Wednesday, April 5, 2017

Shale Law in the Spotlight: Recent Pipeline Developments in Pennsylvania and the Eastern United States (Part 2)

Written by Chloe Marie – Research Fellow

Last week, our Shale Law in the Spotlight article addressed legal development relating to the Atlantic Sunrise, Mariner East, and Northeast Supply Enhancement pipeline projects.  This second article will address the recent pipeline developments and expansion in Pennsylvania by providing an overview on the development of the Constitution pipeline, the PennEast pipeline, the Rover pipeline, and the Northern Access pipeline. Our next Shale Law in the Spotlight will focus on additional pipeline projects.

Williams has partnered with Cabot Oil & Gas, Piedmont Natural Gas, and WGL Holdings to develop and build the vast Constitution pipeline across the states of Pennsylvania and New York. This 124-mile pipeline project would bring about 650,000 dekatherms of Appalachian natural gas per day from Susquehanna County, in northern Pennsylvania, to connect with the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, New York. The pipeline project would facilitate the delivery of natural gas to markets in New York and New England.

In June 2013, the Constitution Pipeline Company filed a Certificate Application with FERC, and in October 2014, FERC issued its Final Environmental Impact Statement concluding that environmental impacts would be minimal with the application of proposed mitigation and protective measures. As a result, on December 2, 2014, FERC issued an Order granting a Certificate of Public Convenience and Necessity for the Constitution Pipeline project. On April 22, 2016, however, the New York Department of Environmental Conservation (NYSDEC) denied the Clean Water Act Section 401 Water Quality Certification for the proposed Constitution Pipeline project. The Department of Environmental Conservation stated that “the Application fails in a meaningful way to address the significant water resource impacts that could occur from this Project and has failed to provide sufficient information to demonstrate compliance with New York State water quality standards.”

In response, the Constitution Pipeline Company filed an appeal before the U.S. Court of Appeals for the 2nd Circuit challenging the NYSDEC’s denial on May 16, 2016. The company alleged that the denial of the Clean Water Act Section 401 certification is “arbitrary and capricious and constitutes an impermissible challenge to the Federal Energy Regulatory Commission’s Certificate of Public Convenience and Necessity which was issued to the company in December 2014.” On the same day, the Company filed a lawsuit before the U.S. District Court for the Northern District of New York seeking a declaration that the state of New York does not have permitting jurisdiction to make such a decision and is preempted by the Federal Natural Gas Act. On March 16, 2017, the U.S. District Court granted a motion to dismiss brought by the state of New York and ruled that the Constitution Pipeline Company had not suffered any injury from the non-issuance of state water permits because the NYSDEC had not yet acted on them.

The PennEast pipeline is 118-mile expansion project now operated by Enbridge Inc. following its merger with Spectra Energy Corp. in February 2017. The pipeline proposes to transport 1 Bcf per day of Marcellus shale gas from Northeast Pennsylvania to the existing Texas Eastern Transmission and Algonquin Gas Transmission systems in Lambertville, New Jersey.

After initiating the pre-filing process review process with FERC, Spectra Energy Corp. filed an application in September 2015 to obtain a Certificate of Public Convenience and Necessity for the PennEast Pipeline project. Completion of the pipeline project is currently pending on appropriate regulatory approvals from FERC, however, Enbridge Inc. anticipates construction to start in the first half of 2018 with an in-service date in the second half of 2018. 

The Rover pipeline is a new 713-mile interstate pipeline project, which is intended to transport 3.25 Bcf of Marcellus and Utica shale gas per day from processing plants in Southeastern Ohio, Western West Virginia, and Southwestern Pennsylvania through the state of Ohio to Livingston County, Michigan. The Rover pipeline is operated by Energy Transfer and would deliver natural gas to markets in the U.S. and Canada. The economic benefits expected to flow from the project are estimated to be around $1.3 million in Pennsylvania from total benefits of $147 million – with $135 million of this going to Ohio.

In June 2014, Energy Transfer filed a request to initiate the pre-filing review process and in February 2015, filed a Certificate Application with FERC. On February 2, 2017, FERC issued an Order granting authorization to construct and operate the Rover pipeline; thus construction is expected to begin in the first quarter of 2017 and to be completed in July 2017 in Ohio, and in late 2017 in Michigan.

The Northern Access pipeline is a joint project between the National Fuel Gas Supply Corporation and the Empire Pipeline, Inc., both subsidiaries of National Fuel Gas Company. This pipeline project would involve the construction of approximately 97 miles of new pipeline and the replacement of 2 miles of existing pipeline. It would carry regionally discovered natural gas from the Clermont producer interconnection in McKean County, Pennsylvania to the TransCanada Pipeline at the Chippawa Channel near Grand Island, New York.

In March 2015, both energy companies filed a joint Certificate Application with FERC for authorization to build the Northern Access Project and in February 2016, filed a joint application for Article 15, Article 24, Section 401 Water Quality Certification and Section 404 permits with the New York Department of Environmental Conservation. On February 4, 2017, FERC issued an Order granting a Certificate of Public Convenience and Necessity for the Northern Access project and construction will likely start this April 2017 with a planned in-service date in March 2018.

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