With multiple planned pipeline projects moving through protracted regulatory processes, New Jersey Resources Corp. has taken on another initiative, this time focused on converting existing infrastructure rather than building new.
The company signed a $166 million agreement to buy an 84-mile, 18-inch-diameter oil pipeline connecting to the Philadelphia area and plans to convert a 50-mile southern section of the line to natural gas, company officials said during a Nov. 21 earnings conference call.
"Today, the Philadelphia market is constrained, with limited access to affordable energy sources," New Jersey Resources' Executive Vice President and COO Stephen Westhoven said during the call.
Executives at the utility company said the project, dubbed the Adelphia Gateway, will be a strategic fit, as it makes use of existing rights of way, with no anticipated impacts on wetlands or farmland and minimal environmental impacts overall. The company sees potential demand from utility customers, power generators and industrial and commercial consumers.
"We spent the last decade building a portfolio of energy infrastructure assets to help meet current and future energy demand, and we've used our knowledge of energy markets to offer services that help both large and small customers manage their energy needs," President, Chairman and CEO Laurence Downes said during the call. "Our primary strategy is to invest in natural gas and clean energy, the two fastest-growing areas of our nation's energy supply."
Looking ahead, New Jersey Resources executives said they do not have their sights set on any other specific asset purchases but consider acquisitions a simpler route to expansion than greenfield projects.
"We don't have any [pipe purchases] at this point to discuss, but certainly repurposing some certain assets is an easier way to develop gas infrastructure," Downes said.
Another project in which the company is involved, PennEast Pipeline Co. LLC, recently received a key permit from a Pennsylvania township to site the pipeline's gas compressor station, a notable step forward for the proposed 1.1-Bcf/d pipeline between Pennsylvania and New Jersey. PennEast is still waiting on final approval from the Federal Energy Regulatory Commission, having already received a favorable final environmental impact statement from the agency after nearly three years of regulatory and environmental review.
Gas utility subsidiary New Jersey Natural Gas Co.'s planned Southern Reliability Link also recently got a critical approval, albeit for the second time. The pipeline was previously allowed to move forward, but a court sent the issue back to the Pinelands Commission, which oversees the 1.1 million-acre Pinelands National Reserve that the pipe is slated to cross. About 12 miles of the 30-mile, 30-inch-diameter transmission line is expected to run through the Pinelands National Reserve.
New Jersey Resources on Nov. 21 reported a net financial loss of $12.5 million, or 14 cents per share, in the fiscal fourth quarter, compared with a loss of $2.1 million, or 2 cents per share, a year earlier. For the full year, New Jersey Resources reported net financial earnings of $149.4 million, or $1.73 per share, compared with $138.1 million, or $1.61 per share, the previous fiscal year.