Why $3.3 Billion Northeast Energy Direct Pipeline Was Defeated
Vincent DeVito, an attorney and partner in Bowditch & Dewey L.L.P.’s Boston and Washington, D.C. offices, is recognized for his expertise in energy, regulatory, and corporate matters. Mr. DeVito is a former U.S. Assistant Secretary of Energy for Policy and International Affairs, and serves as counsel for Northeast Energy Solutions, Inc. The views expressed here are his own, not necessarily those of the law firm.
It's a David and Goliath story. But instead of a slingshot, David in this case fired off a stiff legal challenge to defeat the giant.
Kinder Morgan, Inc. is North America's largest energy infrastructure company. In late May, it withdrew an application to the Federal Energy Regulatory Commission. Kinder Morgan will apparently not proceed with the $3.3 billion Northeast Energy Direct natural gas pipeline project.
The pipeline was originally slated to become operational in November 2018. It would have had the capacity of handling 1.3 billion cubic feet a day, and was intended to boost the output of natural gas from Pennsylvania's Marcellus Shale deposits. The gas would have been conducted via a 188-mile mainline pipeline through rural areas of New York State, Massachusetts, and New Hampshire.
Kinder Morgan said it was cancelling Northeast Energy Direct strictly because of the failing economics of the project, and cited "inadequate capacity commitments from prospective customers." To the casual observer, it probably seems that plunging commodity prices, a competitor's pipeline project, and political notice of broad opposition formed a serious counterweight to the proposed pipeline.