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Is New Jersey Becoming the Pipeline Capital of the Northeast?

Cheap natural gas from Pennsylvania isn’t just spurring the market, it’s driving plans for building pipelines throughout the Garden State

pipeline
Credit: stateimpact.npr.org

This is the second story in a series produced in conjunction with WHYY public radio of Philadelphia. It explores the way the availability of cheap natural gas in Pennsylvania is playing out in New Jersey in the proliferation of pipeline proposals and projects -- some of which would cross environmentally sensitive land and water. We’ll be reviewing this issue all week, culminating with a roundtable on Friday morning. (Read the first article in this series.)

New Jersey is awash in plans to build new natural gas pipelines, many of them going through areas set aside with taxpayer funds to preserve open space or farmland.

At least a dozen proposals have been either put on the table or approved -- most of which are aimed at taking advantage of cheap natural gas supplies discovered in neighboring Pennsylvania’s Marcellus Shale formations. Two of the pipelines bring crude oil to refineries in the state.

Inexpensive natural gas from Pennsylvania has been a boon to both customers who heat their homes with the fuel and to businesses that rely on it as a basic building block of their manufacturing processes. It has lowered bills since 2009 significantly for residents -- up to 44 percent for customers of Public Service Electric & Gas, the state’s largest utility.

But critics say the pipelines, which cross environmentally sensitive areas and waterways such as the Delaware River, could pose risks to the public and drinking water. The latter concern mostly involves the controversial practice of extracting natural gas from the shale formations with a process called hydraulic fracturing or “fracking.”

The technology involves pumping huge volumes of water and a smaller amount of chemicals into the formation to capture the natural gas. Environmentalists say it can lead to contamination of groundwater and the nearby Delaware River, the source of drinking water for 15 million people in the region.

“The environmental impacts are very wide-ranging,’’ said Maya von Rossum, Delaware Riverkeeper, who has been one of the biggest critics of fracking and expansion of the pipelines. Among them are leaks from the pipeline of methane, a potent gas that contributes to global climate change, she said.

Natural gas pipelines have been proposed or are now being built through the New Jersey Highlands and Pinelands, the latter project has drawn opposition from four former Governors -- two Democrats and two Republicans.

Ten pipelines currently crisscross New Jersey, according to information from the US Energy Information Administration. Half of them carry natural gas, while the others carry petroleum. The natural gas lines are Tennessee Gas, Columbia Gas Transmission, Transcontinental Gas, Texas Eastern Transmission and Algonquin Gas. The petroleum pipelines are Buckeye Partners, Colonia Pipeline and three Sunoco lines -- Twin Oaks/Newark, Harbor and Philadelphia/Reading. Map created by Colleen O'Dea

Like others critical of pipeline expansion, von Rossum argued that there is little planning of where and how necessary are the plethora of pipeline proposals, which take no account of the boom-and-bust nature of the volatile energy sector.

“The question I have is what happens in 20 years when there is a bust,’’ said Jeff Tittel, director of the New Jersey Sierra Club, referring to increases in natural gas prices. Will the pipelines still be necessary should natural gas prices rise dramatically, Tittel wondered.

The expansion of the pipelines, however, aligns with the New Energy Master plan adopted by the Christie administration, which sees providing cheaper natural gas to consumers and businesses as a way to lower the state’s energy costs, which are among the highest in the nation.

To some, the growth in natural gas has been a huge benefit. “It is a literally a game-changer, said Hal Bozarth, executive director of the Chemical Industry Council, many of whose members rely on natural gas for their manufacturing operation. “The drop has been precipitous.’’

Indeed, that drop has been so precipitous that manufacturers who once fled the state are exploring the possibility of relocating to New Jersey. Not only will cheaper natural gas provide benefits to businesses and consumers, but also the proposed expansion of pipelines will provide jobs in a state still lagging behind its neighbors in revitalizing its economy.

For the PennEast project, a 114-mile pipeline from Luzerne County, PA to Pennington, the company sponsored a study that suggested it would create up to 12,000 jobs.

To Ralph Izzo, president, chief executive officer, and chairman of Public Service Enterprise Group, the ability to tap into the new natural gas reserves is a boon to consumers.

“To me, natural gas should be only second to energy efficiency,’’ Izzo said, referring to efforts to cut costs by reducing energy consumption among consumers. “We’re not in a place that has benefitted from proximity (to fuel supplies) in the past.’’

