price woes.”Natural gas prices likely to stay depressed well into 2016

Why do we need this pipeline again?