NATURAL GAS:

The Constitution Pipeline: an answer to New England's price woes or a shale bonanza in the making?

NEW YORK -- The Constitution Pipeline is expected to jolt forward this spring when a joint venture between Williams Partners LP and Cabot Oil & Gas Corp. files with federal regulators for route approval to build from Pennsylvania across New York to deliver natural gas to New England's high-demand market.

The $700 million venture, called Constitution Pipeline Co., is seeking to overcome concentrated opposition from environmental groups in New York to bring badly needed gas to New England, which has long dealt with higher power prices because of its relative isolation from domestic energy supplies.

The Williams-backed venture hopes to step into that gap, despite some vocal opposition in the Empire State to any project that might be linked to Marcellus Shale gas. The plan is to lay 120 miles of new pipe from Pennsylvania, where hydraulic fracturing for shale gas is permitted, into New York, where it is not but is under review, to connect with the Iroquois Gas Transmission and Tennessee Gas pipeline systems to the west of Albany.

The proposal is timely. Last week, natural gas prices shot up at two hubs in the Northeast -- at Algonquin Citygate into Boston and Transco Zone 6 serving New York -- and the Energy Information Administration quickly blamed the lack of pipeline capacity into the region for prices that coasted from about $3 or $4 per million British thermal units in early January to closer to $35 per MMBtu as of last week.

Sensing the hostility to any project that might be linked with hydraulic fracturing, especially in New York, those behind Constitution recently issued a new proposed route for the pipe that they expect to forward to the Federal Energy Regulatory Commission in April or May. Project planners insist the new proposal would change more than 50 percent of the initial route, to answer public comments received over the past year.

Those behind the venture say the new route would address many of the concerns presented by landowners and environmental groups. Project manager Matt Swift said the new draft is the result of engineers studying 20 route alternatives and more than 120 reroutes. Of those, Swift and company have settled on six alternatives for FERC and 89 route revisions.

"We're confident that the revised primary route is the best possible path to minimize environmental and landowner impacts, balancing those considerations with the engineering requirements for safely and properly constructing and operating a transmission pipeline," Swift wrote in a recent update on the project.

The most significant change was the decision not to site a large portion of the pipeline next to the Interstate 88 corridor. Swift said the venture spent months looking at that section of the blueprint and decided this route was not viable.

The result is a track that would wind from northeastern Pennsylvania across the border into New York's Southern Tier, which is ground zero for the state's tug of war over fracking. The pipeline, when finished, is booked to deliver Pennsylvania gas to the east, to the densely populated eastern corridor between New York City and Boston but also to rural communities in western New York.

Constitution planners say the new route would mean 22 fewer water body crossings and fewer homes affected close to the proposed track. More significantly, it would eliminate the need for a new 32,000-horsepower compressor facility in New York's Schoharie County, instead relying on modifications to Iroquois Gas Transmission's Wright compressor station.

Constitution and Iroquois announced an agreement to improve that compressor earlier this month.

"The route we've selected provides us with the flexibility to eliminate the need for a separate compressor station," Swift explained, adding that his group studied "50 different parameters" to settle on the final draft.

Crossing the watershed line

Environmental groups in New York remain unhappy. They have pledged to make the pipeline the next front in their campaign to keep fracking and any product associated with the process out of the state.

Bridget Lee, an attorney with Earthjustice, described Constitution as "the sort of massive infrastructure project that will lock the region into continued extraction and burning of fossil fuels" when it should be looking into renewable alternatives. She will urge FERC to reject the pipeline.

"The project will disturb hundreds of acres of land, with access roads and industrial equipment cutting across forests and watersheds," Lee said. "And it will spur the already frantic pace of gas drilling and fracking, along with the air, water and climate pollution that accompanies such development."

Kate Hudson, watershed program director at Riverkeeper, was more specific in her criticism. Hudson fears Constitution "Alternative K" more than the others because it would cut "right through New York City's drinking watershed in Delaware and Schoharie counties," she said.

