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Constitution Pipeline, Leatherstocking Eye Expanding North PA/South NY Gas Service

Looking to facilitate local natural gas service to homes and businesses in southern New York and northern Pennsylvania that have never had the option before, Constitution Pipeline Co. LLC and Leatherstocking Gas Co. LLC announced plans this week to install four delivery taps along Constitution's proposed pipeline route. Gas could flow to these targeted municipalities by late 2015.

Leatherstocking said it is evaluating delivery point locations for local distribution of natural gas to homes and businesses in Delaware and Otsego counties in New York and Susquehanna County in Pennsylvania, and one tap location that would provide service to the Amphenol Aerospace Plant in Sidney, NY. Last month, the Delaware County Industrial Development Agency awarded a grant of $750,000 to construct a natural gas pipeline from the proposed Constitution Pipeline to Amphenol Corp.'s existing facility in Sidney, as well as a new planned manufacturing facility.

Ironically, the plan would deliver natural gas for the first time to rural municipalities in a number of Pennsylvania counties that are leaders in Marcellus Shale natural gas production, as well as southern New York counties that are thought to hold large Marcellus gas reserves (see Shale Daily, Feb. 20a; Jan. 8).

Leatherstocking, a partnership between Corning Natural Gas Corp. and Mirabito Holdings Inc., said its vision encompasses development of local distribution systems to introduce natural gas service to locations within New York’s Broome, Chenango, Delaware and Madison counties and Susquehanna County in Pennsylvania that currently have no such service. Leatherstocking has franchise agreements in 10 municipalities within Delaware, Otsego, Chenango and Broome counties. The New York State Public Service Commission must grant certificates of public convenience to Leatherstocking in the identified areas before distribution system development can begin.

"The Constitution Pipeline can create a backbone for Leatherstocking Gas Co. to extend the development of local natural gas distribution franchises in rural communities along the pipeline route in northern Pennsylvania and southern New York," said Leatherstocking CEO Mike German.

Constitution Pipeline project manager Matt Swift said working with Leatherstocking is an opportunity to provide gas service to communities along the pipeline route. "The members of these communities who do not have access to local natural gas service will greatly benefit from this affordable, U.S.-produced, cleaner energy resource."

The $683 million Constitution Pipeline project, which involves the construction of a 30-inch diameter, 125-mile pipeline from Susquehanna County, PA, to Schoharie County, NY, is currently being reviewed by the Federal Energy Regulatory Commission (FERC). Along with the associated Wright Interconnect Project (see Shale Daily, Feb. 13), the projects together are designed to carry up to 650,000 Dth/d to the Iroquois and Tennessee Gas Pipeline systems for eventual delivery to markets in New York and New England.

Constitution is owned by subsidiaries of Williams Partners LP, Cabot Oil & Gas Corp., Piedmont Natural Gas Co. and WGL Holdings (see Shale Daily, June 3, 2013). Cabot, one of the biggest Marcellus operators, has agreed to ship 500,000 Dth/d on the pipeline, while Southwestern Energy Services Co. has signed on for 150,000 Dth/d (see Shale Daily, April 27, 2012). Piedmont, a distribution company that serves more than one million customers in the Carolinas and Tennessee, is investing $180 million, but it would not be a customer (see Shale Daily, Nov. 14, 2012).

Last month Williams CEO Alan Armstrong said the pipeline is being delayed not by federal regulators but by the New York Department of Conservation (DEC) (see Shale Daily, Feb. 20b). FERC in February issued a draft environmental impact statement (EIS) for Constitution and the Wright Interconnect Project.

"The only real issue we are facing right now is a regulatory issue that relates to the New York DEC, not FERC," Armstrong told analysts during a February conference call. None of the other proposed ventures between Williams and partners are facing such delays. "On the FERC side, they are continuing to push it through, with the Constitution draft EIS...They are doing their part to accelerate it...We have to have discussions with New York [regulators] to find the right answers and the right solutions there as well."

To the contrary, the delay is not related to landowner protests, Armstrong assured analysts. However, the DEC remains concerned about mitigation issues and other aspects of the project. Eventually, those concerns should be allayed, he added.

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