Dive Brief:
- Kinder Morgan has scrapped plans for its Northeast Energy Direct (NED) pipeline, a $5 billion project designed to move Marcellus Shale gas into the northeast.
- Company officials cited "insufficient contractual commitments" from customers in the New England market.
- The NED pipeline would have consisted of Market Path and Supply Path segments; last year Kinder Morgan authorized spending for the market component, but decided to hold off on the supply path investment.
- Kinder Morgan's capital project backlog fell from $18.2 billion at the end of 2015 to $14.1 billion at the end of the first quarter 2016. Along with the NED project, the company also canceled the Palmetto Pipeline after Georgia lawmakers worked to slow the project's development.
Dive Insight:
Kinder Morgan has now canceled a second pipeline project this year, slashing its capital budget as the company was unable to secure shipper commitments.
“The reduction in our backlog was driven primarily by the removal of the Northeast Energy Direct Market project due to insufficient contractual commitments from customers in the New England market, and the removal of the Palmetto Pipeline project following unfavorable action by the Georgia legislature regarding eminent domain authority and permitting for petroleum pipelines,” President and CEO Steve Kean said in a statement.
Northeast Energy Direct was supposed to be online by the end of 2018, and the company appeared poised to move ahead with the $3.3 billion market section of the line. The Market Path component would have had capacity of 1.3 Bcf/d and would have run almost 190 miles from Wright, to Dracut, Massachusetts.
The Supply Path would have had a maximum design capacity of 1.2 billion cubic feet per day (Bcf/d) and was designed to run more than 130 miles in northern Pennsylvania to an interconnection with TGP’s 200 Line system and Iroquois Gas Transmission System in Wright, New York. Its estimated cost was $1.7 billion.
Earlier this year, Kinder Morgan scrapped its Palmetto Pipeline when Georgia lawmakers passed a bill to restrict the use of eminent domain for pipeline projects. That pipeline was designed to transport refined petroleum products from Jacksonville, Fla., to South Carolina.
