The Cost of the Pipeline

Last Friday, May 1, 2020, PennEast filed a response to FERC’s April 1, 2020 Data Request on docket CP20-47-000.

As you might expect, while reading the response the image of the Keystone Kops tripping over themselves in pursuit of a villain came to mind.

The request was pretty simple, so I thought PennEast had a shot to get it at least mostly right.  What FERC said was that the abbreviated filing on this docket talked only about the Certificated Route on CP15-558, but didn’t include emissions information for the 4 PA Route changes on their amended Certificate from 2019.  OK – so submit new tables for those four changes, and they’re done – easy peasy lemon squeezy.

But no – of course not.  The response is muddled, confusing, inaccurate, contradictory with both itself and with other responses, and is riddled with errors.  I filed a Motion to the docket trying to describe all the issues (and as it is, I probably missed some – it’s that bad).

My submission is here:

MichaelSpille-CP20-47-MotionToAnswerAndAnswer-6.PDF

Here are some of the issues:

1. PennEast starts out  on the wrong foot.  Rather than saying they were responding to the request to include data on the CP19-78 2019 changes, they go into a torturous description of how they got there.  The end result is you have no idea what exact data they are supplying – will it be the original route from 2018?  The 2019 one?  A jumble of those plus the current amendment application?  Who knows!
2. PennEast botches nearly all of their table references.  Most of the tables say things like “Table Error! No text of specified style in document-5.2 Revised Conformity Determination”.  Yeah, no one proofed the damn thing and it’s filled with technical errors.  Some tables aren’t referred to at all and just sit out there, lonely and confused.
3. PennEast adds in data about Phase 2.  Even though it wasn’t asked for, PennEast supplied it anyway – a whole bunch of theoretical impacts from Phase 2.  And of course, a bunch of it is wrong.  For one, the construction pollutant numbers are not consistent with those of Phase 1.  Argh!
4. PennEast leaves out a bunch of tables because “hey, we don’t think they changed”.  Um…..
5. PennEast quietly takes out the Columbia-TCO connection at Hellertown.  Without fan fare, warning, or otherwise saying what they’re doing, they quietly indicate that the Columbia-TCO connection has moved to Church Road.  This changes the Purpose and Need of Phase 2 entirely, making Phase 2 look even less beneficial than it was.  This information is buried in a footnote despite being a major change.
6. The Operational Emissions tables are filled with errors!  Tons of them.  Anywhere they couldn’t copy and paste from the Final EIS or the abbreviated filing, they muffed the calculations.  They double count stuff, they get the number of compressors wrong, they get basic math wrong, and fugitive emissions and venting seem to be basically random!
7. They get docket references wrong.  FERC 101 and they flubbed it.
8. They don’t understand their own changes at the Kidder Compressor Station, so they fake it.  Yes.

In all, this Response is astounding.  It is clear that PennEast rushed this out the door to meet deadlines, and sacrificed any sort of accuracy for speed.  And why?  It ain’t like they’re going anywhere anytime soon.

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.

A link to the motion is here.

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.

Today I filed a Motion for Leave to Answer and Answer with FERC to PennEast’s response this week to FERC’s April Data Request.

The full filing is available here:

https://elibrary.ferc.gov/idmws/file_list.asp?accession_num=20200423-5166

To put it simply, PennEast’s response is a total train wreck.  They literally do everything they can to evade legitimate Federal authority and oversight, and actually tell FERC “no, we won’t tell you that!” over and over again.  It is simply unbelievable.  Here are the major points discussed:

1) The Mill Creek Corporate Center cumulative impact response was unresponsive.

PennEast tells FERC not to worry about the Mill Creek Corporate center because – get this – they did a few google searches and don’t think much is going on with it.  Yeah, that’s right.  PennEast didn’t bother to talk to the developer or the local zoning board.  Google instead was their friend.

And here we go!

2) PennEast is incorrect that they do not need to indicate purpose and need for Phase 2.

PennEast actually has the gall to say “we don’t need to evaluate Phase 2, because its the same as what we did on CP15-558”.  They literally refuse to do any purpose and need analysis for Phase 2 at all!

Clearly, PennEast needs to actually spell out the supposed need for Phase 2.  Explicitly and in detail, not with a hand wav.

3) PennEast’s assertions that they do not need a DRBC review are incorrect.

PennEast actually spends 6 pages ranting that DRBC has no jurisdiction over them.  Completely ignoring that the DRBC has already ruled they do have jurisdiction, and cited the exact area of their Rules of Practice and Procedure that require PennEast to submit an application to them.

4) PennEast’s response to Data Request 7 should be a red flag that should immediately result in a rejection of this application.

 
In Data Request 7, FERC asks a number of questions around feasibility of alternatives like Adelphia and Columbia pipelines, markets that Phase 1 will service, changes in volumes of gas being moved between the original Certificate and this one, the reduction of UGI’s commitment on Phase 1, the feasibility of a smaller pipe for Phase 1, and why the Hellertown Lateral is necessary given the Church Road Interconnects.10

PennEast’s response is shocking. They effectively refuse to answer any of these questions.

5) PennEast is now admitting it is building an interconnect near an active fault.

PennEast here says “whoopsie, that fault near Church Road actually is active!  Our bad”.

Yes, they want to build next to an active fault.

6) PennEast is unresponsive on Calvary Baptist Church and Mill Creek Corporate Center traffic impacts and mitigations.

Once again, PennEast thinks google is a substitute for actual research and analysis.  They say “don’t worry about that church, we figure Sunday is their big day and we won’t work on Sunday”.  Totally ignoring the fact that the church acts as a day care center and school during the week.  D’oh!

7) PennEast is unresponsive on why the Hellertown Lateral is not part of Phase 1.

