An important aspect of natural gas pipelines is the Potential Impact Radius, or PIR.  This is defined as:

“Potential impact radius (PIR) means the radius of a circle within which the potential failure of a pipeline could have significant impact on people or property”.

What does significant mean here?  Well the actual definition is based on survivability:

“PIR is the distance beyond which a person standing outside in the vicinity of a pipeline rupture and fire would have a 99% chance of surviving”

The formula for PIR is pretty simple – it’s based on pipeline diameter and pressure:

PIR = 0.69 * (maop * d^2)^0.5

(here the “^” symbol means “raised to the power of).  In English this is:

To determine PIR, start with diameter of the pipeline squared, times the maximum allowable operating pressure.  Raise that the power of 0.5, multiply the result by 0.69, and there you go.

For the PennEast pipeline maop = 1480, and diameter = 36″.

This results in a PIR of 955. This means if the pipeline breaches at point X, everyone in a circle of 955′ radius (radius, not diameter!) of the pipeline will have less than 99% of surviving e.g. could die.  Note that the we’re talking about an exponential equation, so it means as you get closer to the pipeline you have an exponentially worse chance of surviving.  In the case of PennEast, at 500′ you would have little effective chance of surviving.

Fun fact: the model assumes no whether or geographical conditions, just a perfectly flat surface with no wind or other weather conditions.  Wind and topography can have a major impact and means damage can occur significantly beyond the official PIR. See the top picture for the potential differences between PIR and actual impact radius.

Some fun facts:

My house is 180′ from the proposed route pipeline centerline.  So me and my family are toast.

Hewitt Park – 800′ from center line.

Hunterdon County Library Southern Branch – 725′ from center line.

West Amwell Elementary – 1750′.  So they’re good so long as the wind is not blowing to the North East that day.

Lowes Shopping Center in PA, near Lehigh River: the whole shopping center plus Route 33 falls within 900′.

When you talk to people who have experience with FERC and past pipeline battles, they’ll often tell you about problems with the FERC process and attitude. You’ll hear about boilerplate cut and paste language in evaluations. You’ll hear about timelines created to help the pipeline in the ground faster. For the environment…well, forget it, we’ll get the environmental impact analysis in sometime later. You hear that FERC will bend over backwards to help companies get their gas flowing as fast as they can.

We’re seeing this now, live and in color, with FERC and PennEast. Those of us watching the docket and reading the meeting minutes between PennEast, FERC, Tetra Tech, and NJDEP and other agencies are seeing the broken process unfolding before our eyes.

The good news is that have allies in this process, and FERC is seeing many monkey wrenches thrown into the works they have never had to worry about before. FERC may have gotten away with this in the past, but the times, they are a’changing, and together we’re going to make them change.

First, some background in the latest issues. PennEast has met with the NJDEP on several occasions in the months of July and August to discuss the project. Many issues came out of those meetings, which were documented in meeting notes filed to the FERC docket for PennEast. There were, in fact, so many substantial issues that the citizens’ groups organized against the pipeline in New Jersey got together and drafted a letter detailing those concerns (I’m proud to say that I was able to pitch and help with that effort). We sent it off a few weeks ago and are looking to meet with the NJDEP in person to discuss all of our concerns and see what we can do to help them. I’ll be covering more of that in coming weeks, but suffice to say that we’re seeking to work closely with the NJDEP to ensure our environmental safe guards are honored. And meanwhile, let’s all cheer them on for all of their efforts to date.

More recently, the NJDEP meetings between PennEast and FERC were discussed in a meeting between FERC, PennEast, and the firm contracted to perform the Environmental Impacte Statement (EIS) on the project, Tetra Tech. The full meeting minutes are available here:

http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=13988551

The purpose of this meeting was to discuss when PennEast plans to formally file with the FERC, and issues that need to be corrected before they file, and issues that are still up in the air or may have significant impacts to them. A number of pieces of these meeting notes caught my eye, including the ones listed below. These are verbatim from the meeting minutes:

• Survey status
  • Access to New Jersey parcels continues to be a problem; however, survey status is above 50% for wetlands, cultural, and RTE species
• Project Schedule
  • Expect to submit application in mid-September, may slip from September 18th filing
  • Expect to receive Certificate in August 2016
• NJDEP and Green Acres
  • PennEast has conducted several meetings with NJDEP to discuss process and review route
  • NJDEP doesn’t appear to understand the FERC process; have requested opportunity to review RRs prior to 7(c) application
  • Medha proposed conducting a separate meeting with NJDEP to try (again) to explain process and differentiate between EA and EIS
  • Certificate will be conditional on surveys being completed
• Concerned about timeline with regards to Green Acres review which can take 12-18 months and requires township participation
  • 100 percent of municipalities in New Jersey are being uncooperative.  PennEast stressed willingness to compensate and mitigate for impacts to Green Acres parcels

What’s going on here is that FERC does not, as a general rule, follow its own regulations properly. They are charged under the National Environmental Policy Act (NEPA) with thoroughly evaluating any project that will have a significant impact to the environment. For large projects like PennEast they have to create what’s called an Environmental Impact Statement (EIS). This quantifies and clearly states all of the impacts the project will have on the environment, both temporary from construction and permanent ones from subsequent operation. The project also has to justify it’s Purpose and Need – it has to state how this project will benefit the people of the United States.

Under NEPA, FERC has to then weigh the project justification against the environmental impact, and evaluate whether the impact is worth the benefits.

That’s what FERC is charged to do under the law. Unfortunately, they appear to take a number of short cuts along the way, and we’re seeing that live right now with PennEast.

