My FERC Submission on Dalton expansion and related issues

I’ve put together a FERC submission detailing Dalton expansion project in relation to PennEast, and other projects where PennEast will clearly be shipping gas out of the Eastern PA/NJ markets. Will update with the FERC link once it’s available.

https://drive.google.com/file/d/0B512ERL8q-oIR3hzQVZ5VHlKSDA/view?usp=sharing

Another piece of the puzzle slides into place

tl;dr – PennEast pipeline partner AGL Resources is working with Transco pipeline company to bring PennEast gas to Georgia.

Full post….

Many people pointed to the participation of Elizabethtown Gas in the PennEast pipeline project as proof that this pipeline was being built to benefit the people of New Jersey.  I mean, hey, this is a local natural gas company, clearly they’re going to use it to lower gas prices in the state.  Right?

Well, as it turns out things are not always what they seem. When PennEast does non-official presentations to the public or the press they play up the Elizabethtown Gas angle. However, if you look at their official filings you’ll note that Elizabethtown Gas is not mentioned. Instead, their parent company, AGL Resources, are the actual company of record that’s involved with PennEast.

But that’s just a technicality, right?

Well, no, as it turns out that makes a big difference. While Elizabethtown Gas is a local company, AGL Resources is not. According to their web site AGL resources is in fact “the largest natural gas-only distribution company in the United States”.

And their plans for PennEast look to be quite a bit bigger than providing gas to NJ.

Williams, the owner of the Transco pipeline network, announced that they are working in cooperation with AGL Resources to expand their pipeline capacity to get more gas flowing from Mercer County, NJ to the south east. Their press release is here.

The purpose of this project is to get Marcellus shale gas from Transco’s Mercer County interconnect down to Georgia. On its end Transco will be beefing up the compressor stations along the route to deliver more gas at higher pressures along existing pipelines. AGL is partnering with them to build another 111 mile pipeline to connect into this infrastructure.

The kicker of course is that the “Marcellus Gas” Transco and AGL are talking about will be coming from the PennEast pipeline. The Mercer County interconnect is where the PennEast pipeline terminates in Hopewell Township, NJ. The pipeline that was being built to “benefit consumers and businesses in PA and NJ” is yet again being proven to not benefit our states at all.

And what this also shows is the knock-on effects these pipelines will have. Pipelines will beget more pipelines. Companies will be motivated to upgrade existing infrastructure. More and more infrastructure will be built out to get this gas where they can make the most money out of it.

And once the Marcellus region is played out, all those pipes will be useless.

Photographing the pipeline route, Part 14: Into Pennsylvania!

Update: Roads incorrectly identified as in Durham were changed to the correct town of Williams Township.

In part 14 we finally make it into Pennsylvania! It’s been a long trip and we’re still only halfway there.

Once again my wife and I took our trusty hound and pitbull mix along for the ride. The foxhound, Fern, wasn’t too sure about all of this driving until we hit this sign just into PA:

Once she saw that she knew PA was cool and approved of our mission.

Shot 256 – Riegelsville PA – Delaware Road Looking South
We were fortunate for our first day in PA to have good weather, in particular clear skies and lots of sun. We started out on Delaware Road looking south.

Shot 257 – Riegelsville PA – Delaware Road Looking South Zoom
A zoomed in shot of the previous one focusing on the rolling hills.

Shot 258 – Riegelsville PA – Delaware Road More To Right
Panning the previous shot more to the right.

Shot 259 – Riegelsville PA – Delaware Road More To Right Zoomed
A zoomed in version of the previous shot.

Shot 260 – Riegelsville PA – Delaware Road To South Extreme Zoom
An extreme zoom in on the hills

Shot 261 – Riegelsville PA – Delaware Road To North Rock Wall
Turning around and looking to the north we see a quaint rock wall lining the road, with more farms beyond the wall. It is very hard to imagine heavy machinery cutting into country like this to bury a pipeline 8′ in the ground. I somehow doubt PennEast is going to repair this wall rock by rock.

Shot 262 – Riegelsville PA – Delaware Road To North West
Looking down the road a bit.

Shot 263 – Riegelsville, PA – Spring Hill Road to South
We moved onto Spring Hill Road after that. As you can see it’s just all farm country here.

Shot 264 – Riegelsville, PA – Spring Hill Road to South Stream
Zoomed into a stream to the south that the pipeline will cut across.

Shot 265 – Riegelsville, PA – Spring Hill Road Koplin Farm
Posted sign from Kopling Farm. Keep them varmints from PennEast out!

Shot 266 – Riegelsville, PA – Spring Hill Road to North
The view turning to the North. A slanted field along the length of the pipeline route, probably bad news during construction, debris will likely flow downhill over the fields if it rains heavily at all during construction time.

Shot 269 – CountyLine Road and Bougher Hill Road
Moving along to County Line road, I saw a “Stop the Pipeline!” sign had fallen over, likely from all the rapid cycles of snow/freeze/melt/repeat we’ve been going through in the past two months. I propped it back up and got a quick shot, the pipeline route is a couple of hundred feet down the road from this intersection.

