
“NFG Gives Up on Building Northern Access Pipeline; NY Killed It”, by Jim Willis
“Even though the project eventually won the right to build via the courts, years of opposition from NY increased the costs exponentially and led NFG to pass on building it. A very sad day.”
NFG Gives Up on Building Northern Access Pipeline; NY Killed It
EMPIRE PIPELINE | ENERGY SERVICES | INDUSTRYWIDE ISSUES | NEW YORK | PIPELINES | STATEWIDE NY
November 8, 2024
We hate this…writing yet another post mortem for a pipeline project in the Marcellus/Utica. Yesterday, National Fuel Gas Company (NFG) CEO David Bauer confirmed that his company has given up after battling for 10 years to build the Northern Access Pipeline, a 97-mile pipeline from McKean County in Pennsylvania into and through Allegany, Cattaraugus, and Erie counties in New York that would have flowed Marcellus gas into New York State. The project faced intense opposition from New York Gov. Andrew Cuomo and later his lackey and successor, Gov. Kathy Hochul. Even though the project eventually won the right to build via the courts, years of opposition from NY increased the costs exponentially and led NFG to pass on building it. A very sad day. Score another victory for the Evil Empire State.
NFG’s $500 million Northern Access project included building 97 miles of new pipeline along a power line corridor from northwestern Pennsylvania to Erie County, NY. The project also called for three miles of new pipeline in Niagara County, NY, along with a new compressor station in the town of Pendleton.
Because NY tried to block the project, for years, the Federal Energy Regulatory Commission (FERC) gave NFG an extra 35 months to get the project done in a decision in June 2022. The Sierra Club challenged FERC’s time extension. Earlier this year, the U.S. Court of Appeals for the District of Columbia (DC Circuit) rejected the Clubbers and said FERC properly extended the time to build the project, clearing away the final hurdle (see FERC Wins Lawsuit Against Sierra Club re NFG’s Northern Access Pipe).
With the court decision in hand, NFG (said David Bauer) took another close look at the project and found the initial $500 million price tag had ballooned astronomically. The increase in price to build, plus the fact NFG had already completed a “Plan B” project (called FM100), led to a decision to cancel the project.
Back in 2019, MDN told you about FM100, NFG’s plan to beef up and extend an existing pipeline network to flow an extra 330 million cubic feet per day (MMcf/d) of Marcellus gas to Williams’ mighty Transco Pipeline (see NFG FM100 Pipe Project in NW PA to Feed Marcellus Gas to Transco). The FM100 Project, completed in 2021, installed 31 miles of new pipeline, abandoned 45 miles of old pipeline, built a new compressor station and other bits and bobs for the existing Line FM100 pipeline–work that was done in Cameron, Clearfield, Elk, McKean, Potter and Clinton counties in PA (screw you NY).
At the time, we called it NFG’s “Plan B” if the Northern Access project didn’t pan out—prescient because that’s the language Bauer used in explaining his reasons for dumping Northern Access.
From the Buffalo News:
National Fuel Gas Co. is giving up on its plan to build a 95-mile natural gas pipeline running from McKean County, Pa., through Allegany, Cattaraugus and Erie counties.
Delays in getting required approvals from regulators for its proposed Northern Access pipeline, combined with rising costs since it was first proposed in 2017, led to the decision by National Fuel to scrap the project, the company’s CEO, David P. Bauer, said Thursday.
The pipeline would have carried natural gas from wells in Pennsylvania to a link with a Canadian pipeline under the Niagara River off Chippawa, Ont. The idea was to provide a way to transport natural gas from the prolific production areas in central and western Pennsylvania to markets not only in Western New York, but in the Midwest and Canada.
Ronald Kraemer, then president of Empire Pipeline, points in 2016 to the field in Pendleton where National Fuel planned to build a compressor station for a proposed extension of a natural gas pipeline into Canada.
From the start, the pipeline project faced unrelenting opposition from state regulators, who moved to block the project as far back as 2017. National Fuel fought back in court, eventually winning a favorable ruling from a federal appeals court this spring.
