Kinder Morgan shelves $3 billion pipeline project
The energy giant Kinder Morgan Inc. has pulled the plug on its controversial natural gas pipeline proposed through parts of Massachusetts and Southern New Hampshire, after failing to sign up enough utility customers and facing stiff consumer and political opposition.
Kinder Morgan said on Wednesday that its Northeast Energy Direct project didn’t receive the commitments from big customers that it needed to proceed with the $3.3 billion plan, which would involve building a 188-mile pipeline from a point west of Albany, N.Y., to Dracut.
The company’s withdrawal represents a huge victory for its array of opponents, ranging from grass-roots organizations to established environmental groups to powerful politicians. They also included residents of the many towns that would be affected by pipeline construction and activists who worried it could make New England overly dependent on natural gas.
And the decision could provide a big boost to the other large pipeline construction project proposed for New England, Spectra Energy Partners’ Access Northeast, which has the financial backing of utilities Eversource Energy and National Grid.
“There was probably room for only one of the two competing projects,” said Paul Flemming, director at ESAI Power, a research and consulting firm in Wakefield.
Kinder Morgan had submitted plans for the project to federal regulators in November, and needed their approval before starting construction.
Kinder Morgan’s initial decision to proceed with the project, through its Tennessee Gas Pipeline subsidiary, was based on existing contracts it had with some gas utilities, as well as the expectation that others would sign on to buy gas from the line. Executives at the Texas company were also counting on an unprecedented shift pursued by state regulators in New England that would allow electric customers to be charged for pipeline construction costs.
That change, driven by Governor Charlie Baker’s administration and top officials in other states, is aimed at curbing New England’s relatively high electricity rates by bringing in cheaper natural gas to fuel power plants. Their theory: The cost of pipeline construction would be more than offset by savings in electric rates because more cheap gas could flow from Pennsylvania’s Marcellus Shale. Roughly half of New England’s electricity comes from natural gas power plants.
“This was our big chance to pay lower energy costs, like everybody else,” said Anthony Buxton, general counsel for the Coalition to Lower Energy Costs, a group of industrial and commercial electricity consumers. “That opportunity is gone. . . . For the short run and the medium run, there are going to be manufacturers in the Commonwealth who are going to be saying, ‘Whoa, wait a minute, what does this mean for us?’ ”
In a statement, Kinder Morgan suggested it did not have enough business to justify moving ahead with the project, saying “there are currently neither sufficient volumes, nor a reasonable expectation of securing them, to proceed with the project as it is currently configured.”
One of the main risks the company cited: It’s far from certain that New England states will succeed in establishing rules that would allow electricity customers to be charged for gas pipelines.
In Massachusetts, the Department of Public Utilities last fall approved rules to allow electric ratepayers to be charged for pipeline expansion, to ease supply constraints in the region. National Grid then sought state approval to charge electric ratepayers for the Kinder Morgan and Spectra projects, while Eversource wants to do so for the Spectra project.
But the Conservation Law Foundation appealed the DPU decision, and the case is scheduled to be heard by the state Supreme Judicial Court on May 5.
“We said all along that we didn’t think there was a need for a big new pipeline across the state,” said David Ismay, a staff attorney at the Conservation Law Foundation. “We feel somewhat vindicated that the board of Kinder Morgan is now seeing what we argued.”
Kinder Morgan’s statement hinted at the uncertainty caused by the legal challenge, but didn’t mention the project’s many opponents.
“Kinder Morgan is stopping the pipeline because it is both expensive to ratepayers and simply not needed,” George Bachrach, president of the Environmental League of Massachusetts, said in an e-mail. “Massachusetts has the capacity to develop its own energy in solar, wind and hydro. In the process, we can create new industries and jobs here, rather than exporting our dollars and jobs to fossil fuel states.”
State Senate President Stanley C. Rosenberg, one of a number of Western Massachusetts officials who opposed the project, called Kinder Morgan’s decision a “game changer” that will simplify the broader discussion about how to meet the state’s energy needs. Lawmakers are expected to soon debate an energy bill that is likely to focus on attracting more hydropower from Canada and spurring construction of offshore windmills in waters south of Massachusetts.
But politicians in Western Massachusetts, the area of the state that would have been most affected by Kinder Morgan’s project, weren’t the only ones to raise concerns.
Attorney General Maura Healey last year commissioned a report that showed increased natural gas capacity isn’t needed to guarantee a reliable electricity supply. She said on Wednesday that she considers the Kinder Morgan project to be “too big and too costly for Massachusetts ratepayers.”
Meanwhile, US Senator Edward Markey praised Kinder Morgan’s suspension, saying the pipeline could have turned New England into a “throughway to export US gas to overseas markets” without benefitting residents here, by sending the gas to Canada for export.
While environmental activists celebrated on Wednesday, they said their sights remain on the Spectra project.
“Kinder Morgan recognized that their deep pockets were no match for grassroots power,” Emily Kirkland, director of organizing for the Cambridge-based Better Future Project, said in a statement. “It’s only a matter of time before other fossil fuel companies come to the same realization. Spectra Energy, you’re next.”