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After three years the PennEast pipeline gets FERC approval

Shale Drilling (Wikimedia Commons/Plazak).
Shale Drilling (Wikimedia Commons/Plazak).

The Federal Energy Regulatory Committee assented to the project, concluding that the public benefits outweighed the environmental hazards. Environmental activists and commissioners have called for an upcoming review of the approval process to assign more weight to communities and landowners.

FERC’s 19 January order approving the highly contested LNG pipeline denied requests for an evidentiary hearing, but imposed environmental conditions on the pipeline’s construction. In the order, FERC concluded: “the benefits that the PennEast Project will provide to the market outweigh any adverse effects on existing shippers, other pipelines and their captive customers, and on landowners and surrounding communities.” The 116 mile system will connect east coast municipalities to the Marcellus Shale formation in the west using a 36 inch pipeline.

In a statement, PennEast’s board of managers chair Anthony Cox called the order “a major victory for New Jersey and Pennsylvania families and businesses”, adding: “They will reap the benefits of accessing one of the most affordable and abundant supplies of natural gas in all of North America.” Earlier in 2018, the company cited high energy costs for New Jersey consumers during ‘extreme’ cold weather as rationale for increased capacity.

Speaking to local press, a PennEast spokesperson said that the company expects to begin construction this year, with service starting in 2019.

One of the criteria for project approval is market demand, which takes the form of supply contracts. Of the contracts PennEast has received guaranteeing pipeline use, 75% of them are with PennEast affiliates (so far, the subscribed supply makes up 90% of the pipeline’s capacity). Commissioner Richard Glick, who dissented the order, highlighted this fact and called for the commission to weight this evidence appropriately: “In today’s order, the Commission relies exclusively on the existence of precedent agreements with shippers to conclude that the PennEast Project is needed… the existence of precedent agreements that are in significant part between the pipeline developer and its affiliates is insufficient to carry the developer’s burden to show that the pipeline is needed.” The Sierra Club environmental group applauded the commissioner’s statement, calling the new pipeline unnecessary and concluding that “fracked gas pipelines have no place in our communities.”

During the approval process PennEast has struggled to carry out necessary assessments as many landowners have denied them access to land on the proposed route. This order allows the company to exercise eminent domain to force access to the land. Commissioner Neil Chatterjee said in a statement that he had considered landowners’ rights and encouraged them and PennEast to cooperate with the commission to minimise impacts on landowners.

In the same statement cited above, Cox from PennEast said: “In the coming days, we will work to finalise fair and positive compensation agreements with landowners,” added Cox. “In the weeks ahead, survey crews will collect remaining field data in support of our permit applications to ensure minimal environmental and community impact.

In December 2017, FERC Chairman Kevin J. McIntyre announced the intention to review the LNG pipeline approval process. In a statement affirming her support for the order, Commissioner Cheryl A. LaFleur said that she supported McIntyre’s decision: “I believe this review should include both our needs determination and our environmental review of proposed projects. Today’s order highlights the issue of how pipeline developers engage with landowners, which I believe should also be explored in the upcoming generic proceeding.” She said that until the review was conducted, she would continue to assess pipeline applications on a case-by-case basis.

FERC has been accused of being a ‘rubber stamp’ for energy companies, a view that was compounded after a report commissioned by the Natural Resources Defence Council found that the commission had approved twice as much capacity as was consumed in 2016.

By Luke Acton

Shale Drilling (Wikimedia Commons/Plazak).