But by then, the cost of the pipeline, which was projected at $500 million when it was first proposed, had shot higher, while National Fuel was also able to complete a smaller scale 30-mile pipeline project in Pennsylvania, called FM100, three years ago that provided another way to bring natural gas from Pennsylvania to other markets.
Still, National Fuel continued to pursue the Northern Access project.
“We believed the region needed more pipeline infrastructure to serve growing demand and we had a FERC-certificated project that would deliver significant volumes into New York State and connected markets,” Bauer said.
“Due to several years of litigation on key regulatory approvals, we never put shovels in the ground,” Bauer told analysts during a conference call on Thursday.
“Earlier this summer, that litigation was favorably resolved in the courts, which led us to take another look at the project,” he said. “But at the end of the day, a substantial increase in expected project costs led us to decide to cease further project development efforts.”
National Fuel officials did not provide an update for the pipeline’s estimated cost.
While the court fight and the battle with regulators from the state Department of Environmental Conservation dragged on, many of the state and federal authorizations needed for the project that National Fuel had succeeded in obtaining had expired, Bauer said. That would have forced National Fuel to go back to those regulators for new authorizations.
By deciding to scrap the pipeline, National Fuel took a $33.8 million charge against the earnings of its pipeline business during the fourth fiscal quarter of this year. The company had spent about $80 million on the project, but it was able to repurpose some of those assets and land rights to reduce the size of the write-off, said Tim Silverstein, National Fuel’s principal financial officer.
The project also faced stiff opposition from landowners and environmental groups, as well as a litany of litigation in state and federal courts. There was a prolonged fight over the DEC’s rejection of the stream crossing permit, which the DEC said posed a threat to wildlife and water quality, as well as a battle over whether National Fuel could use eminent domain powers to seize land for the pipeline.
In contrast, regulators in Pennsylvania quickly granted National Fuel all of the permits it needed to build the portion of the pipeline that would have run through that state. (1)
The following article from the WKBW TV station in Buffalo provides the full, official announcement from NFG:
National Fuel has confirmed to 7 News it is no longer pursuing its plan for the Northern Access Pipeline.
The plan, which faced opposition from residents and environmentalists when it was proposed nearly 10 years ago, was to build a nearly 100-mile natural gas pipeline that extended from McKean County Pennsylvania through Western New York and into Erie County.
National Fuel said a substantial increase in projected costs and ongoing challenges facing natural gas pipeline development in New York State led it to no longer pursue the plan.
You can read the full statement National Fuel issued to 7 News below:
“National Fuel Gas Supply Corporation and Empire Pipeline, Inc., no longer intends to pursue an extension of the Northern Access Project’s FERC certificate, which expires at the end of the calendar year. When initially developed 10 years ago, this project was the Company’s “Plan A” to move Seneca Resources Company’s growing production out of the Pennsylvania basin. When New York regulators put that project in limbo in 2017, we quickly pivoted to “Plan B” – the FM100 Project, a Pennsylvania-based project which was completed in 2021 and moves Seneca’s production to the Transco system. All the while, the Company continued to pursue Northern Access because we believed the region needed more pipeline infrastructure to serve growing demand and we had a FERC-certificated project that would deliver significant volumes into New York State and connected markets. Due to several years of litigation on key regulatory approvals, we never put shovels in the ground. Earlier this summer, that litigation was favorably resolved in the courts, which led us to take another look at the project. At the end of the day and nearly 10 years later, a substantial increase in expected project costs along with the ongoing challenges facing natural gas pipeline development in New York led us to decide to cease further project development efforts.” (2)
(1) Buffalo (NY) News/David Robinson (Nov 7, 2024) – National Fuel gives up on Northern Access pipeline after years of opposition
(2) Buffalo (NY) WKBW-TV Channel 7 (Nov 7, 2024) – National Fuel no longer pursuing its plan for the Northern Access Pipeline