Shale gas line to the Northeast gets federal nod

AP News
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Posted: Dec 03, 2014 7:07 PM

HARRISBURG, Pa. (AP) — Federal energy regulators have approved a $700 million pipeline project designed to bring cheap Marcellus Shale natural gas from Pennsylvania into high-priced markets in New England and New York.

The project's backers said Wednesday that the Federal Energy Regulatory Commission's approval means the 124-mile Constitution Pipeline could be built and operational by next winter, if it gets the remaining regulatory approvals from Pennsylvania, New York and the U.S. Army Corps of Engineers in a timely fashion.

The project is the first to be approved out of a slew of proposals designed to bring Marcellus Shale gas to New York and New England.

The lead partners are Tulsa, Oklahoma-based Williams Partners LP and Houston-based Cabot Oil & Gas Corp. Williams will operate the pipeline, while Cabot and Southwestern Energy have long-term agreements to supply the gas. Other partners include Piedmont Natural Gas Company Inc. and WGL Holdings Inc.

Lindsay Schneider, an analyst at Wood Mackenzie, said the pipeline could bring up prices for producers like Cabot in northern Pennsylvania, while potentially bring down home heating prices in New York and New England. But calculating the effect on home heating prices would be difficult to do, she said.

Meanwhile, solving the larger problem of winter energy price spikes in New England will require an additional expansion of pipeline capacity into that area for those coldest days of the year, she said.

The Marcellus Shale is the largest-known underground natural gas reservoir in Pennsylvania. Production from the reserve, beginning in the last five years, has made Pennsylvania the nation's second-largest natural gas producer behind Texas.

Marcellus Shale gas is about half the cost of the Gulf of Mexico gas that traditionally reached Boston and New York City through existing pipelines. It also is cheaper than Canadian gas that flows to the Northeast.

The pipeline would run from Pennsylvania's Susquehanna County through New York's Broome, Chenango, and Delaware counties to connect with the existing Tennessee and Iroquois pipelines in the Schoharie County town of Wright, 80 miles southwest of Albany, New York.

The Northeast has become increasingly reliant on natural gas for home heating, but congested pipelines are ill-equipped to bring the gas directly from Pennsylvania.