First, they are required to create a full EIS, and study the area and its issues as deeply as possible e.g. determine the true impact. They often do not do that. FERC allows companies to file incomplete EIS’, and FERC accepts them. To make this technically legal they make finishing the surveys and EIS a condition of their approval – they have to finish their surveys and reports before the company can begin construction.

However, this is all just boilerplate. Once FERC approves a project, no one seems to check the EIS later to see if it’s really complete, and the surveys are meaningless because no one evaluates them. This takes NEPA from being a critical tool for evaluating environmental impact to being just a lot of paperwork that has to be filed.

Second, they sometimes allow the company to go into projects almost blind. They are supposed to physically survey, on the ground and in person, a substantial majority of the route. However they often approve of projects that are missing large amounts of surveys. These surveys are usually missing because property owners who are affected refuse the company access to their land. Here again they use loop holes to circumvent the intent of the regulations. In these cases they grant approval, which gives the company eminent domain powers. They can then condemn the properties and have free reign to survey them at all, and the property owners cannot object.

However, these surveys are again just paperwork. The route at approval time is fixed. If they find something significant from the surveys they can’t change the route. And often disaster happens as a result. This has happened on past projects, where mitigation of environmental impact failed because the companies had insufficient survey data, and they couldn’t change the route once eminent domain was granted and they found out what was really there.

Looping back to the meeting minutes – PennEast, Tetra Tech, and FERC are all complaining that NJDEP is stubbornly insisting on enforcing regulations both at the NJ state level, and also on the federal level as stewards of the Clean Water Act in New Jersey, and as part of the FERC process. NJDEP is resisting the “short-circuiting” of the process that FERC does as a matter of course in their business. And FERC is stating bluntly that they’ll allow an incomplete application and just make surveying a condition of their approval (which as I indicated is empty and meaningless).

Yet another issue is timing. Energy companies are always rushing to get these projects approved because they want first-mover advantage in the market and delays cost them a great deal of money. And FERC supports this rushing. The problem with that is that the regularly miss very serious environmental and other issues and cause far more damage in real life once construction begins than their studies indicate. Here PennEast is claiming that they will formally file in late September 2015 – and get approval from FERC in August 2016. This means PennEast is pushing to get approval in a bare 11 months. This is an incredibly short time for an EIS of a 100+ mile long project along a green fields route. And here again they are complaining that Green Acres evaluations alone can take 12-18 months – and require township cooperation. As you probably know 100% of the impacted towns in NJ have passed resolutions against PennEast. PennEast is asking FERC to help them work around these regulations so they can get their pipe in the ground as quickly as possible.

All of this are gross violations of the letter and spirit of NEPA, and an horrible abuse of eminent domain. NEPA is supposed to be used to fully define a project’s true impact before eminent domain is ever granted. Eminent domain should never be granted without full knowledge of what’s being attempted and what harms it will create. Yet FERC routinely does exactly this.

But things don’t have to be this way, and we intend to change it.  FERC has acknowledged that the landscape has changed in the past few years, and they need to change with it.  Court cases are being won against them and precedents are being set.  And the opposition against PennEast has been both powerful and effective.

Looking forward – the opposition to PennEast are putting out letters for the NJDEP and other organizations. Get copies as they come out, sign them, and forward them to the NJDEP to show your support for their stance and actions.

And Write your legislators. They need to hear our voices in unison. Tell them about the meeting minutes and how FERC is trying to subvert NEPA right out in the open for everyone to see.

As PennEast is close to officially filing their application, now is the time to turn up the heat even higher and let them know we’re watching, we’re taking action, and we won’t let up for an instant.

True Safety Standards

In its regulatory filings PennEast has indicated that they’ll be following the minimum federal standards for pipeline construction, and they even have thrown in a couple of bones to make the pipeline even safer: they’ve pledged to put in slightly safer pipe in rural areas, and to also inspect every weld they do. Which is above and beyond the federal regulations (and says a lot about those regulations I might add).

According to their web site, PennEast says “[we] will incorporate the best safety practices from construction through operation…Safety is PennEast’s highest priority when designing pipelines. PennEast is adopting design features and operating practices that meet or exceed stringent industry and regulatory standards”.

As it turns out, that’s not really true. At least not in the state of New Jersey.

In NJ, the Board of Public Utilities has done extensive analysis of Federal pipeline safety standards, and have found them to be lacking. As a result they have enacted far stricter guidelines in order to help guarantee that we have far safer pipelines than what the federal government allows. I’ll be detailing those guidelines and the reaction of industry below, but before I do there’s one more thing you ought to know.

PSEG, Elizabethtown Gas, NJ Natural Gas, and South Jersey Gas have all enthusiastically embraced these stricter guidelines as a huge step forward in ensuring public safety. They’ve applauded the BPU for enacting such great legislation.  The guidelines require all pipeline be built to Class 4 specifications regardless of population density, require 4′ as the minimum depth of cover, and require stringent oversight of workers.

And, as the majority owners in PennEast Pipeline LLC, they won’t be following any of the rules, ’cause, ya know, federal guidelines supercede state ones in interstate pipeline projects.

Please, write to all four companies and tell them that you’re going to hold them to the NJ standards they have pledged themselves too, and that, in the unfortunate event that this pipeline gets built, they will pledge to use these regulations to govern installation along the entire 100+ mile route.

The remainder of this post is my FERC comment on this topic, and includes some real eye-openers (they certainly were to me!).

FERC Filing

After studying PennEast’s filings, I believe there is far more that PennEast could do to ensure the safety of the community in regards to this pipeline.

