New Jersey Resources Corp. said most of its capital spending on the PennEast Pipeline Co. LLC system will now occur in 2021, signaling that the project to transport natural gas from Marcellus Shale fields to eastern Pennsylvania and New Jersey will not come online until that year.
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 update marks the latest twist for the roughly 120-mile pipeline. In 2017, the New Jersey Department of Environmental Protection, or DEP, denied PennEast a critical wetlands permit. In the intervening period, the project has faced legal challenges and opposition from environmentalists.
With a string of court victories on the books and all necessary land surveys completed, PennEast is poised to resubmit its application to the New Jersey DEP.
"This is an important step for the PennEast project to receive its final permits and approvals," New Jersey Resources COO Steve Westhoven said during the call. "It is our expectation that the New Jersey DEP will conduct a full and thorough review of the project. Once PennEast has received all the necessary permits and approvals, we expect construction to begin."
However, 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.
The duration of the permitting process will be critical and ultimately determine when the partner companies can begin construction, Walsh said on an Aug. 6 conference call. If the project does not receive permits and approvals by the onset of next winter, it will push the start of most construction into the spring, he added.
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.
UGI had expected construction to begin at the end of 2019 and the line to go into service around the close of 2020.
New Jersey Resources also shifted spending on the Adelphia Gateway LLC project due to delays in securing a certificate of public convenience and necessity from the Federal Energy Regulatory Commission for the project. Westhoven said the company now expects the project to make a material contribution to earnings in fiscal year 2021.
New Jersey Resources on Aug. 6 reported a net financial loss of $17.5 million for its fiscal third quarter, more than doubling its $8.0 million loss in the year-ago period. Its EPS loss of 20 cents came in below the S&P Global Market Intelligence consensus normalized earnings estimate for a profit of 12 cents per share.
New Jersey Resources' stock price was down more than 4%, or about $2 per share, around $45.65 following the earnings report.
While the company reaffirmed its full-year financial earnings forecast of $1.95 per share to $2.05 per share, Westhoven said he expects profits to come in at the low end of the range due to underperformance in the energy services business.
"However, we believe our rate case, our new and existing infrastructure projects, new [Clean Energy Venture] projects, and the final approvals of our midstream projects will all support our long-term [net financial earnings] growth rate of 6% to 8%," said Westhoven, who will become CEO after New Jersey Resources CEO Laurence Downes steps down Sept. 30.