Three of the utility companies backing the PennEast Pipeline project announced plans to delay spending on the line, a move reflective of the difficulty the project has had in obtaining all required permits for construction.
The project has been unable to secure a wetlands permit from the New Jersey Department of Environmental Protection. But PennEast Pipeline Co. LLC will again apply for the permit after being denied in 2017. PennEast would be a 1.1-Bcf/d natural gas pipeline between the Marcellus Shale in Pennsylvania and New Jersey.
The New Jersey agency told PennEast in 2017 its application lacked information and denied the wetlands permit. The project faces legal challenges and stiff opposition from environmental groups.
PennEast had anticipated beginning construction in 2020. However, joint venture partner New Jersey Resources Corp. said most of its capital spending on the project will now occur in 2021 signaling delay.
The company now expects to spend $11.4 million in 2020 and $214.2 million in 2021 on the project, executives said during an Aug. 6 conference call. Last quarter, New Jersey Resources included $195 million in spending on PennEast in its 2020 capital plan, with $30 million allocated to the project in 2021.
The restart of the New Jersey permitting process and seasonal factors mean major construction on PennEast could have to wait until spring 2021, according to John Walsh, president and CEO of UGI Corp. one of New Jersey Resources' four partners on the project. Walsh said the companies would "definitely" finish construction by the end of 2021 if they got started that spring, assuming all permits and approvals were in place and they completed preconstruction activity during the winter.
Another utility company partner, South Jersey Industries Inc., also signaled its expectation that permit delays could push the 120-mile natural gas line's opening date into 2021. South Jersey Industries CEO Michael Renna told analysts on his company's Aug. 8 earnings conference call that while the company hoped that New Jersey regulators would follow precedent and approve a needed permit in 2020, he was prepared for further delays.
"It's important to remember that should PennEast face an in-service delay, the ultimate value and benefit of the project for [South Jersey Industries] would remain unchanged," Renna told analysts.
The Federal Energy Regulatory Commission approved PennEast in January 2018. The project consists of a compressor station and a 120-mile, 36-inch-diameter pipeline running between Luzerne County, Pa., and Mercer County, N.J. (FERC docket CP15-558)