The New Jersey Board of Public utilities has done a thorough analysis of Federal Law in the matter of pipeline safety, and has determined that the federal statutes do not provide an adequate level of safety for the public. As a result they have enacted far more stringent rules in the state.

The NJ regulations state in part:

” The State system for designing pipelines based on the class location in relation to population density, found at N.J.A.C. 14:7-1.3, requires all pipelines installed after the effective date of the proposed amendments to be designed to Class 4 pipeline location standards, the highest standard for similar pipelines designed under the Federal classification system at 49 CFR 192.5. This may result in some costs for pipeline operators, although most have voluntarily chosen to meet higher standards than Federally required. To the extent that costs are incurred, the Board has determined that these costs are justified in order to ensure safety”.

In this section the Board of Utilities has ruled that the class location system is not adequate, and mandates that Class 4 pipeline be used in all locations as of this time.

The statutes continue onto the depth of cover of pipelines:

“The Board’s rules governing minimum cover of mains and service lines found at N.J.A.C. 14:7-1.12 are more stringent than corresponding Federal regulations at 49 CFR 192.327 and 192.361. N.J.A.C. 14:7- 1.12(a) and (b) require 36 inches cover over distribution mains and 48 inches cover over transmission pipelines, respectively, in comparison with Federal regulation requirements, at 49 CFR 192.327, of 24 inches cover over distribution mains and 36 cover over transmission pipelines.

…

To the extent that this rule requires an operator to install pipelines at increased depths of cover, there will be some costs incurred. However, the Board has determined that these costs are justified as a measure of damage prevention and to ensure the protection of people, property, and the environment, especially in densely populated areas”

Here the BPU has determined that federal statutes are not adequate for our state, and that a minimum cover of 4′ be used for all transmission pipelines.

Follow the strictest guidelines that will protect our families and friends

I submit that if PennEast is interested in truly designing and constructing a safe pipeline, that they should conform to all of the NJBPU regulations, and specifically should use Class 4 pipe exclusively throughtout the route; that a minimum of 48″ of cover be used over the pipeline in all locations; and that the remaining NJ Board of Public Utilities regulations be adopted as well.

PennEast members have already endorsed these rules

I will further note that when these rules were up for re-adoption, that the four major NJ companies involved in natural gas utilities in the state were invited to comment, and they did.

The full text is available here:

Click to access NGPRreadoption_20090212.pdf

Those companies were:

– South Jersey Gas Company
– Pivotal Utility Holdings d/b/a Elizabethtown Gas, a wholly owned subsidiary of AGL Resources
– New Jersey Natural Gas
– Public Service Electric and Gas Company

I would like to highlight some comments here:

COMMENT: We support the readoption of Chapter 7, and commend the Board for many of the proposed amendments which provide additional clarity and understanding while strengthening pipeline safety within the state. (SJG)

RESPONSE: The Board appreciates this comment in support of the rule.

COMMENT: We fully support the basic principles of ensuring continued pipeline safety and damage prevention, an appreciate the effort demonstrated by the Bureau of Pipeline Safety staff in preparation of the rule. (PSE&G) (ETG)

RESPONSE: The Board appreciates this comment in support of the rule

COMMENT: We concur with the amendment to N.J.A.C. 14:7-1.3 as written. All of our natural gas pipelines are currently Class 4 design and operation, and we agree with the requirement that all new pipelines constructed after the effective date of this rule shall meet the design standards for a Class 4 pipeline location. (SJG)

RESPONSE: The Board appreciates this comment in support of the rule

COMMENT: Proposed N.J.A.C. 14:7-1.6(a) and (b), which require oversight by qualified welding inspectors, should apply to transmission lines only. The character of transmission lines, especially their potential leak failure mode, makes them much more appropriate for this level of scrutiny. In addition, the rule should be modified from “ensure oversight” to “ensure quality.” Oversight implies viewing the welder as he or she welds, which is an not efficient or effective form of quality control. Quality tests and checks are normally included to ensure quality and include 100% X-ray’s to ensure weld integrity. (PSE&G) (ETG)

COMMENT: We are in general agreement with the proposed depth of cover requirements at N.J.A.C. 14:7-1.12 for distribution mains, transmission pipelines and service lines which are installed after the effective date of this rule

RESPONSE: The Board appreciates the commenter’s support for the depth of cover requirements.

I would like to note that the commenting companies – South Jersey gas, AGL Resources, NJ Natural Gas, and PSE&G – are all part owners in PennEast Pipeline Company LLC and in fact collectively represent a majority ownership. These companies have stated on the record that they believe these regulations are sensible and improve public safety. As such I call for them to mandate that the PennEast pipeline, if approved, be built to these same standards that they have endorsed.

TL;DR

Most of the proposed PennEast pipeline route will use substantially lower safety standards than would be required in dense suburban or urban neighborhoods.  Those of us in rural locations will have thinner walls, the pipe will be buried less deeply in the ground, and will have fewer safety inspections than it will in areas of higher population density.

INTRODUCTION

Pipeline safety has become a hot topic around the PennEast pipeline, and people particularly want to know how this thing is proposed to be built, how safe it might be, and what issues might come up if it is built.  And they’re worried – and rightfully so.  There are rumors that different areas get different treatment.  That rural lives and property are considered to be worth less than those in more suburban or urban environments.  That some of the “Best Management Practices”…aren’t.

So now looks like a good time to address those issues.  I’ll be drawing on PennEast’s filings for this information, along with government regulations that mandate certain practices, and what the industry has been doing to change those regulations.

