Today, 13 groups and individuals filed a Motion with FERC demanding that PennEast reveal the true nature of the precedent agreements attached to Phase 1 and Phase 2 of the project. The need for this is crystal clear as PennEast has left a smoking gun in plain site on this topic: Two of its members have pulled out of Phase 1 for no logical reason. The only reason for them to do so is because they no longer need the gas they contracted for back in 2015 and 2018.
The Motion is long because it follows the evolution of precedent agreements from the original application through the PA Route amendment in 2019 to the new Phase 1/Phase 2 shenanigans today. But the central thesis is simple.
As of the 2019 amendment, UGI Energy Services contracted for 100,000 dekatherms/day capacity on the full project. They would take receipt in a few places along the route in PA, including near the Appalachian Trail, and from the Hellertown Lateral.
NJR Energy Services bought the contracts for 50,000 dekatherms/day when they bought the assets that have become the Adelphia Gateway pipeline, which presumably would be delivered via the Columbia interconnect, or a new Adelphia interconnect.
Now, as you likely know, this Phase 1/Phase 2 business proposes that they build Phase 1 first, which is only in Pennsylvania, but does not go into New Jersey. What you may not know is that Phase 1 does not stop where you think it might, but actually stops a few miles north of the Hellertown Lateral and the interconnects there. The Hellertown lateral is not included in Phase 1 at all.
And PennEast refuses to say why.
But we do know that UGI has halved its commitments from 100,000 dekatherms/day on the original route, to only 50,000 dekatherms/day on Phase 1.
Meanwhile, NJR Energy Services has likewise dropped its commitments, from the original 50,000 then to 0 on phase 1 today (yes, 0).
While PennEast refuses to say why these two companies do not want delivery on Phase 1, it is pretty clear why: it’s because neither company needs that gas today, and probably can no longer justify entering long term contracts for it to their investors and Board of Directors.
This is the smoking gun – two PennEast owners, UGI and NJR, are unwilling to meet their full commitments on Phase 1. Despite Phase 1 being 48% empty at this time. And PennEast won’t even build the Hellertown Lateral in Phase 1, despite it being in PA and having nothing to do with “New Jersey Authorizations” that are blocking Phase 2. PennEast has left evidence in plain site that the purpose and need behind this project has utterly collapsed.
As a result, FERC needs to compel PennEast to release the business justification for all precedent agreements, and to reveal the exact state of the precedent agreements for Phase 2. Only with this information will the truth come out.
One thought on “UGI and NJR Energy Services Pulling out of Phase 1 is a smoking gun FERC can’t ignore”
Just reposted this. Lorraine had originally reposted it on BEA yesterday. It deserves to be reposted numerous times. Thank you all for the amazing, heady work you do! Inspiring. Humbling. And it makes me hug myself with joy in these self quarantining days…..