National Fuel Gas Co. (NFG) said Wednesday that its Northern Access pipeline expansion project would again be delayed, this time because of a slower than anticipated approval process at FERC.
The company has pushed the expansion's in-service date back from November to its fiscal 2Q2018, between January to March 2018. NFG cited "ongoing delays" in the regulatory process at the Federal Energy Regulatory Commission, including issuing the project's certificate. Those have limited its ability to start development along portions of the 99-mile route before designated environmental protection periods begin this April and last through the end of July, NFG said.
As a result, the company said it has agreed with the New York Department of Environmental Conservation (NYDEC) to extend the deadline for a decision on various state permits, including the project's water quality certification. The deadline, NFG said, would be moved from March 1 to April 1. However, NYDEC has issued "notices of complete application" for project permits, NFG noted, allowing the agency to move forward with the permitting process.
CEO Ronald Tanski said while the company continues to make progress working through the state, federal and local regulatory processes, delays at FERC were not anticipated and the project is now facing the kinds of permitting delays that recently have daunted other Northeast infrastructure projects.
The Constitution,Atlantic Sunrise,Northeast Energy Direct (NED), Access Northeast and PennEast pipeline projects have all hit snags in recent months. They've faced federal regulatory and state permitting delays, failed to obtain adequate customer commitments or, in NED’s case, been canceled altogether. Most of the project would serve the bottleneck in the northeastern Marcellus Shale. FERC only recently issued Atlantic Sunrise a long-awaited final environmental impact statement.
Northern Access would expand the National Fuel Gas Supply Corp. and Empire Pipeline systems to transport more than 490,000 Dth/d from wells operated by Seneca Resources Corp. in Northwest Pennsylvania to markets in the Northeast. Seneca is NFG's exploration and production subsidiary. NFG said early last year it would delay the Northern Access project until late 2017 on reduced drilling activity caused by the commodities downturn. The project was initially scheduled to enter service in late 2016.
While it reported record annual production, Seneca curtailed 34.6 Bcf of volumes throughout fiscal 2016 because of low commodity prices. The company said Wednesday it produced 44.9 Bcfe during fiscal 1Q2017, 18% higher year/year and up from 39.8 Bcfe sequentially. It reported no curtailments during the period, but the company plans to release more details during its quarterly conference call next month.
An improvement in local natural gas prices in Pennsylvania allowed Seneca to sell more production into daily spot markets and enter more seasonal sales agreements this winter. The boost in production drove gathering volumes higher on the company's systems. NFG's gathering segment moved 50.6 Bcf in the 1Q2017 up 50% from the year-ago period.