Dive Brief:

• The New York State Department of Environmental Conservation has rejected National Fuel Gas' proposed Northern Access pipeline, a roughly-100 mile pipeline that would have moved gas from the Marcellus shale to markets in Western New York, the Midwest and Canada.
• The denial of a water quality certification drew a stern response from National Fuel President and CEO Ronald Tanski, who warned utilities in the gas-constrained region might not be able to get the fuel generators and consumers need. 
• National Fuel said it had been working with the DEC for 34 months and had done detailed engineering and environmental studies at the agency's request to support stream-crossing techniques now being denied.

Dive Insight:

Both PJM Interconnection and ISO New England have raised concerns about the difficulty in developing new gas pipeline capacity, potentially putting their availability to procure fuel at risk in the colder months when heating demand spikes. 

Tanski's lengthy statement in the wake of the pipeline rejection appeared to mirror those claims.

"We are highly concerned about the ability of utilities in the state to meet the future energy needs of their consumers and the businesses and industries that drive the state’s economy," he said. "New York’s continued denial of permits for energy infrastructure projects is simply not sustainable, as it will have the effect of reducing New York’s energy reliability, lead to higher costs for consumers and be a limiting factor in the ability for industry to locate or expand in the state."

Almost 60% of New York's electric generation capacity is gas-fired, the National Fuel CEO said. "As more coal and nuclear power plants are scheduled to be shut down, new gas-fired plants are being built in their place. Additional natural gas infrastructure is essential."

The $500 million project is privately funded and National Fuel Gas Supply Corp. and Empire Pipeline, both owned by NFG. The company touted the potential economic impact, including an estimated increase in annual property tax receipts by $11.8 million for four New York counties, and an additional one-time sales tax impact of $6.6 million.

Tanski said that what is most troubling aspect of the state's decision is the way it was done. DEC "waited literally until the 11th hour to issue this denial, even though we had detailed discussions with NYS DEC staff over a 34-month period."

In its decision, the DEC said rejection was contingent on the pipeline's "failure to avoid adverse impacts to wetlands, streams, and fish and other wildlife habitat."

Environmental advocates cheered the decision, with the Natural Resources Defense Council calling the pipeline a "serious threat to water quality, wildlife, trout streams, and other habitats, as well as to air quality in the North Country and Western New York."

Environmentalists have long questioned the assumption that new natural gas pipeline capacity is needed in New England, particularly to serve power generators. Instead, they argue renewable energy and demand-side management should be used for electricity needs.