Shot 269 – CountyLine Road to south
CountyLine road runs along a little ridge as you can see. The view south is simply awesome. The pipeline will be coming through the middle of this shot.

Shot 270 – CountyLine Road to south pan right
Same as above but panned to the right a bit.

Shot 271 – CountyLine Road Crossing Area
Looking down the road at the approximate crossing area.

Shot 272 – CountyLine Road to North
Looking more to the north on the road.

Shot 273 – CountyLine Road Southern Zoom
A zoomed in shot of the scenic view to the south.

Shot 275 – Durham PA, Durham Road and Bachman Lane
After that we did Durham Road, with yet another Stop PennEast Pipeline sign 🙂

Shot 276 – Durham PA, Durham Road Old Farm
An old farm along the route, not sure if it’s active or not, some of the buildings appeared to be in pretty bad shape.

Shot 277 – Durham PA, Stop PennEast sign
A closeup of yet another pipeline sign on Durham Road.

Shot 278 – Durham PA, Durham Road Signs
A cluster of signs at a farm on Durham Road.

Shot 279 – Durham PA, Durham Road Farm House
A shot of the farm house and all their anti-pipeline signs on Durham Road.

Shot 281 – Williams Twp PA, Raubsville Road to the North
A farm on Raubsville Road had both directions covered with their anti-pipeline signs. The open space was followed by a gentle up hill in the distance.

Shot 282 – Williams TwpPA, Raubsville Road to the South
Looking to the south from Raubsville Road. At the trees in the middle of the shot runs Fry’s Run, a creek the pipeline will be crossing.

Shot 283 – Durham PA, Raubsville Road to due South
Moving to a due-south shot on the road.

Shot 284 – Williams TwpPA, Raubsville Road to South East
Looking now to the South East.

Shot 285 – Williams TwpPA, Raubsville Road to due north
Looking due North now.

Shot 286 – Williams TwpPA, Raubsville Road to north west
Looking straight along the pipeline route to the north.

Shot 287 – Williams TwpPA, Hexenkopf Road Posted Sign
A posted sign over on Hexenkopf Road.

Shot 288 – Williams TwpPA, Hexenkopf Road to West
The pipeline kinks to a more east/west routing in this area. Here we’re looking from Hexenkopf Road to the West.

Shot 289 – Williams TwpPA, Hexenkopf Road to East
Looking to the east.

Shot 290 – Williams TwpPA, Hexenkopf Road to East
Looking east dead along the proposed pipeline route.

Shot 291 – Williams TwpPA, Hexenkopf Road anti pipeline sign
A house and anti-pipeline sign just to the north of the pipeline route.

West Amwell Township responds to PennEast’s boilerplate scoping replies

I’m immensely proud of the political leadership in my town of West Amwell. The elected and designated officials of our town have been fighting against PennEast from the beginning, and their focus and dedication on this issue has been relentless.

Our town’s pipeline committee has seen PennEast’s ridiculous boilerplate replies to the scoping comments, and has submitted a very detailed document of all of the things PennEast missed.

The committee’s response is available here, and is signed by Cathy Urbanksi, Chair of the West Amwell Pipeline Committee, and George Fisher, mayor.

Here’s a link to the FERC alternate site in case the main one above is down.

It mentions the National Heritage Priority Site on Goat Hill that PennEast missed.

The specific, unique reasons lands have been preserved in the Sourlands that PennEast did not address.

The details of our C1 water ways and drinking water situation that PennEast ignored.

Our township officials have had to educate PennEast on the realities of blasting in hard diabase bedrock. Earth to PennEast – shaped charges do not mitigate vibration in bedrock. Shaped charges in fact focus more of the blast into the diabase. Our concerns do not consider just debris from blasting (although this is important). Our concerns relate the fact that diabase is a highly efficient medium for conducting blast waves, and that those waves can collapse the fissures in the bedrock that we rely on for our wells.

On these and many more points our township committee has had to educate and chastise PennEast for it’s woefully inadequate response.

They close with this summary:

The scoping period was “to solicit comments on the scope of the environmental review for the Project from interested stakeholders.”

West Amwell Township spent considerable time and resources preparing the scoping comments and expressing our specific concerns. It appears that they were ignored or just not read by PennEast. It is not possible for PennEast to prepare a comprehensive Environmental Impact Statement when the scoping period comments were mostly disregarded.

Of the comments that PennEast did respond to, most did not address specific issues and concerns. They were boilerplate and stock responses. The “interested stakeholders” were treated very unfairly and not in accordance with the regulations:

“Pursuant to Section 157.21(f)(9) of the Commission’s regulations, 18 C.F.R. § 157.21(f)(9) (2014), PennEast submits, in Appendix A hereto, its response to comments posted to the above-referenced docket.”

