The Cracks are Beginning to Show

Several months ago, in July, New Jersey Resources (NJR) reported their third quarter 2015 financial results.  NJR is a 20% owner in PennEast Pipeline Company LLC, and their subsidiary New Jersey Natural Gas is the largest “shipper” on the project at 180,000 dekatherms.

In that July report they gave a rosy picture in their “Continued Growth” slide of PennEast’s progress to date and their future expectations.  That slide is below:

(the full report is available here:

As you can see in the slide it shows a nice PennEast progression:

2015 FERC filing, 2016 FERC certificate issued, 2017 Final Approval, 2018 pipeline in service.

They looked pretty confident in that slide, right?

Now let’s fast forward to the present. Today, November 24th 2015, NJR announced their 4th quarter and 2015 fiscal year financial results. And they had the same “growth” slide in their presentation. But it was changed a bit:

What’s the change? Well, the entire PennEast progression has been altered to be much fuzzier than before:

2015 FERC Filing, 2016 continued progress, 2017 continued progress, 2018 continued progress.

This may seem like a minor change but in fact this is a BIG deal.  New Jersey Resources has changed their signals to the investment community on PennEast.  In July they gave a steady progression of FERC milestones and an in-service date of 2018.  Now four months later they have removed all milestones and just stated “continued progress”.  And most ominously for PennEast, they are now not forecasting a 2018 in-service date.

The actual earnings call this morning also set a change in tone.  Unlike the July call, the November call barely mentioned PennEast at all and when it did they moved on quickly.  Almost like they don’t want people paying attentiont to it.

This is a significant crack in PennEast’s support.  One of the primary owners lacks confidence to tell the investment community that they’re going to make any money on this thing in 2017 or 2018.

We should all give thanks to NJR for this little nugget of information, and may we see many more in the coming year.

Published by

Mike Spille

I'm a thinker, an analyzer, a synthesizer. Maybe not in that order. I live in West Amwell NJ with my wife Kristina, our two kids Day and Z, our two dogs Fern and Cinna, and three cats Ponce de Leon, Oliver, and Doolittle.

6 thoughts on “The Cracks are Beginning to Show

  1. THis is all no big deal

    Delays are routine, especially in large infrastructure projects and especially by FERC.

    Delay only helps PennEast because prices are low and demand is slack – those are the same reasons that Keystone XL asked Obama administration for a time out in review and same reason Shell pulled out of Arctic drilling. PennEast doesn’t need to seek financing now in a bad market.

    DEP letter to FERC is meaningless and is being misinterpreted.

    I want to kill this pipeline, but to do that will take a clear eyed diagnosis.

    Misleading false hope do no good.


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