One factor leading to the increase in pipeline proposals is that New Jersey already has five major interstate natural gas pipelines, most of which pump the fuel from the Gulf of Mexico to the metropolitan area. The state has 1,520 miles of natural gas pipelines, according to the Energy Information Administration, an arm of the U.S. Department of Energy. Some proposals also call for expanding existing pipelines, since these large interstate lines are a good fit to connect to the shale drills.

“New Jersey is in a very good spot to take advantage of this gas,’’ said Stephen Leahy, a policy and analysis advisor for the Northeast Gas Association, a trade organization. He disputed arguments from those who say that these pipelines are speculative in nature, saying that they would never get the necessary funding to build them without locked-in customers.

Proponents of the pipelines also argue that they would not be built unless many consumers and businesses wanted the cheaper energy they provide to heat their homes and run their operations.

“PennEast is fully subscribed at this point,’’ said Andrew Hendrie, president of the New Jersey Utilities Association. “The demand is there,’’ he said.

The PennEast proposal is one of the state’s most controversial projects. The $1 billion undertaking is being sponsored by all four gas utilities in New Jersey. Foes of the project oppose it because it will skirt through the Sourland Mountains and through 41 percent of land set aside for open space and farmland preservation.

And while PennEast has created huge contention among landowners, the biggest controversy to date has been over a project to build a 22-mile pipeline through parts of the Pinelands. This pipeline will enable South Jersey gas to rebuild and repower the obsolete, coal-fired B.L. England plant in northern Cape May County. Proponents say it is essential to ensure reliable electric power in South Jersey, particularly with a proposed shutdown of the Oyster Creek nuclear plant in Ocean County.

This project must be approved by the New Jersey Pinelands Commission, which rejected it on its first application because of its possible negative impact on the watershed. The initiative is opposed by most conservationists and four former governors. South Jersey Gas earlier this month submitted a new application to build the pipeline.

Yet the economic and reliability issues has the project winning supporters in both political parties. It’s also been the cause of back-room deals over replacements to the commission, which must be approved by the state Senate. In March, Gov. Chris Christie’s choice for the commission, Robert Barr, a pipeline advocate, won confirmation with support from Democratic Senate President Steve Sweeney.

Sweeney has said he supports the pipeline out of concern for South Jersey residents and the need for reliable electricity in the area. He dismisses arguments about safety and ecological preservation, noting there are numerous pipelines already routed through state.

The controversy is really about opposition to fracking in general, Sweeney said. Some environmentalists believe that if they can stop natural gas from being delivered, they can stop or curtail fracking, he said. But New Jersey has no shale, no fracking, and thus no real control over that issue.

There are plenty of pipelines already crisscrossing the state, environmentalists concede. “We’ve gone from a crossroads of the Revolution to a crossroads of pipelines,’’ Tittel said.

He argued that some of the new pipelines would not benefit New Jersey consumers, but ship the natural gas to other areas in the Northeast, or possibly for export overseas through proposed liquefied natural gas terminals off the Jersey coast. Thus, Tittel and others worry that the cost-benefit of the pipelines will be short lived, because once the gas can be exported, the cost will rise as international consumers compete to buy the fuel.

The pipeline debate is not limited to the impact they can have on rural areas and the environment. There are also safety concerns and Not In My Backyard (NIMBY) complaints. Spectra Energy, a Houston-based company, has won approval from the federal government. to build a 16-mile pipeline from Staten Island to Jersey City and then into New York. It spurred vocal opposition from those communities who fear it poses a danger if the pipeline explodes.

Jim Benton, director of the New Jersey Petroleum, conceded there are arguments in favor and against the routing of these lines, but reiterates the issue of a demonstrated market demand here.

“That’s why it is all coming to New Jersey because energy costs are so high,’’ Benton said.

Pat Kornick, a spokeswoman for PennEast, said the pipelines are an attractive economic tool for state. “There is a growing need for natural gas, not only for the manufacturing sector,’’ she said.

Paul Patterson, an energy analyst with Glenrock Associates based in New York City, said the move to natural gas, compared to other sources of generating electricity, provides a good environmental profile.

“It makes sense,’’ Patterson said, adding the location of newfound deposits of the fuel have changed the economics of the energy sector. “In the end, you can expect more pipelines.’’

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