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DRBC to Review PennEast’s 1 Bcf/d Pipeline Proposal

Although a de facto moratorium remains in place against oil and natural gas development in the Delaware River Basin, a proposed pipeline for Marcellus Shale gas that would cut across the basin needs to pass the muster of the Delaware River Basin Commission (DRBC).

PennEast Pipeline Co. LLC has proposed building a 1 Bcf/d capacity, 36-inch pipeline that would run 108 miles from Dallas, PA, in Luzerne County, to the Trenton-Woodbury interconnection on the Transcontinental Gas Pipeline (Transco) at Pennington, NJ, in Mercer County (see Shale DailyAug. 12). A binding open season held in September yielded 965,000 Dth/d of bids (see Shale DailySept. 5).

DRBC spokesman Clarke Rupert told NGI's Shale Daily that the regulatory agency that oversees the basin's watershed in Delaware, New Jersey, New York and Pennsylvania notified PennEast officials in a letter on Nov. 14 that the pipeline project falls under its purview.

"We notified PennEast that based on our staff's internal review of some recent submittals by the project's sponsors -- to both DRBC and several other agencies, [including] FERC and the New Jersey Department of Environmental Protection -- that we have determined that the project would be subject to review under the DRBC's compact and implementing regulations," Rupert said Wednesday.

The DRBC asked PennEast to submit a formal application within 90 calendar days, and to request a pre-application meeting. Rupert said the commission had already met with company officials for a "very preliminary, informational meeting," in early September.

"At that time we were able to learn what their intentions were, and it also give us an opportunity to make sure that they understood our various rules and regulations, in terms of what would necessitate a review of that project," Rupert said. "It's a process. We're now at the point where we've notified the company officially that based on what we know to date, they need to come in for an application, and that the project will be reviewed by the commission."

Last month, the Federal Energy Regulatory Commission approved PennEast's request to initiate a pre-filing review for the project (see Shale DailyOct. 17). PennEast said it plans to complete the pre-filing process and submit a formal application to FERC in 3Q2015; it expects a decision by 2016. Pending FERC approval, construction could begin in 2017 and would take one year to complete.

Last month, Spectra Energy Partners became the sixth member company of PennEast (see Shale DailyOct. 31). Other stakeholders include AGL Resources; NJR Pipeline Co., a subsidiary of New Jersey Resources; PSEG Power LLC; South Jersey Industries; and UGI Energy Services, a subsidiary of UGI Corp. Spectra and PSEG each hold a 10% interest in the project, while the other four companies each have a 20% stake.

Rupert said the project's sponsors, in a submission to FERC, indicated that DRBC approval was one of 26 approvals needed to move forward. Twenty regulatory agencies in all would need to ultimately approve the project, he said.

"Clearly you're talking about a lot of governmental agencies at the federal, state and local levels that will be reviewing this for consistency with their own rules and regulations," Rupert said. "The DRBC, as a federal interstate contact agency, will be one of those 20. Our regulations carry the force of law. In fact, in the letter to PennEast officials, we note that DRBC review and approval are required prior to the commencement of any water withdrawal, discharge or earth disturbance activities.

"We're at the point where there will be a lot more specifics provided to us in the form of that application. For example, they've indicated to us that they will be using hydrostatic testing of the pipeline, but we haven't been told what the source of the water would be, or specifically how much water they plan on using. Those are the kinds of details that we need to have provided."

In a statement, Maya van Rossum, the Delaware Riverkeeper, commended the DRBC's decision to review the project.

"Having a truly independent agency take a look at the impacts of the PennEast Pipeline project is vitally important for the rivers and residents of our watershed," van Rossum said Monday. "We look forward to engaging in the DRBC review process and to offering science, data, facts and information to inform their decision."

PennEast has competition from Williams Partners LP’s proposed Diamond East Project, a Transco 1 Bcf/d expansion that would take Marcellus Shale gas to the Northeast (see Daily GPI, Aug. 26).

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