New England can breathe a sigh of relief for natural gas prices next winter. The Federal Energy Commission has approved the 124-mile Constitution Pipeline project that will bring Marcellus Shale natural gas from Pennsylvania up into the high priced natural gas markets of New York and New England. The project’s backers – Tulsa, Oklahoma based Williams Partners LP and Houston, Texas based Cabot Oil & Gas Corp. – commented yesterday that the approval means that the pipeline could be built and operational by next winter. The 124 mile pipeline is projected to cost $700 million and is the first to be approved out of a slew of proposals designed to bring Marcellus Shale gas to New York and New England.
Marcellus Shale (from the Marcellus Formation) is the largest-known underground natural gas reservoir in Pennsylvania. Production from the reserve began in the last five years and has made Pennsylvania the nation’s second-largest natural gas producer behind Texas. This particular pipeline is set to begin in Pennsylvania’s Susquehanna County and run through New York’s Broome, Chenango and Delaware counties to connect with the existing Tennessee and Iroquois pipelines in the Schoharie County town of Wright, 80 miles southwest of Albany.
The pipeline will have an imminent effect on the natural gas markets in New York and New England which commonly experiences some of the highest natural gas spot prices in the country. Marcellus Shale is about half the cost of the Gulf of Mexico gas that traditionally reached New York and New England through existing pipeline infrastructure. Marcellus Shale is also cheaper than the Canadian gas that flows into the Northeast.
However despite the approval of this 124 mile Constitution Pipeline, a lot more will need to be done to solve the winter energy price spikes. New England has become increasingly reliant on natural gas for home heating but congested pipelines and overexerted grids are to blame when the colder weather comes around – causing the rate hikes. While the Constitution Pipeline is the step in the right direction, New England will require additional pipeline capacity for those coldest days of the year.