Right off the bat let me tell you this: the rumors you hear are true. If you live in the country, your life, your family’s lives, and your pets and farm animals, your property, your house, your barns, your pools, your ponds and fire pits – they’re all considered to be worth less than those who live in the suburbs or the city. This is because of “Class Locations”.  Read on for what this means for you.

CLASS LOCATIONS

Decades ago some bright Department of Transportation people decided that we needed to regulate the construction of natural gas pipelines.  In their infinite wisdom they decided NOT to make pipelines as safe as possible.  Oh, no.  That would cost pipeline companies a lot of money.  So instead they chose what’s called a risk model that was based on population density near a pipeline.

A risk model outlines potential risks that a potential project can face, and draws lines where it thinks risks are acceptable, and where they are not.  In places where they aren’t, they dial back the parameters until they’ve found what is acceptable.

The definition of “acceptable” is up to the people drawing up the risk model (and those who approve it).

In terms of natural gas pipelines they decided the big issue at hand would be the impact of a pipeline breach near human population centers.  They figured that out in the country, there’d be a low impact, in suburban areas there’d be somewhat more impact, and in urban areas there’d be a very high impact.

“Impact” is not defined in terms of human life, but generally in terms of economic impact – the damage the accident incurs, and the amount of money it takes to fix it.  As a piece of this individual humans get a (somewhat arbitrary) economic number assigned to them.

They then modeled what “population centers” looked like.  They decided (again, in their infinite wisdom) that there were 4 classes of population they would look at:

Class 1 – Underwater, or with 10 or fewer inhabited dwellings within 220 yards of the pipeline centerline over a 1 mile length.

Class 2 – 11 to 46 inhabited dwellings within 220 yards of the pipeline centerline over a 1 mile length.

Class 3 – 47+ buildings within 220 yards of the pipeline centerline over a 1 mile length, or an outdoor space or building where 20+ people will gather.

Class 4 – A location where they are many 4 story+ tall buildings (e.g. urban).

High Consequence Area – A location that is deemed especially sensitive or important, or where evacuation may be difficult (a school, a busy and often crowded park, a hospital).

In this manner the DOT people modeled population density as it related to natural gas pipelines.  And they decided the more people there were around a pipeline, the safer they would make it.

SAFETY FACTORS BY CLASS LOCATION

Your class location has three important impacts on pipeline construction:

• How thick the pipe is
• How deeply it is buried
• How often it is inspected

As you can imagine, class 1 gets the least protections, class 4 gets the most.

Pipeline thickness

Finding out the thickness of your pipe is difficult.  It relies on a number of factors, so it’s hard to find it online.  The exact thickness depends upon the pressure of the pipeline (PennEast is 1480 psi), the width of the pipeline (36″ for PennEast), the safety factor for the class location, and the quality of steel being used.

We know all of those items except of the grade of steel PennEast will be using.  It’s not clear if we’ll get those numbers as they may be considered privileged information to protect critical infrastructure (e.g. they’re afraid of terrorists knowing).

But we do know the other parameters, and the most important is the safety factor.

The safety factor is somewhat mis-named.  The number itself is not an indication of the safety factor, but actually is an indication of how close they’re allowed to come to the rated stresses for the type of pipe they’re using.  As an example, a safety factor of 100% would be for a situation where a pipeline would be allowed to run up to 100% of its rated strength (note: this is a made up example, nothing would ever be allowed to run to maximum tolerance with no margin for error).  So even though it’s called a safety factor the actual number indicates how close to the pipeline strength rating you’re allowed to come.

The actual safety factors for pipelines are 72%, 60%, 50%, and 40%.

Note that pipelines operate at a constant pressure across its length, so in reality the safety factors translate into varying pipe widths and/or higher grade pipe.  So if you live on a farm or out in the woods you’ll get a less safe pipe by design then your friends a few miles away who live in a large housing development.

How deeply the pipe is buried

Class location also impacts how deeply the pipe must be buried.  At class 1 locations it can be closer to the surface, at higher locations it must be buried more deeply.  In agricultural areas the pipeline must also be buried more deeply to minimize crop impact, as standard depths are not nearly deep enough.

How often it is inspected

Finally class location defines how often the company is required to inspect the pipeline.  Most pipeline companies trumpet the fact that they have electronic monitoring systems that operate 24/7 so the on-site pipeline walks are unimportant.  This is not actually the case – regular pipeline walks are often neglected but are actually vital as automated equipment can fail, give false positives, give false negatives, or simply be ignored.

Class 1 Location

At this location the pipeline will be allowed to operate up to 72% of the structural stresses allowable, which translates into a thinner pipe and/or lower grade steel.

The pipeline must be buried so it’s top is only 30″ from the surface of the ground – except in areas with hard ground/bedrock.  In those areas it only needs to be 18″ from the surface.

Class 1 locations require the least amount of physical on-the-ground inspections.

Class 2 Location

At this location the pipeline will be allowed to operate at 60% of its structural stresses, so in practice it’s the second thinnest steel.

The pipeline must be buried so its top is 36″ from the surface of the ground, 24″ in areas with hard ground/bedrock.

They require more physical inspections than class 1.

Class 3 Location

At this location the pipeline will be allowed to operate at 50% of its structural stresses, so it’s thicker steel than in class 1 or 2.

Depth requirements are same as for class 2 – 36 ” or 24″ in hard rock/bedrock.

Physical inspection requirements are the same as class 2.

Class 4 Location

At this location the pipeline will be allowed to operate at 40% of its structural stresses, so it’s the thickest steel.

