Gas pipeline builder suspends work on Mass. project

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BOSTON – Kinder Morgan suspended further work and spending on its Northeast Energy Direct natural gas pipeline project Wednesday, citing inadequate commitments from prospective customers. The line would help Massachusetts and New England meet energy needs but has been met by protests and uncooperative landowners across the state.

Less than a year ago, in July 2015, the company’s directors authorized its Tennessee Gas Pipeline unit to pursue the $3.3 billion project to run a pipeline from Wright, New York, across Western Massachusetts and into New Hampshire just east of the Connecticut River, coming back into the Bay State in Dracut, near Lowell. On Wednesday, Kinder Morgan said that approval was based on contractual commitments at the time and expected to sign up more customers from gas and electricity distribution companies and other “market participants” in New England.

“Unfortunately, despite working for more than two years and expending substantial shareholder resources, TGP did not receive the additional commitments it expected,” Kinder Morgan said Wednesday in a statement . “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.”

Environmentalists, rival energy firms and some public officials have questioned both the project’s cost and the wisdom of increasing the region’s already heavy reliance on natural gas. Kinder Morgan had hoped the pipeline would address natural gas transportation problems affecting the Northeast and alleviate “uniquely high” gas and electricity costs in the region.

Kinder Morgan faulted inadequate regulatory procedures in New England states as a reason for its inability to sign on more customers for its gas, citing the “open-ended” nature for establishing procedures to facilitate binding commitments on the part of electricity producers in each state.

“In addition, innovations in production have resulted in a low-price environment that, while good for consumers, has made it difficult for producers to make new long term commitments. Further, current market conditions and counter-party financial instability have called into question TGP’s ability to secure incremental supply for the project. Given these market conditions, continuing to develop the project is not an acceptable use of shareholder funds,” Kinder Morgan said.

The pipeline unit plans to “continue to work with customers to explore alternative solutions to address their needs, particularly local distribution companies that are unable to fully serve consumers and businesses in their areas because of the lack of access to abundant, low-cost domestic natural gas,” Kinder Morgan said.

Asked earlier in the day whether Kinder Morgan and other pipelines developers should be able to pass along the cost of construction to consumers through their electric rates, Gov. Charlie Baker said:

“I’m not paying too much attention to the Kinder Morgan project, primarily because most of that is driven by federal policy and not by state policy.”

“What I’ve said all along is the best way for Massachusetts and New England to ensure that people here in the commonwealth get the best price they possibly can on their electricity and their thermal piece is to have a proactive approach to this and my hope and my anticipation is that that pro-active approach will look like a bill that comes out of the House at some point during this session and gets debated and enacted and includes what I’ve talked about before, which is a combo platter of the two I’m particularly interested in, which is hydro and wind,” Baker said.

State Attorney General Maura Healey said on that the company finally faced reality: “Kinder Morgan has recognized what has been clear for some time, that the NED pipeline project was too big & too costly for ratepayers.”

Energy industry stakeholders – from suppliers of natural gas to developers of offshore wind generators and solar and hydro-power producers – are jockeying for a piece of the region’s supply mix as lawmakers contemplate major energy policy legislation and the looming 2019 shutdown of the Pilgrim nuclear plant in Plymouth, a major source of carbon-free supplies.

“Kinder Morgan is stopping the pipeline simply because it is both expensive to ratepayers and simply not needed,” Environmental League of Massachusetts President George Bachrach said. “Massachusetts has the capacity to develop its own energy in solar, wind and hydro and create new industries and jobs here, rather than importing energy and exporting our dollars and jobs.”

Written by Michael Norton