So how can PennEast justify this pipeline?  We already seem to have enough natural gas.  The whole state of NJ uses around 1.8 billion cubic feet a day on average across all consumer types (residential, electrical, industrial, transportation).  This pipeline, at 1 billion cubic feet a day, could power more than half the state all by itself.  So how could this work?

Who’s Buying the Gas?

Well, there are a few different ways.  First there’s the Purpose and Need justification they have to provide to satisfy eminent domain. They have to prove that this project will provide material benefit to the people of NJ and PA that outweighs their taking our land via the government.  In this case their purpose and need is that several companies are willing to buy natural gas from the pipeline, and that they will use it to benefit businesses and consumers in Eastern PA and NJ.

The reality is a bit different though.  In PennEast’s most recent government filings they have included the list of “open season” subscribers who have pledged to buy gas from PennEast.  These are shown below:

This table shows each subscriber to the pipeline, how much volume they’ve committed to, what percentage of the total that represents – and most critical, whether the company is an owner of the pipeline or not.

As it turns out 76% of the pipeline capacity is being bought by the pipeline owners (those are the names highlighted in red).  The pipeline owners are literally selling the gas to themselves and using that as their eminent domain justification.

But this still doesn’t solve the question of what it’s going to be used for.  Natural gas consumption in NJ has been flat for years, and is projected to the stay that way except for very moderate growth in gas-fired electrical generation.  So where can it go?

Next up we’ll look at the major pipeline interconnects to see physically where this gas can go.