Lest I offend the other towns along the pipeline route by over doing it with West Amwell, let me hurry to say that opposition against the pipeline has been unanimous in NJ, and has been swelling in PA for some months, and the level of detail and commitment in those towns has been simply outstanding overall. I keep thinking back to the scoping meeting in Hampton, NJ where the mayor of Kingwood Township stood up for his comments and basically raked PennEast over the coals, demanding the company guarantee drinking water for every single resident in his town for a decade or more after construction.

If you’re in one of those towns that hasn’t passed a resolution in opposition of PennEast, send them links to comments like these. Show them what a united front of townships up and down the route can do.

Analyzing the shale production market

I’ve done a number of posts analyzing the natural gas market and looking at where all this production could possibly go. To that end I’ve been using the production numbers to show how it’s driving a push to get gas to new markets, such as through LNG exports.

Eric from Cranford, NJ is looking at it from the other end. He’s analyzed the market around Shale gas production and has shown that the rigs are way over-producing and that the market is in a free fall. Debt in in the industry is rampant and drillers will be drilling at a loss for now and into the foreseeable future. He reckons the shale drillers have made themselves a bubble that’s now on the verge of total collapse.

EIS Scoping Comment 20150227-5507 submitted on February 27, 2015 by Eric Weisgerber called for an examination of the general investment and financial environment for shale gas fracking companies to judge their long-term viability, a determination of the likelihood of the current environment being a “bubble” and thus full of malinvestment, and an examination of the necessity of the shale gas industry to never stop drilling in order to keep up production even in a money-losing environment. Mr. Weisgerber also called for a vigorous and skeptical examination of the financial justifications for the pipeline as stated by PennEast.

As followup to the above scoping comment I am submitting the article “Natural Gas Prices To Crash Unless Rig Count Falls Fast” published on March 22, 2015 on oilprice.com:

http://oilprice.com/Energy/Natural-Gas/Natural-Gas-Prices-To-Crash-Unless-Rig-Count-Falls-Fast.html

He includes some quotes from the article in his submission (note: these bullets are out of quotes just for formatting purposes – all of these bullets are Eric’s):

  • rig counts for shale gas drilling are too high
  • an orgy of over-production is taking place in the Marcellus Shale
  • shale gas plays are not commercial at less than about $6/mmBtu except in small parts of the Marcellus core areas where $4 prices break even. Natural gas prices have averaged less than $3/mmBtu for the first quarter of 2015 and are currently at their lowest levels in more than 2 years.
  • Bank of America fears sub-$2 gas prices now that winter heating worries are over. http://www.bloomberg.com/news/articles/2015-03-18/surprising-natural-gas-output-has-bofabracing-for-sub-2-prices
  • The only criterion that seems to matter to investors these days is production guidance. If production drops, stock value will fall even farther than it has already. This will trigger loan covenants if asset values fall below thresholds set out in the loan agreements. When that happens, the loans will be called unless the companies can come up with more cash. This might result in bankruptcy. So, the drilling must continue as long as there is capital.
  • The table shows financial data through year-end 2014. What it reveals is not pretty. 2014 negative cash flow reached $15.5 billion, an increase of $7.2 billion over 2013. [Table of 22 top operators in the shale gas plays, see below]
  • On average, shale-gas companies earned only 68 cents for every dollar that they spent in 2014. Total debt increased almost $10 billion to $93.5 billion and average debt exceeded stated equity by 18% excluding companies with negative equity including the now-bankrupt Quicksilver Resources.
  • Shale gas plays are commercial failures. The misuse of capital to continue to increase production while destroying price and shareholder equity has gone on for too long. Investors should demand that shale gas companies cut rig counts at least as much as tight oil companies have.

He concludes:

The article quoted above provides evidence in support of the importance and necessity for an investigation into the true need for the PennEast pipeline. It shows that the current environment for shale gas plays is highly negative and that the future viability of those plays is gravely in doubt. It makes no obvious sense to build the PennEast pipeline, therefore the reasons for building it must be non obvious, unstated, and quite possibly highly speculative at the best, and fraudulent at the worst.

Eric’s analysis dovetails nicely with my own. Both sides show that there’s a glut of natural gas in the market place, and that producers are desperate to get the gas somewhere to prop up their drilling operations. They are in even more dire straights then you could imagine because they have covenants in their drilling agreements with the land owners that they must continually produce from the land. If they stop they lose their rights to drill. So they’re caught between losing a big percentage of their investment – or losing the entire damn thing.

This is where the LNG exports come in. They’re the hail mary pass the industry is making to save all that shale investment. If they can open up new markets their investments will be saved, and as a bonus gas prices will begin to rise again.

It’s been said here and elsewhere countless times, but bears repeating: This gas is not for NJ and PA. PennEast is lying to you and the government in their FERC application.

Eric’s full submission is available below:

Eric’s submission – FERC Generated PDF

Eric’s submission – FERC Generated PDF Alternate Site