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Spectra Energy Partners LP (NYSE: SEP), an Enbridge Inc. company, has purchased a 10% stake in the $1.2 billion PennEast Pipeline, doubling its interest in a natural gas project that has been subject to intense environmental opposition.
“From its inception, we have viewed the PennEast Pipeline as a critical project for the mid-Atlantic, connecting abundant domestic supplies to growing local markets in need of additional clean natural gas,” said Bill Yardley, president of Spectra on March 13. “PennEast provides an opportunity to build upon our very strong footprint in the region.”
Spectra purchased the equity position from PSEG Power LLC, supplier of gas to its affiliate, Public Service Electric & Gas, which is New Jersey’s largest utility. PSEG will continue its commitment to buy 125 million cubic feet (MMcf) of the pipeline’s 1 Bcf capacity.
PennEast is among several major projects designated as likely candidates for “pipeline purgatory” by BTU Analytics Senior Analyst Marissa Anderson during a January webinar. That is because delays from federal and state agencies and resistance from environmental organizations have put the project’s planned in-service date in doubt.
PennEast is scheduled to go online in second-half 2018, but more than 5,000 comments have been filed with the Federal Energy Regulatory Commission (FERC).
Pipeline opponents were heartened by the news that PSEG planned to sell its interest, contending that it showed how the 119-mile pipeline project is losing momentum.
“PSEG is clearly concerned about owning a piece of this project,” said Tom Gilbert, campaign director of ReThink Energy NJ, on the protest organization’s website. “The other companies behind PennEast—New Jersey Natural Gas, Elizabethtown Gas, and South Jersey Gas—should follow PSEG’s lead on this.”
But PSEG Power said it will continue to be a PennEast customer.
Bill Levis, president of PSEG Power, emphasized PSEG will remain a PennEast customer for its committed capacity.
“This project will provide PSE&G customers with greater and more reliable access to affordable natural gas,” said Bill Levis, the company’s president. “We look forward to being a PennEast customer. We’ve decided to put our focus on our core business—constructing three new combined cycle power plants and running our diverse fleet of generation plants.”
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
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