Depth requirements are same as for class 2 – 36 ” or 24″ in hard rock/bedrock.

Physical inspection requirements are the same as class 2.

High Consequence Area

These areas would have increased monitoring and integrity checks over other areas,and include places like schools, beaches, parks, etc where many people will gather/inhabit.

HOW THIS RELATES TO PENNEAST

PennEast has indicated in their federal filings that they will upgrade the to a minimum of class 2 safety factor for the length of the pipeline, even for class 1 areas.  So the pipeline will be operating at 60% of maximum allowable stresses in those areas.  Class 3 areas will still get the thicker pipe and 50% maximum allowable stresses.

The “class 2 upgrade” only applies to the pipe thickness. They will still be burying the pipe more shallowly in class 1 locations.

Incredibly, PennEast has identified ZERO High Consequence Areas, even though there are many that have been identified by myself and others (examples: the strip mall in PA near route 33, the private Christian school in the same area, etc).

PennEast trumpets as loudly as they can to anyone who will listen that this gas is for NJ and PA, period.  They will never, ever, ever, ever (pinky swear, really) EVER let this gas go for export.

Ever.

To help cement our trust on their pinky swear promise, PennEast part-owner New Jersey Resources (NJR) announced this week that they are swapping their interest in the Iroquois Gas Transmission System for an interest in Dominion Midstream Partners instead. NJR stated in their press release that:

“With this agreement, we are exchanging NJR Midstream’s ownership interest in Iroquois for expanded ownership in a variety of midstream assets held by Dominion Midstream Partners,” said Laurence M. Downes, chairman and CEO of New Jersey Resources. “We believe this is an attractive opportunity to diversify our position in the midstream marketplace.”

Formed in 2014, Dominion Midstream Partners, LP owns, operates, develops and acquires natural gas import, storage, regasification, transportation and related assets, including a preferred equity interest in the Cove Point Liquefied Natural Gas (LNG) facility and ownership of Dominion Carolina Gas Transmission, LLC (DGCC). Cove Point provides LNG import, storage and transportation services to the Mid-Atlantic marketplace and DGCC is an interstate natural gas transportation company, delivering natural gas to wholesale and direct industrial customers throughout South Carolina.

The full press release is here:

http://www.njresources.com/news/releases/2015/njr/15-36NJRMidstream.asp

Wait. What? Back that up. To this part:

“including a preferred equity interest in the Cove Point Liquefied Natural Gas (LNG) facility”.

O
M
G

Parse all of the jargon and what we have here is that PennEast part owner NJR is buying a piece of Dominion Cove Point LNG. The very same Dominion Cove Point LNG which is expanding into an LNG export terminal even as I write this.

That’s right. The company who says “this gas is for NJ and PA” just bought a big share in an LNG export company. For those not aware Cove Point LNG export is fully subscribed by heavy industry in Japan and India.

Anyone still have any doubts on where this gas is going?

The recent Huffington Post article that went out about the PennEast pipeline has made a big splash with pipeline opponents (and with good reason).  For those not familiar with it it’s available here:

http://www.huffingtonpost.com/wild-river-review/beleaguered-new-jersey-co_b_7984424.html

As part of her research, the article’s author, Joy E. Stocke, interviewed PennEast spokes person Patricia Kornick. Joy was kind enough to share her Q&A information with us and has consented on letting me release it on the FERC docket.

That QA and available below in the FERC-generated PDF:

http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=13959687

I’ve included my own rebuttal to the Ms. Kornick’s answers in the document and the full text of the submission is recreated here.

My personal observation of the Q&A

At a high level I have to say that PennEast’s responses are appalling and highly unresponsive. People have very specific concerns and questions and PennEast responds predominantly with condescending boilerplate and platitudes. FERC staff should see this as a prime example of how PennEast “reaches out” to the community – by talking down to us, by obfuscating the facts, by hiding behind jargon and evading plain questions whenever they can. This is not “reaching out”. This is an insult to our communities, our families, and our lives. I submit that none of these actions should not count as “community outreach” according to NEPA standards and that PennEast should be found wholly deficient in this area.

Q/A Section

Question to PennEast from TC Onstott – PhD Geosciences – Princeton University.   In 2007 listed as one of TIME Magazine’s most influential people in the world:

It is pretty clear from the current PennEast Map, that the pipeline passes right through the center of the highest arsenic concentration in the State of New Jersey. The Pipeline goes through legally permanently protected land including Open Spaces, Preserved Farmland, DEP preserved lands, and land trusts. It runs within a few hundred feet of reservoirs such as the Swan Creek reservoir, which provides drinking water to West Amwell. It runs through a county where nearly all residents rely on private wells for their water and private septic systems. Arsenic is the most important pollutant of wells in the state. That is why the wells are so carefully monitored. The arsenic comes from the rocks and enters the aquifer. PennEast proposes to mainly blast their way through the rocks to make the trench. That is because the soil zone is so thin in these same counties Hunterdon/Mercer where the arsenic is so high. MOST IMPORTANTLY, this is rural country and a sole source aquifer. The vast majority of residences depend upon their well water. The towns all depend upon local wells all provide by this same aquifer and aquifer which is very sensitive to this type of construction because it is open to the surface. This is a fractured rock aquifer so there is not that much groundwater to begin with and the rain fall is not that great in this region either. So any contamination takes a very long time to dilute with fresh recharge water. Why would PennEast risk the drinking water for these communities? And how did they not know about this before they proposed their route?

