By William Opalka
Kinder Morgan said Wednesday it has suspended work on the Northeast Energy Direct pipeline, citing an uncertain regulatory climate and a lack of commitments from New England power generators to reserve capacity.
The $3.3 billion project, being developed by subsidiary Tennessee Gas Pipeline, was to deliver shale gas from Pennsylvania into New York, with a line also running through Massachusetts and New Hampshire. The Kinder Morgan board approved the project last summer and it sought federal approval late last year (CP16-21). (See Northeast Energy Direct Files for FERC Certificate.)
“The board’s initial approval was based on existing contractual commitments at the time by local gas distribution companies to purchase natural gas from the project, as well as expected commitments from additional LDCs, electric distribution companies and other market participants in New England,” the company said in a statement. “Unfortunately, despite working for more than two years and expending substantial shareholder resources, TGP did not receive the additional commitments it expected. As a result, there are currently neither sufficient volumes, nor a reasonable expectation of securing them, to proceed with the project as it is currently configured.”
The company conducted an open season last year to engage potential customers and received commitments for only 751,650 dekatherms per day of the pipeline’s 1.3 million dekatherms per day capacity.
A controversial aspect of the project, and that of another proposed pipeline, Access Northeast, is the proposal to have EDC ratepayers foot some of the project costs through their utility bills. (See Massachusetts Regulators Endorse Pipeline Contracts.) Massachusetts Attorney General Maura Healey has opposed the move, and similar proposals in other New England states have yet to be enacted.
“The New England states have not yet established regulatory procedures to facilitate binding EDC commitments, that the process in each state for establishing such procedures is open-ended and that the ultimate success of those processes is not assured,” Kinder Morgan added in its statement.
Project opponents were elated.
“It’s a rare thing to see a fossil fuel company admit there simply isn’t enough need for what they’re selling,” Conservation Law Foundation President Bradley Campbell said. “It is increasingly apparent that free market forces are rapidly driving us toward a clean energy future, and today’s decision by Kinder Morgan is a telling sign of things to come. Our environment, our economy and the health of our communities depend on continuing to see fossil fuels out the door.”