Did Williams just float an alternative/competitive pipeline to PennEast? Sure looks that way to us. On Friday Williams announced a binding open season to add 34 miles of looping pipeline next to existing Transco pipeline along with beefing up some of it’s compressor stations, in a bid to increase flows along the Transco from Luzerne County, PA (where PennEast would originate) to Mercer County, NJ (where PennEast would terminate).
Williams calls the Transco expansion project Regional Energy Access. The aim is to deliver 1 billion cubic feet per day (Bcf/d) of Marcellus gas from northeast PA to local distribution companies (LDCs, the local gas utility) and to gas-fired power plants in the region. How is this not a direct competitor to PennEast, which also aims to flow 1 Bcf/d for the same purposes in the same region?
Williams’ announcement from Friday:
Williams (NYSE: WMB) today announced that it is initiating a binding open season from March 8 to April 8, 2019, for Regional Energy Access, an incremental expansion of the Transco interstate pipeline to provide firm natural gas transportation capacity to markets in the northeastern United States as early as November 2022.
Regional Energy Access is being designed to provide up to one million dekatherms per day of firm transportation capacity to the Transco pipeline’s northeast market, including existing Pennsylvania and New Jersey local distribution companies and power generators. Demand for natural gas in the Northeast continues to rise as businesses rely on natural gas to help meet clean air goals.
“Regional Energy Access is a cost-effective expansion along an existing Transco corridor that will ultimately deliver more than a billion cubic feet of new natural gas supply with minimal environmental footprint,” said Scott Hallam, senior vice president of Williams’ Atlantic-Gulf Operating Area. “The project will expand existing infrastructure to meet the region’s growing demand for natural gas while helping reduce air emissions.”
Regional Energy Access minimizes environmental impacts by maximizing the use of existing Transco pipeline infrastructure and rights of way. The preliminary design of the project consists of additional compression and selected pipeline loop segments along the existing Transco pipeline corridor. Although the final capacity, scope and cost of the project will be determined by the results of the open season, it is anticipated that the project will include approximately 34 miles of pipeline looping and additional compression along existing Transco facilities.
The project will connect robust Marcellus supply from receipt points along the Transco pipeline’s Leidy Line in Luzerne County, Pennsylvania, to delivery points in Pennsylvania and New Jersey, including the Station 210 Zone 6 Pool in Mercer County, New Jersey, the Lower Mud Run Road interconnect in Northampton County, Pennsylvania, and along Transco’s mainline to Station 200, Marcus Hook lateral and Trenton Woodbury lateral.
The proposed project will be subject to approval by the Federal Energy Regulatory Commission and other agencies. For customer inquiries, contact Kelsie Van Hoose at (713) 215-2396. (1)
The advantage for Transco is that they already have pipeline in the ground, and own the right-of-way for that pipeline to install additional “looping” pipeline next to it, which they plan to do along 34 miles of the existing Transco. And they own existing compressor stations that they can beef up with new equipment.
PennEast, on the other hand, has to install brand new pipeline (greenfield) in the ground for 116 miles and build a brand new compressor station. It’s a much harder row to hoe. Antis try to bury any pipeline project with frivolous lawsuits and regulatory filings–but they especially hate brand new pipeline projects like PennEast.
Is the Williams proposal a threat to the $1 billion, PennEast project, which hasn’t started construction yet? We don’t think so–because PennEast is mostly permissioned by the Federal Energy Regulatory Commission (FERC). PennEast recently made some tweaks to the route, changes which need FERC approval (see PennEast Pipeline Tweaks Route in PA, Antis React). However, until the first steel is in the ground, you just don’t know.
PennEast aims to start construction in late 2019, and have the pipeline operational by 2020, according to project officials. The Williams Regional Energy Access project aims to be up and running “as early as November 2022”–some two years after PennEast.
To further support our argument the Williams project is a direct competitor to PennEast, consider this. We went looking for a map that shows where the Transco line runs. We hit pay dirt. We don’t know when the following was posted, but obviously PennEast anticipated there may be a competitive threat to their project from Transco at some point, and posted the following on the project website:
PennEast considered a loop of Transco‘s Leidy Line pipeline system as a system alternative to the proposed Project. A loop of Transco’s Leidy Line could access the same production region that the PennEast Project accesses. However, the Transco Leidy Line does not offer the same access to specific delivery point locations provided by the PennEast Project.
PennEast will offer direct delivery to both UGI Utilities in Pennsylvania and Elizabethtown Gas in New Jersey that cannot be made by utilizing the Transco system. PennEast’s proposed route is also uniquely capable of providing an interconnection with both Algonquin and Texas Eastern at one location, which will provide supply for growing markets served by each transmission system in the capacity constrained northeast and New England. Because the Transco Leidy Line cannot make these direct deliveries to UGI Utilities and Elizabethtown and Transco does not access Algonquin and Texas Eastern at one location, any Transco system alternative does not satisfy the purpose and need of the PennEast Project. In addition, if Transco were to loop its Leidy Line pipeline system as an alternative to the Project, there would not be an additional new pipeline system to deliver production from this region to the markets to be served by the Project, providing a further reason why this system alternative does not satisfy the purpose and need of the Project. PennEast is also considering requests for interconnections with existing power generation located within a short distance of PennEast’s proposed route that cannot be served from Transco’s ROW.
In addition to the foregoing, a loop of Transco’s Leidy Line is not a viable alternative in light of the current circumstances and the environmental impact associated with constructing the facilities. PennEast has performed analysis of an alternative involving a loop of Transco’s Leidy Line. PennEast agrees with Transco’s own statement where it indicates that the existing line cannot be expanded: “The existing Transco pipeline system is extremely capacity constrained in New Jersey and Southern Pennsylvania, operating in very densely populated areas. […]due to encroachment of residential and commercial structures along the Transco system, certain areas would be nearly impossible to loop and would require other greenfield portions to be constructed, further increasing the overall impact of the project.” (2)
PennEast includes this map, showing the route of the proposed PennEast and the existing Transco Leidy line:
That map says it all, doesn’t it?
PennEast tried to preempt a competitive threat from Transco by quoting Williams that the existing Transco line through the region could likely not be expanded for several reasons. And now, Williams is attempting to do just that.
PennEast points out they can connect to several delivery points that a beefed up Transco cannot. Notice that PennEast’s route is south of Transco, running through Carbon County while Transco runs through Monroe County.
However, the inescapable conclusion you must draw is this: It will be difficult to get both of these projects built. One will win and get built. The other will not. Which will it be? Let the fight begin.
(1) Williams (Mar 8, 2019) – Williams Announces Open Season for Regional Energy Access Expansion
(2) PennEast Pipeline (undated, accessed Mar 11, 2019) – Prior Alternative 4 (Originally Filed As “Transco Leidy Line Alternative” In Draft Resource Report 10)
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