This is a big one.  PennEast refuses to say why the PA-based Hellertown lateral was pushed to Phase 2.  This makes no sense, as Hellertown has nothing to do with so called “NJ Authorizations”.

However, this is an admission by UGI that they are losing economic interest in PennEast. Hellertown was going to give them half their subscription from the original project.  By not insisting on having Hellertown in Phase 1, UGI is able to skip out on 50,000 dekatherms/day commitment.

Yeah, that’s right.  PennEast’s own project manager is running away from its original commitment.  And I bet others are too.
8) PennEast fails to provide meaningful alternatives analysis in the event that Phase 1 is constructed solely.

Basically the Alternatives PennEast puts forth make no sense.  They basically say “nope, won’t work.  Sorry!”.  Interestingly, they don’t even mention shippers in their purpose and need section here.  So maybe even PennEast is backtracking on the whole 4 shipper thing….

Last week PennEast filed a series of Answers on the FERC docket to issues posted by the public.  This was during the initial comment period on the docket on their “abbreviated amended application” that defines this new Phase 1/Phase 2 approach that would build only the PA portion of the route in Phase 1, and would maybe/maybe not deliver complete Phase 2 in NJ at some undefined later date.

There were *alot* of problems with those answers.  This weekend I filed a response to that detailed all of the many, many issues with PennEast’s filings.  The link to the full response is below:

MichaelSpille-CP20-47-MotionToAnswerAndAnswer.PDF

Here is an outline of the issues that we question (the full document has far more details):

1) The Answer Mischaracterizes the Project.

PennEast actually manages to mis-describe their own project.

2) FERC has no regulatory framework that would allow a pipeline company to keep a significant portion of a Certificated project in limbo.

PennEast has literally told FERC to put a hold on Phase 2 in NJ.  That it may or may not build it.  And that the amended application only deals with Phase 1.  There is no framework within FERC or NEPA that allows a company to file for something they may or may not do.

3) PennEast’s Citations in its answer are vague and faulty.

PennEast fails to even properly cite responses in its Answer.

4) PennEast mis-characterizes the Certificate Policy Statement’s stance on affiliate agreements.

PennEast badly mischaracterizes how the Certificate Policy Statement is meant to work.

5) PennEast erroneously indicates that 52% subscription rate amounts to “most” of the capacity being fulfilled.

PennEast fails basic English language when it tries to convince FERC that half is equal to “most” of the capacity.

6) PennEast lacks any substantial proof of demand for Phase 1.

In fact, the purpose and need story for Phase 1 is bleak indeed.  PennEast cannot find any third parties at all to help them out here.

7) Phase 1 was not “designed”, it is an attempt by PennEast to hide a new, smaller project behind its existing Certificate and avoid appropriate levels of scrutiny and review.

This Phase 1, Phase 2 business is a clear ploy by PennEast to try to sneak in Phase 1 under the original Certificate Order with almost no analysis.  This ain’t “design”.

8) PennEast has a confusing and contradictory narrative around Phase 1 precedent agreements.

PennEast is stating that the new Phase 1 subscriptions have nothing to do with the original subscriptions on the original docket.  But this makes no sense, if these are all new subscriptions then the pipe is sized all wrong.

9) PennEast is playing games with precedent agreements that should give FERC serious pause as to the true public necessity of either Phase 1 or Phase 2.

PennEast really, really does not want FERC (or anyone else) to know the real deal behind these new precedent agreements.  In fact they almost scream in their Answer that FERC cannot and should not look behind any of them to see why these deals were made in the first place.  This should be a GIANT red flag to FERC.

10) PennEast is incorrect about not overbuilding in Phase 1 and needs to do alternatives analysis around a smaller pipe and alternative compressor setups that could reduce costs.

PennEast claims nothing is overbuilt, it’s all “designed”.  This is bullshit.  By PennEast’s own admissions they need to do detailed alternatives analysis on the size of the pipe and the full compressor design for each phase.

11) PennEast’s citations of much older natural gas pipelines being allowed to bifurcate by FERC in limited situations are not relevant to this proceeding.

PennEast’s citations in their Answer on ancient pipelines that have been allowed to split into phases by FERC are wrong and misleading.  Those cited pipelines did not change the purpose and need of their projects at all, and critically the owners pledged to build all the phases and defined them completely.  PennEast by way of comparison waves its hands hopping it will get to Phase 2.  Some day.  Maybe.

12) PennEast contradicts itself on the feasibility of Phase 2.

PennEast simultaneously says they will build Phase 2.  Except maybe they won’t.  They can’t have it both ways.

13) PennEast fails to acknowledge the level of eminent domain required by Phase 1 and Phase 2 of these projects.  

Nowhere does PennEast acknowledge the massive level of eminent domain they are implementing in each phase.  FERC MUST force PennEast to disclose full eminent domain takings so FERC can include this in its purpose and need weighing.

14) PennEast has left many comments unanswered

Finally, PennEast has left dozens and dozens of questions completely unanswered.  This is a travesty, and FERC must see through PennEast’s ruse and deny this ridiculous “amendment”.

Today, a group of 12 conservation groups and grass roots community organizations posted a letter to the Delaware River Basin Commission.  In the letter, we thanked the DRBC for indicating that they would review reservoir and recreational area impacts from the recently proposed 2-phase PennEast project on FERC docket CP20-47-000, but indicated that that wasn’t enough.

According to the DRBC’s Rules of Practice and Procedure, “natural gas transmission lines and appurtenances will be deemed not to have a substantial effect on the water resources of the Basin unless such lines would involve significant disturbance of ground cover affecting water resources“.

Link to our the letter:

Letter to DRBC

Link to Appendix A:

Appendix A – Visual Catalog of Impacts