Hudson said this option puts drinking water at risk for 9 million New Yorkers. That potentially places the sensitive watershed issue in the middle of the regulatory fight to come: Many politicians who have sought a middle ground in favor of fracking, including New York Mayor Michael Bloomberg (I), have said they will support it only if production steers clear of aquifers and reservoirs.

"The fact the Constitution did not take Alternative K off the table ... calls into question its statement that it gave serious consideration to the environmental concerns raised by citizens and other interested parties," Hudson said. "Although it is not Constitution's proposed primary route, FERC review could lead it ultimately to be selected as the final route."

In Hudson's view, Constitution engineers should have at the very least struck Alternative K from the draft. She added that the group would also oppose the pipe on more general fracking grounds in any event.

"Our other concern relates to the fact that the construction of this pipeline in whatever location will significantly increase the amount of hydrofracking activity in the Southern Tier generally, and in and near the New York City watershed in particular, whether from high-volume fracking, yet to be permitted, or from low-volume fracking, which is currently allowed," she said.

She added: "The opportunity to directly connect to a pipeline once a well is drilled will reduce costs to drillers, encouraging them to undertake fracking operations that would have otherwise been financially marginal."

Pipeline over politics

Chris Stockton, a spokesman for Constitution and an employee at Williams, countered that public comments about the project on the positive end were just as numerous as responses that would like to see it blocked. He cited millions of dollars in projected economic benefits associated with the project, to include the construction phase and the jobs that would come with it, in addition to increased tax bases for small towns.

"We understand that there are members of the community that have concerns about this project," he said. "We've also heard from a lot of people who are very supportive."

More directly, Stockton insisted Alternative K, while it was included in the recent draft, is not considered one of the top six options.

"We are not framing it as a viable option," he said.

Stockton went on to take up the broader argument. The need for the pipe, he argued, "is independent from the debate about allowing natural gas production in New York."

"The Constitution Pipeline is currently fully contracted with long-term commitments from [Pennsylvania] producers," he wrote in an email. "It is being designed to move natural gas produced in Pennsylvania, not New York."

The bid to construct the line also comes with an outreach effort. Constitution recently awarded more than $300,000 in grants to communities that would be affected. Examples of awards last year: $23,500 to a Boys and Girls Club in Delaware County, N.Y., to "support youth development" in disadvantaged areas; $23,954 to the Pindars Corners Volunteer Fire Department to buy better gear; and $6,900 to upgrade the Sidney Municipal Swimming Pool.

On the company website, project architects note the support of many labor unions as well as the Delaware County Board of Supervisors and the Binghamton Chamber of Commerce. Stockton also pointed to a side agreement wrought with a local New York company, Leatherstocking Gas Co. LLC, to develop delivery interconnects along Constitution's proposed pipeline route.

That deal stems from Constitution's status, just like any interstate line, as "open access" to serve local municipalities and public utilities in New York that might want to tap into gas supplies. The Leatherstocking deal could lead to a local gas distribution network in Broome, Chenango, Delaware and Madison counties as early as this summer.

But open access cuts both ways and could mean New York producers of gas from the Marcellus Shale ultimately get access to deliver their product. When asked whether that might ever occur, Stockton acknowledged that anything was possible but added that capacity is "spoken for," so the pipeline would have to be expanded to transport any additional volumes above the contracted amount.

Stockton also cast the decision in a national energy security light.

"I'm not saying it couldn't be expanded someday," he wrote in an email. "What I am saying is that there are some people out there who have claimed that this pipeline was being built on the speculation that gas production would someday be opened up in NY. The fact is that this pipeline is not dependent upon future gas production in NY state. It is ultimately about providing gas-hungry markets in NYC and Boston access to domestic Pennsylvania natural gas supplies via a pipeline network that currently relies on Canadian gas supply."

The possibility that it could tap into New York shale plays is enough for activists who want FERC to reject the new pipeline. They say it is bound to end up as part of a regional delivery system for shale gas, whether from Pennsylvania or New York.

"Foresight and common sense dictate that FERC officials consider forgoing the project altogether," Lee from Earthjustice said.

The 30-inch-diameter pipeline would have a capacity of 650,000 dekatherms of gas per day. A dekatherm is a quantity of heat energy equivalent to 1 million BTU.

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