PennEast Response:
Please appreciate that PennEast employs a seasoned team of safety, engineering, environmental, geologists and other specialists with vast experience working within the energy industry and on pipeline infrastructure projects. The PennEast team is dedicated to examining all aspects associated with safely constructing and operating the pipeline while minimizing impact to the community and environment. The team is conducting various studies to ensure it has an accurate understanding of the underlying geology of the proposed route and will assess any risks and develop applicable mitigation measures to ensure safe construction near critical water supplies. Given the various challenging environments in which pipelines have been built across the country, and the improved construction techniques used today to manage these types of risk, PennEast is confident it will be able to adequately address these concerns.

My Comments:
Professor Onstott can comment best on this. But I will add that the State of NJ, Hunterdon County, Mercer County, the various municipalities in the region, and organizations such as the Stony Brook Millstone Watershed Association have been studying this area for decades. The issues we have with our watershed, drinking water recharge, arsenic issues, radon issues, etc are all extraordinarily well documented. Thousands of pages of studies are available on these topics. PennEast appears to be ignoring all of this information and instead will be paying for their own biased experts from the natural gas industry who will spend only weeks or months investigating serious issues we have been struggling with for decades. Responses such as the above serve only to show PennEast’s over-confidence and total lack of information about the route they have chosen. To put it bluntly we have no reason to trust that a rushed survey under a PennEast deadline is going to be of the same quality and accuracy as the surveys local governments and environmental organizations have done based on year after year after year of observation.

Question to PennEast:
PennEast listed the homes that would be benefitting from the Marcellus Shale Gas. Would you list them again? PennEast claims to service 4.7 million homes in NJ and PA. The Transco Leidy Loop claims 2 million for their project in Princeton. The TEAM 14 project, just approved by FERC, will add the equivalent of 2.8 million homes to its route which terminates in Lambertville NJ and Staten Island. A projected total of new local service to some 9.5 million homes just from these 3 projects. NJ and PA have two of the worst recoveries from the Great Recession and there are no housing or business booms that would qualify this kind of expansion. The 2013 Census shows a total of 3.5 million housing units in NJ, 80% of them already using natural gas.

PennEast Response:
In an effort not to quantify without using industry terms (e.g., bcf, mcf), PennEast has shared that the natural gas transported through the pipeline would be enough to heat the equivalent of 4.7 million homes, not listing specific homes or communities to be directly serviced. The PennEast website is being update to ensure this point is reflected accurately. PennEast provides a much-needed expansion of upstream pipeline capacity that ultimately provides supply to entities that serve consumers throughout the region with critical energy distribution service. Natural gas is not consumed only by residential consumers, nor does the number of 3.5 million housing units above listed reflect the overall market for natural gas demand. Natural gas also is used by businesses, industry, transportation, hospitals, schools, and government. Its role in electric generation also is growing, with natural gas being a major source of fuel for the region’s newest fleet of power generation units. PennEast consistently has represented the benefits extend to New Jersey and Pennsylvania consumers, and in all likelihood, surrounding states, as well. ConEdison, a metropolitan New York utility, also recently subscribed for capacity. Simple census data is not reliable to dissect the complexities of the natural gas and electricity market dynamics; in actuality, this is where many often mistake the true benefits that would be realized from the Project. Generalized data or averages miss peculiarities or nuances to many areas of the demand market. Unlike any of the projects above listed, PennEast represents a targeted benefit to the utilities that have been providing critical energy distribution service to the region’s consumers, which in part explains why all of the New Jersey utilities have subscribed capacity on the project.

My Comments:
This answer is highly evasive and does not match the facts. The majority of the companies subscribed to the PennEast pipeline are national, not local entities, and are involved in midstream transportation as well as local use. While they could use some of this gas for local use, in fact the companies can also consider these part of their midstream assets and transport the gas elsewhere over their existing networks. Examples include Spectra Energy, a company that operates throughout the U.S. New Jersey Resources, who sells gas throughout the Atlantic and New England states. And UGI Energy Services, who has been playing up their recent overseas LNG acquisitions in the financial press. The addition of ConEdison to the mix further underlines this fact. PennEast keeps increasing its scope over time. At first it was just for PA and NJ. Then PA and NJ and “surrounding states”. Then it was PA and NJ and NY and surrounding states”. Companies such as Spectra Energy simply refer to “The Region”. In reality PennEast’s increasing scope creep demonstrates that they cannot find sufficient consumers for their natural gas in PA and NJ and had to look elsewhere for the majority of the usage.

Question to PennEast:
NJ averages a total of 1.8 billion cubic feet of natural gas per day across all users. The PennEast pipeline will add 1 billion cubic feet to that mix. How can PennEast justify adding 55% over-capacity?

PennEast Response:
Again, natural gas markets are very complex and data referencing average daily use overlooks the significant seasonality of natural gas demand markets. Over the last decade, the reality is that natural gas demand — baseload and peak — has increased significantly. Natural gas demand is projected to continue to grow significantly due to its abundance, and its economic and environmental benefits. While you might disagree, natural gas represents an affordable, clean source of energy that most homes, businesses and industry prefer if it is available to them.

My Comments:
This response from PennEast makes a number of assertions, but critically contains no numbers or references to back those assertions up. The facts are that NJ is well served by natural gas now and in the future, and PennEast is a vast overkill. In reality NJ uses only 1.8 billion cubic feet per day of gas on average, for a total of 657 billion cubic feet a year. PennEast will be carrying 365 cubic feet per year into the state – which is again a 55% over-capacity. On natural gas demand projections – PennEast is flat out wrong. Government studies show that natural gas use is expected to decline out to 2040, with the exception of electrical generation. That will show modest increases as coal plants are converted to natural gas, but the emphasis here is on “modest”. And specifically in NJ only a single coal plant is planned to be converted to natural gas. So in NJ demand is projected to trend down out to 2040. PennEast has been provided with numerous DOE and EIA.GOV studies that have contradicted their empty assertions such as the one above. If they want to keep making these assertions they’re going to have to back it up with hard data and facts.

