Fossil-fuel projects may face greater scrutiny after PennEast scraps pipeline

Murphy administration, seeking more clean energy, will look harder at projects, analysts say
Credit: (AP Photo/Matt Rourke)
Jacqueline Evans, whose property in Hunterdon County is adjacent to the proposed pathway for the PennEast Pipeline, stands outside her home in Delaware Township, Monday, Sept. 27, 2021. The group pushing to get the pipeline built announced Monday it’s pulling the plug on the project.

Fossil-fuel projects may now have a tougher time being approved in New Jersey after the PennEast Pipeline Co. formally ended its long campaign to build a natural-gas pipeline from northeast Pennsylvania to Mercer County, saying it has not received New Jersey state permits, and so will cease “all further development.”

The company’s statement early Monday was greeted with jubilation by environmentalists and landowners who have fought the project since it was announced in 2014. The announcement is being viewed as a sign that regulators will now take a harder look at pipelines and other fossil-fuel proposals amid rising public demand for urgent action to curb climate change.

After the remnants of Hurricane Ida unleashed historic flooding and killed more than two dozen people in New Jersey in early September, analysts said Gov. Phil Murphy’s administration will be increasingly reluctant to approve any fossil-fuel project that would be perceived as contributing to bigger storms, heavier rainfall or higher temperatures.

“There is greater opposition to these projects than at any time in the past, and that’s tied to climate change, and the real-world impacts that we’re all painfully and frequently experiencing in our lives,”  said Tom Gilbert, campaign director for the New Jersey Conservation Foundation, and a longtime foe of PennEast. “That makes any proposal for new expanded fossil-fuel infrastructure, an increasingly questionable, illogical proposition when we know that we need to be moving rapidly away from fossil fuels.”

PennEast ends its initiative

PennEast’s statement followed its announcement last week that it no longer planned to build the $1 billion pipeline on New Jersey state lands despite a June ruling by the U.S. Supreme Court that it was entitled to do so.  While the first announcement suggested that PennEast might revive the pipeline in the future, the latest statement left no doubt that the project has ended.

Murphy, whose administration has long opposed PennEast, issued a statement welcoming its demise, and saying he’s “committed to protecting our state’s natural resources and building a clean-energy future that works for all New Jerseyans.”

His office did not respond when asked whether that meant the state will subject future fossil-fuel projects to closer scrutiny, but a leading business group predicted that was the likely outcome of increasing climate concerns.

“There is an atmosphere, and an environment, in the state and in the nation where people are putting roadblocks into natural gas projects, and that, in and of itself, makes it more challenging and more costly and less predictable,” said Ray Cantor, vice president of government affairs at the New Jersey Business & Industry Association. “That could very well have an impact on future projects.”

While it’s clear New Jersey needs to decarbonize its economy, it shouldn’t abandon natural gas without knowing where renewable alternatives will come from, Cantor said.

‘Realistic replacements’?

“We can’t just say we’re going to eliminate natural gas and natural-gas infrastructure without having realistic replacements,” he said. Offshore wind, which is being aggressively promoted by the Murphy administration, is promising but is not as reliable as natural gas, he argued.

“We need reliable, affordable baseline power and it can’t just come from intermittent energy sources,” Cantor said.

The most hotly contested of the state’s pending fossil-fuel projects is a proposed shipping terminal on the Delaware River at Gibbstown in Gloucester County that would export liquefied natural gas transported by truck or train from northern Pennsylvania. The project, which would be the first of its kind in New Jersey, was approved by the Delaware River Basin Commission in December but still needs permits from the DEP.

It’s unclear whether Murphy supports the Gibbstown plan, since he voted for it in his role as a DRBC commissioner but later said  he would try to “prevent” it being built. His office did not respond on Monday to a request for clarification.

Environmentalists fiercely oppose the LNG project, saying it would increase demand for fracked natural gas, risk public safety by transporting the highly explosive fuel through densely populated areas and subject the people of Gibbstown to a round-the-clock procession of trucks or trains.

But the project’s outlook may have brightened with a recent sharp rise in world natural-gas prices to five or six times the level at which U.S. gas is traded, increasing a differential that underlies the economics of the Gibbstown terminal. In the United States, prices have risen, albeit from a much lower base, to around $5 per million British thermal units, their highest in seven years, driven by rising demand and shrinking supply from some overseas producers.

Other projects in the pipeline

Pending projects also include the Northeast Supply Enhancement Project, which would pump more natural gas to some areas of New York City by building a new pipeline below Raritan Bay, constructing new pipeline loops in Somerset and Middlesex counties and adding a compressor station in Franklin Township.

In May 2020, the DEP denied permits for the entire project, saying there was no demonstrated public need and that New York State had already issued its own denial. Despite that, the project’s proposer, Williams Transco, has said it still hopes to build it.

Williams also plans to build new or expanded compressor stations in Gloucester and Somerset counties as part of its Regional Energy Access project which would use existing pipelines to limit the environmental impact of adding capacity. Those projects, too, await DEP approvals.

At the federal level, legislation sponsored by New Jersey Congressman Tom Malinowski (D-7) would stop pipeline companies seeking to demonstrate demand for their product by agreeing to sell it to their partners and investors — as PennEast would have done. The company is party owned by NJR Pipeline Co., a unit of New Jersey Resources, South Jersey Industries and UGI Energy Services.

“It should not be this easy for corporations to get a guaranteed 14% profit for building a natural-gas pipeline, just by promising to in effect purchase the gas from themselves,” Malinowski said during a Zoom call for activists and landowners to celebrate the PennEast decision. “It creates an unnatural incentive for building unnecessary projects.”

Democrat at helm

He said he would continue to seek the support of the Biden administration for his bill. He also predicted that the Federal Energy Regulatory Commission, which issued its own approval for PennEast, will take a “more balanced” approach toward approving pipeline projects now that its commission is headed by a Democrat, Richard Glick.

The agency has long been attacked by environmentalists as a “rubber stamp” for the pipeline industry, approving virtually every project that comes before it.

Doug O’Malley, director of Environment New Jersey, said the reasons stated by PennEast for its withdrawal indicate that the Murphy administration plans to rigorously enforce the Clean Water Act. The DEP twice denied permits for the project, most recently on the grounds that PennEast didn’t have a legal right to 42 parcels of state lands where the pipeline would be built, and previously because the company didn’t submit enough information.

“This provides a warning for all other pipeline projects that the DEP is going to be a leader on not allowing pipeline companies to roll over key portions of the Clean Water Act,” O’Malley said during the Zoom call, held by the environmental group Delaware Riverkeeper Network.

Jacqueline Evans, whose land in Delaware Township, Hunterdon County, would have been built on by the pipeline as a result of PennEast’s eminent domain rights, tearfully welcomed the end of the project.

“My children and I, for the past seven years, have fought this unneeded, unwanted pipeline, and we are just overcome with joy and gratitude that this fight is over,” she said. “So many people told us that we didn’t have a chance, and we never believed that, and we just kept fighting.”

We’re in this together
For a better-informed future. Support our nonprofit newsroom.
Donate to NJ Spotlight