BREAKING: Kinder-Morgan Pulls The Plug On Northeast Pipeline Project
Apr 20, 2016 06:13PM
By Bill Gilman
In an apparent victory for grassroots efforts in towns across three New England states, including Tewksbury, Kinder Morgan has announced it is abandoning plans to extend its Tennessee Gas Northeast Direct Pipeline through Connecticut, Massachusetts and New Hampshire.
In a statement released Wednesday afternoon, Kinder Morgan spokesman Stephen Crawford said the company determined the demand for additional natural gas was not at the levels previously thought and, as such, usage commitments had not met anticipated levels.
"Unfortunately, despite working for more than two years and expending substantial shareholder resources, TGP did not receive the additional commitments it expected," said Crawford. "As a result, there are currently neither sufficient volumes, nor a reasonable expectation of securing them, to proceed with the project as it is currently configured. Given these market conditions, continuing to develop the project is not an acceptable use of shareholder funds."
In addition, the company announced $954 million in revenue in excess of the dividend, cash that will be used for future growth projects.
“Despite continued headwinds in our industry, we are pleased with KMI's performance for the quarter, and we are pleased to have generated $954 million of cash in excess of dividends during the quarter,” said Richard D. Kinder, executive chairman. “Given our tremendous amount of cash flow, we do not need to access the capital markets to fund growth projects in 2016. This cash flow in excess of our dividends insulates us from challenging capital markets and significantly enhances our credit profile. Moreover, by continuing to high-grade our backlog, we do not expect to need to access the capital markets to fund our growth projects for the foreseeable future beyond 2016."
However, one of those projects will NOT be the 120-mile long Tennessee Gas Northeast Direct Energy Pipeline extension.
Bruce Panilaitis, chairman of the Tewksbury Board of Selectmen, hailed the decision.
"It's good news for the residents of Tewksbury, the Commonwealth, and the entire northeast," he said.
The pipeline had been projected to run from Wright, NY to a terminal in Dracut. Various projected paths had an off-shoot from the pipeline and possibly a section of the main pipeline running through more than 50 properties in Tewksbury.
In response to concerns about safety, decreased property values, lifestyle disruption and opposition to the fracking process, residents created a Facebook page called Tewksbury Pipeline Awareness, that has served as a clearing house for information about the project. Additionally, Tewksbury joined a loose alliance with several other Massachusetts communities along the pipeline route, as a means of sharing information and political clout.
Most recently, many residents have refused to allow Kinder Morgan employees onto their property to conduct surveying work related to the pipeline project.
Plans for the project were unveiled in July 2014 and Kinder-Morgan announced a $3.3 billion investment to provide, what it claimed, was much-needed additional energy to the Northeast.
According to Crawford, the company's board approved the project based on existing commitments by local gas distribution companies, as well as expected commitments from additional gas and electric utilities and other market participants in New England.
In his statement, Crawford said Kinder Morgan blames the shortfall in contracted capacity to regulatory procedures in Massachusetts and other New England states that don't allow binding commitments for pipeline capacity from electric utilities. Crawford said low natural gas prices, and current market conditions contributed to the problems.
Kinder Morgan filed its application for the project with the Federal Energy Regulatory Commission in November.