Question to PennEast:
NJ enjoys the 4th lowest residential natural gas prices in the country (actually we’re tied for 4th). Explain why we need to add 55% more natural gas with prices this low?

PennEast Response:
It is easy to mistake the complexity of the natural gas markets, as natural gas costs in the region continue to be one of the highest in the nation when the current pipeline capacity is at full demand. (This generally occurs during peak seasonal demands.) If the lowest cost source of gas literally is right next door, why not ensure it can be delivered in a reliable, environmentally friendly, affordable manner, and specifically, to benefit consumers within the region? While there are some who can afford the energy delivered to local markets, most people would welcome additional cost savings, especially in light of the above-referenced slowed regional recovery from the Great Recession. Reduced energy rates also mean greater disposable income and greater quality of life. Lower cost energy to businesses and industry translates to competitiveness in a regional, national and global marketplace, which can lead to job growth and numerous other benefits. At a time when schools and government are looking to rein costs, maintain tax revenue and improve their communities, natural gas offers a pragmatic solution.

My Comment:
The above response from PennEast does not answer the question at all. In fact, the original question understated the position NJ is in as it referenced it older set of eia.gov data. The April 2015 numbers show New Jersey with the lowest natural gas prices in the entire country. So let’s repeat the question, but with the updated data: why does NJ need a 55% supply increase when we have the lowest residential natural gas prices in the entire United States. On the issue of peak seasonal demands, as mentioned elsewhere those problems have been alleviated. As of 2015 FERC has indicated that the supply issues New Jersey faced have been fixed, and that despite one of the harshest winters in recent memory the natural gas industry came out fine. The addition of the Leidy Line Southeast Expansion project will add even more cushion. So – why, again, does PennEast think we need an extra billion cubic feet a day?

Question to PennEast:
What are PennEast’s projections for electrical and natural gas prices in NJ out to 2040? They claim New Jersyans will see a cost savings, let’s see an actual number. I ask this because a joint DOE/EIA.GOV study projects natural gas and electrical prices will rise in all of the scenarios they’ve studied due to the expansin of the LNG Industry. The numbers go over 10% in some scenarios.

PennEast Response:
PennEast does not make such projections; however, it evaluates the behavior of the market, researches credible predictions about what could happen and plans accordingly. PennEast consistently has shared that New Jerseyans and Pennsylvanians will see benefits, which is supported by the third-party report developed by Concentric Energy Advisors. It is probable that neighboring New Yorkers, Marylanders and others also are likely to see benefits, though to a lesser degree than the primary New Jersey and Pennsylvania communities. I am not certain about some of the points you are asking with this question. If your argument is that PennEast should ensure the lowest cost of natural gas as possible for regional consumers, PennEast agrees. If LNG exports marginally increase domestic prices, PennEast offers the ability to ensure a direct connection to the lowest cost source of natural gas in the country.

My Comment:
What doesn’t PennEast understand about this question? Do they have price models or do they not? If they don’t, then they’re lying to the public if they’re saying their pipeline will save consumers money. It’s that simple. PennEast claims that its member companies are predominantly public utilities that will use the gas locally. It is not even remotely credible that local utilities have no price or consumption projections.

PennEast statement:

PennEast is not an LNG export project nor is it connected to any export facility. Much to the contrary, PennEast is subscribed primarily by local distributors of natural gas.

My Comment:
This assertion is wrong on many counts. First, UGI, Spectra Energy, and NJR are all national companies serving wide regions. Second, the PennEast pipeline is connecting to pipelines which will
connect to the approved Cove Point LNG Export facility under construction now. PennEast’s Lambertville interconnects have also been explicitly named by Downeast LNG which is in pre-filing with FERC right now.

Question to PennEast:
What are Spectra Energy’s specific plans for their cut of the gas?

PennEast Response:

The partners’ plans for the natural gas are outlined in Draft Resource Report 1: (http://elibrary.ferc.gov/idmws/file_list.asp?accession_num=20150416-5108).

My Comment:
The only mention of Spectra Energy’s plans in that document are listed under Texas Eastern. It states:

“The PennEast Project provides Texas Eastern with direct access to the eastern Marcellus, which allows Texas Eastern to increase supply diversity and optionality for its shippers and for markets that it serves in the region. “

This is a non-answer and certainly does not paint Spectra Energy as a local service provider. I’ll ask again – what are Spectra Energy’s specific plans for this gas? They are the second largest subscriber t the pipeline with over 13% of the total volume (125,000 Dth/Day) so their plans are material and significant.

Question to PennEast:
PennEast has widely cited their commissioned study indicating that the region would have saved $890 million if the pipeline had been here in the winter of 2013-2014. Does PennEast realize that this study is invalid on its face because the problems cited by the study have been rectified? FERC itself has made this clear in their 2014 State of the Markets report:

Click to access 2014-som.pdf

Their report can be summed up from this quote:

“By many measures, this winter rivaled last year’s in terms of record low temperatures across much of the country, and in overall demand for electricity. However, compared to last winter, with its series of Polar Vortex events in early 2014, the wholesale power markets and natural gas pipeline system performed remarkably well.”

