Because the PennEast pipeline is crossing inter-state borders (PA to NJ), it comes under federal guidelines instead of state. Part of those guidelines is that the pipeline company can invoke eminent domain through the government to seize lands for the pipeline route if the pipeline is approved, and if negotiations with owners fail.

Part of the requirements to invoke eminent domain is that PennEast must justify that this project is for the public good and will benefit the citizens of the United States. It must be for the general public good and not just their own good.

PennEast’s justification is that this pipeline is being created for the good of the people of PA and NJ. It says specifically in their application to the Federal Energy Regulator Commission (FERC) that this pipeline is being built to benefit businesses and consumers in PA and NJ.

If the FERC finds that this pipeline is not in the public good, then it is effectively dead and will not be built. To do that the FERC has to apply PennEast’s statements, and see if they are:

1) true.
2) Actually benefit the United States.

Both tests are necessary for eminent domain. It’s not enough to just state that something is beneficial. You have to prove it’s beneficial.

And this is where PennEast’s arguments break down. The problem is that while PennEast may arguably benefit the United States as a whole, their actual arguments to the FERC fail the first test e.g. are their claims true? As it turns out, no, they are not.

To put it most succinctly, PennEast is lying in their justification for eminent domain.

Let’s take their justification and numbers and break it down against the actual natural gas markets. We have a number of sources that can aide us here, experts in natural gas including the U.S. Government Energy Information Administration (EIA.gov) and financial analysts who specialize in the energy markets.

To start with, PennEast says that the pipeline will carry 1 billion cubic feet of natural gas per day, enough to heat “4.7 million homes”.

Let’s test PennEast’s assertions with some data. Here’s some facts taken from the U.S. Energy Information Administration (http://www.eia.gov/).

The entire state of NJ has approximately 2.6 million natural gas residential consumers. All of Pennsylvania also has about 2.6 million natural gas residential consumers. Combined that’s 5.2 million residential consumers.

Now let’s compare those numbers. PennEast’s pipeline will deliver enough gas for 4.7 million homes. But there are only 5.2 million homes on natural gas today. This pipeline in fact has enough capacity to supply 90% of existing residential consumption. If this is PennEast’s main justification then it fails miserably. We clearly don’t need an extra billion cubic feet of natural gas flowing into PA and NJ for houses. Unless we somehow double the number of natural gas customers, which seems doubtful (to put it mildly).

So the 4.7 million homes number is a bit of marketing fluff. Maybe we should just look at all natural gas consumption in both states. eia.gov has that data too. In total NJ averages 1.8 billion cubic feet consumption across all users, commercial and residential. PA averages just under 3.0 billion cubic feet a day in total consumption. So that’s a total of 4.8 billion cubic feet used by both states per day.

These numbers still don’t add up. The PennEast pipeline all by itself is vast over kill for this consumption. It’s over 20% of our total consumption in two very populous states. If that’s PennEast’s justification, then they fail again.

Look on eia.gov at the consumption graphs. NJ ’s consumption has been flat for decades. It simply doesn’t need any more natural gas coming into it. PA’s is increasing, but not nearly enough to justify this pipeline (and certainly not to justify it running into NJ!).

Their only reasonable justification seems to be price volatility. According to eia.gov, it’s true that there was some price volatility, and agrees with PennEast’s graphs in the filing. However – the data only shows about 10 days of extreme volatility in a 5 year span from 2009 to 2013. 10 days out of 1825 days is a farce. How can you justify the massive ecological, monetary, and human costs this pipeline will exact from us to smooth out volatility over 0.5% of days? You simply can’t.
In reality if you look at the markets it’s clear that PennEast wants to get this gas far away from its source in Marcellus. It wants to get it where gas is expensive, so they’ll maximize profits. With that aim NJ and PA are not the prime targets for this gas. It’s other markets north of us, south of us, west of us, and over seas.

Their FERC submission mentions some local NJ and PA companies, but fails to highlight the national players. One of them is Spectra Energy. Their recent presentation at a Credit Suisse conference highlights their plans for PennEast and other pipelines:

http://phx.corporate-ir.net/External.File? item=UGFyZW50SUQ9MjcxODA5fENoaWxkSUQ9LTF8VHlwZT0z&t=1

In their presentation they tout their ability to route gas “where the lights are” – all across the U.S. And PennEast is just one of many pipelines they plan on using to continue saturating an already over-satured natural gas market. In total Spectra is working with partners to get 13 new or expanded pipeline routes in place. The goal of this is not to get gas into NJ and PA and keep it there. The goal is make the gas as routable as electricity on the electric grid so that it can flow anywhere in the country.

Or, in the gas of natural gas, you can liquify it and ship it to other countries.

Another company buying gas from PennEast is Crestwood. They plan on building yet another pipeline to connect to PennEast to get it to broader markets:

http://www.businesswire.com/news/home/20141020006631/en/Crestwood- Midstream-Partners-Announces-Successful-Non-Binding-Open#.VO9ePELF2D0

As the article indicates this new MARC II pipeline is being built to connect PennEast to New England.

Again, this is not PA or NJ.

The realities are that natural gas supply to PA and NJ are plentiful, and there is no justification for this project no that basis. You could argue merits of a national pipeline system and LNG exports to countries like India and Japan – but PennEast has not done that.

Based on this analysis alone the PennEast pipeline should never be approved. It fails in its justification entirely and is an obvious corporate lie to try to mollify the public.