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Enbridge halts work on Access Northeast pipeline

30 Jun 2017 16:44 (+01:00 GMT)
Enbridge halts work on Access Northeast pipeline

Washington, 30 June (Argus) — Canadian midstream company Enbridge is pausing the 894mn cf/d (25mn m³/d) Access Northeast natural gas pipeline expansion until New England states address "gaps in energy policy" it says have impeded the project.

Enbridge yesterday withdrew the project from "pre-filing" status at the US Federal Energy Regulatory Commission, putting its regulatory approval process on hold. The company said it chose to do so because New England states lack a "uniform energy policy" that would support the construction of natural gas infrastructure for electric generation.

Enbridge was developing Access Northeast with the electric utilities Eversource Energy and National Grid. The project would have expanded the existing Algonquin pipeline system and mostly used existing utility corridors, avoiding some of the permitting difficulties and local resistance associated with building an entirely new pipeline.

Access Northeast was designed to provide fuel for about 5,000MW of gas-fired generating capacity to states including Massaschusetts, New Hampshire and Connecticut, to replace more than 4,000MW of coal, oil and nuclear capacity set to retire by 2019.

But the project's developers struggled to convince enough gas-fired generators to sign long-term contracts for firm capacity, even after New England's electric grid operator adopted penalties for non-performance that will take effect in 2018.

Merchant generators said it was cheaper to rely on fuel oil as a backup energy source, rather than pay for pipeline capacity. But fuel oil releases more greenhouse gas and conventional pollutants than natural gas, and increasing its use works against ambitious environmental goals in New England.

Spectra Energy, now owned by Enbridge, tried to find other ways to pay for the project. One idea would have paid for pipeline capacity through a tariff administered by the regional electric grid, but this was abandoned because of legal risks. Another idea would have had local electric utilities add a pipeline charge to electric bills, but state courts found this legally problematic.

Access Northeast's developers say they will keep working with state and federal agencies to address "energy policy inconsistencies" that are preventing the development of natural gas pipelines. Other proposed natural gas pipelines in the region have also faced difficulties starting construction because of local opposition and the denial of water permits from New York.

The project's developers are likely to continue pursuing legislation in Massachusetts and to proceed with legal appeals in New Hampshire as it tries to shore up support for the project, analysts at Barclay said in a note to clients today. Massachusetts has been the most important state for the project because it accounts for the majority of electric demand in New England.