The De-Emphasis of PennEast continues

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Today New Jersey Resources, a part PennEast owner and the biggest shipper on the project, held their Fiscal year 2017 earnings call.  The call and associated presentation is available here:

The call confirmed a few things for us:

  1. NJR confirmed slippage on PennEast yet again. They are now saying it will be in-service in “2019”, with no guidance on exactly when in 2019 it will happen.
  2. More importantly – there were no dedicated slides on PennEast.  Just a few mentions here and there in the presentation.  On the earnings call, it was even more stark – PennEast just got two quick sentences about them waiting for FERC approval and the 2019 inservice expectation.
  3. The focus of the call and the presentation was on the new Adelphia Gateway project NJR surprise-announced recently.  Adelphia Gateway is an oil pipeline NJR bought for $156 million, they intend to repurpose it as a natural gas pipeline and extend it down to Philadelphia.

This Adelphia project is now being touted as NJR’s big growth push, with its own dedicated slides and push from the executive management team.  They emphasized on the call and in the presentation that the project has “Minimal impact on the environment” and that there are “no anticipated impacts to wetlands or farmlands”.  They emphasized on the call that they’re just re-using an existing pipe so there is almost no construction involved with it at all.

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I wonder why they’re suddenly focusing so much on minimal environmental and farmland impacts?  Could it be – perhaps – that they’ve had problems in those areas in some other pipeline projects?

What’s also interesting about this project is that it seems to mirror a recent move by South Jersey Industries, another PennEast owner.  SJI announced out of the blue that they were buying Elizabethtown Gas.  And it really was out of the blue – all the financial analysts who cover SJI were caught completely by surprise by the move.  Out of no where SJI is touting this new growth opportunity.  And suddenly not talking so much about PennEast.  Incidentally their stock tanked because it looks like they were over paying for Elizabethtown.  Kind of like they were desperate for an alternative to PennEast, and paid a premium for a competitor instead.

Likewise, on the NJR call, one of the analysts asked about how the Adelphia Gateway project came about, and the midstream executive admitted the pipeline had been on the market for awhile now.  It looks like NJR may have been the only bidder on a pipe that’s been unwanted by anyone else.  Kind of like NJR was desperate for an alternative to PennEast.

So here’s your pattern:

  1. PSEG pulls out of PennEast
  2. SJI acquires eTown gas out of the blue and touts it as their new growth opportunity
  3. NJR announces Adelphia Gateway out of the blue, touts it as their new growth opportunity and oh-by-the-way-no-environmental-impact.

Seems to me some PennEast owners aren’t all that sure about PennEast’s future.

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.

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