PennEast Response:
The suggestion that the problem has been rectified is another example of misinformation generally inferred from those unfamiliar with the intricacies of the market. One of the greatest concerns during the polar vortex was the fact that the regional pipeline system was stressed significantly and on the verge of not meeting demand throughout the winter. In fact, some utilities required interruptions of non-critical demand users.

The resulting price impacts reached record highs. This past winter was different. The actual number of colder days was greater, but the peak cold days were not as significant and the colder weather occurred later in the season. Additionally, several electric regional transmission organizations (RTOs) ensured that power generators reliant on dirty fuel sources (e.g., oil) were able to run in emergency conditions to reduce the load on the natural gas pipeline system; environmentally, this was less than ideal.

It also is important to note that while the winter price peaks might have been less pronounced in the latest winter, the average differential between the local supply pricing and the local market prices primarily was sustained, as compared to the previous polar vortex winter. This again suggests there was significant opportunity for local consumers to realize greater energy cost savings. As you might have noticed in reading the Concentric report, it notes that it used a significantly conservative approach, omitting many of the coldest days of the polar vortex; therefore, it did not account for the highest costs for natural gas during the polar vortex. If it had, the potential savings would have been significantly greater.

Any improvement over the polar vortex winter still would leave a tremendous amount of room for cost savings, and meanwhile, this overlooks the fact that the demand for natural gas supply and the taxing effect on the existing regional pipeline system continues to grow.

My Comment:
The problem with this response is that it ignores the FERC report entirely, and focuses on a highly biased report commissioned by PennEast. PennEast should actually read the FERC report and give hard numbers on why the PennEast pipeline is needed in light of that report. As it is PennEast is effectively admitting that their “$890 million” is incorrect and vastly overblown in real market terms. If you factor in the recent DOE and EIA.gov reports on LNG export ramp up for the next 25 years, in reality pipelines like PennEast will result in a net increase of natural gas prices and increased costs to consumers up to a staggering 10% increase. PennEast will not be saving us money; to the contrary PennEast will put consumers in a position where they will be competing with overseas markets where natural gas costs 4x what it does here.

Question to PennEast:
PennEast claims it’s creating jobs, yet observers along the pipeline survey route in Delaware and Hopewell Townships have been keeping track of license plates and not one of them are from New Jersey. How many people will be hired in New Jersey and where?

PennEast Response:
From the beginning, PennEast has shared that it would be hiring a local workforce as much as possible. There are occasions when the specialized nature of the work will involve resources beyond New Jersey and Pennsylvania, which also is something PennEast has shared. PennEast has local engineers, consultants, legal resources, and contractors from New Jersey and Pennsylvania working on the Project. The majority of the team members are from the region, so their license plates would not be noticed. Additionally, PennEast is spending significant amounts in the local communities, though this is only the beginning compared to the economic boon that will occur once construction begins.

My Comment:
PennEast is apparently not aware of how surveys are done. The surveyors park their trucks and other vehicles on the side of the road and then go into the survey areas for extended periods of time. Observers have noted that 3/4 of the license plates are from out of state. Only a quarter are from NJ or PA. If PennEast wants to refute this they should give specific numbers on how many PA and NJ workers have been employed by them or their contractors on this project, and how many are from out of state.

Question to PennEast:
Can you guarantee 100 percent that PennEast gas is not for export? Can you guarantee that no additional pipes can EVER be built along the route? Especially those containing LNG for export? What is to stop the same consortium from forming another LLC? PennEast Response: As I shared when we talked, the natural gas being transported through the PennEast Pipeline would be to serve consumers in New Jersey and Pennsylvania. In spite of oppositionists’ claims to know otherwise, it would not be for export. Additionally, PennEast has had no discussions with its shippers about the desire to export gas overseas nor has PennEast had discussions with any interconnecting facility operators about plans to build export facilities off the PennEast pipeline.

Also as shared when we talked, PennEast cannot guarantee that other pipelines would not be built along the proposed route. Market and environmental conditions might dictate that additional pipeline infrastructure is necessary.

As to your point regarding LNG, pipelines often do not carry LNG. LNG for export is natural gas that is liquefied at a specialized facility, typically near a port or other easily accessible location along a navigable waterbody. In theory, there is nothing to stop the consortium from forming another LLC, but why would PennEast Pipeline Company want to form another LLC? If PennEast Pipeline Company believes additional pipeline infrastructure is needed and PennEast is best suited to deliver that service, PennEast would develop that Project.

The notion that the partnership or consortium of the major regional distributors of energy to New Jersey and southeastern Pennsylvania consumers is a bad thing seems counterintuitive. Rather, PennEast believes it signals the unified viewpoint by energy experts who have centuries of experience providing this critical energy service to the region’s consumers.

My Comment:
There are documented submissions to the FERC showing where PennEast connects to a pipeline which connects to the Cove Point LNG export facility under construction today. There are also documented connections the Downeast LNG export facility in FERC pre-filing. PennEast’s assertions on this are flat out wrong. Cove Point is on track be online in 2017, and Downeast LNG is entering the FERC process for their import/export terminal. I ask PennEast this point blank: will PennEast connect indirectly to these systems once they are completed as planned, or will they not?

In addition, PennEast is contradicting themselves in this very Q&A document. In this section PennEast has fallen back to saying “the natural gas being transported through the PennEast Pipeline would be to serve consumers in New Jersey and Pennsylvania”. Yet in other areas of this Q&A they admit to this gas being also being sent to the NYC metro market via Con Edison, and other shippers such as Spectra Energy indicate that they will be sending the gas out to “the region”. PennEast can’t even keep their answers straight when speaking to one single journalist.