Kinder Morgan cancels widely opposed New England pipeline plan

By Mike Lee | 04/21/2016 07:48 AM EDT

Kinder Morgan Inc. yesterday canceled a natural gas pipeline through New England that drew protests from environmentalists, politicians and both Democratic presidential candidates, saying it couldn’t get enough customers to sign up for the project.

The $3.3 billion Northeast Energy Direct pipeline was originally planned to connect Kinder’s Tennessee Gas system to utility companies and power generators in Massachusetts, New Hampshire and Connecticut. It would have involved building 188 miles of 30-inch pipeline from Wright, N.Y., across Massachusetts and New Hampshire to Dracut, Mass.

A number of gas utility companies signed up for capacity on the pipeline, but there wasn’t enough demand from power generators in the region, Kinder Morgan Chief Executive Steve Kean said on the company’s quarterly earnings call. Without more customers, the project would have returned less than 6 percent on Kinder Morgan’s investment.

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"We gave it our all," Kean said. "In the end, the customer commitments just weren’t there."

The pipeline became a rallying point for environmentalists and others, with opponents questioning its impact not only on landowners in the region but on global climate change.

The decision to cancel the pipe shows the need to move away from traditional fossil energy, Sen. Edward Markey (D-Mass.) said in a statement.

"We need to build on the work that we have done in New England to move to a clean energy economy," Markey said. "And we should create jobs in New England by working smarter not harder when it comes to using natural gas, through increasing efficiency and repairing and replacing our aging and leaking natural gas distribution pipeline infrastructure."

The entire New Hampshire congressional delegation sent a letter last year to the Energy Department’s inspector general, asking it to ensure that the Federal Energy Regulatory Commission’s review of the project included ample input from landowners in the region (E&E Daily, July 21, 2015).

During the runup to the New Hampshire presidential primary, Vermont Sen. Bernie Sanders attacked Hillary Clinton for her lukewarm opposition to the pipe. Clinton later shifted her position and said she opposed the project (E&E Daily, Dec. 8, 2015; E&ENews PM, Feb. 8).

Kinder Morgan didn’t address the protests or political pressure on the call but criticized the regulatory environment in New England.

The company proposed the line in the wake of the polar vortex winter of 2013-14, when there were shortages of gas across New England due to spikes in both home heating and electric generation.

"We think that need is already there," Kean said. "There is a regulatory process that has to get sorted out up there."

He predicted that pipelines will be built to serve the area, but they’ll be smaller than Northeast Energy Direct.

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