The proposed PennEast pipeline that will cross the Sourlands region into Mercer County will have lasting economic impact during and after its construction, according to a study released last week.
The study was commissioned by the PennEast Pipeline Company, a consortium of major East Coast natural gas providers (AGL Resources; NJR Pipeline Company; PSEG Power LLC; South Jersey Industries; Spectra Energy Partners; and UGI Energy Services); and carried out by Drexel University’s business school and Econsult Solutions, Inc.
At a media conference hosted by the company on Monday, February 9, it was suggested that the interstate pipeline would create 2,500 temporary construction jobs. Local labor will be used whenever possible and the study estimates “a total economic impact in both states from design and construction to be $1.62 billion, supporting over 12,160 jobs with $740 million in wages.”
The approximately 110-mile-long natural gas pipeline from Pennsylvania to New Jersey would originate in northeastern Pennsylvania. The underground line would run through Hunterdon and into Mercer County. According to the study, it would deliver approximately 1 billion cubic feet of natural gas per day to markets in eastern Pennsylvania, southeastern Pennsylvania, and New Jersey with natural gas produced from Marcellus shale in Pennsylvania.
“The long-term benefits from being near Marcellus Shale are significant, lower prices and consequent savings for all involved, and a ‘ripple’ effect on the economy,” said the study’s author Vibhas Madan, a professor of economics at Drexel. While Mr. Madan said it was beyond the scope of the present study to quantify that “ripple” effect, he said that there was a possibility of 90 full-time permanent jobs being created. “For each $10 million in increased disposable income, a total of $13.5 million in economic impact could be generated, supporting 90 jobs,” said the report.
“During the construction phase some $17 million would be generated in state personal income taxes,” said Stephen P. Mullen, president and principal of Econsult Solutions.
PennEast Pipeline Company representative Peter Terranova spoke of “long-term benefits to the region in lower energy costs, clean burning gas, supported by main energy providers in the region.” He described a “compelling” need for the PennEast Project that would result in lower energy costs to consumers by accessing gas available 100 miles away rather than 1,000 miles away. A second study showing benefits to the consumer would be forthcoming, he said. Results of that study should be released in a few weeks.
The primary beneficiary, said Mr. Terranova, would be gas-fired power generation which would then benefit electricity users in Eastern Pennsylvania and New Jersey by “displacing coal and reducing the cost of fuel to generating plants.”
“Even if residents do not use natural gas directly, the project is expected to lower gas prices and in turn lower the cost of electricity produced by plants that use gas as fuel,” the report states.
The PennEast pipeline proposal should not be confused with the existing interstate Transcontinental pipeline. “The two are not directly related,” explained Williams Company spokesperson Chris Stockton by phone Monday. “While Transco is an existing pipeline supplying half of the gas used in New Jersey, the PennEast pipeline is new; it would move gas from the shale developments in Pennsylvania into New Jersey where it would interconnect with Transco’s existing line.”
Across New Jersey, the study suggests a total potential estimated annual economic impact of $2.1 million, supporting 10 jobs and $800,000 in wages.
The study took 6 to 8 weeks to complete using 2013 figures from the U.S. Dept. of Commerce. How much Drexel was paid for the analysis was not disclosed.
In response, the Delaware Riverkeeper Network issued a press release questioning the study’s findings: “Penn
East is attempting to defend and advance the economics of their pipeline project in a vacuum, simply talking about the economic costs, jobs, and values of PennEast without consideration of the potentially superior economic benefits and values of other clean energy strategies and without considering the economic costs the project will cause to communities,” said the release. “Even assuming their figures are true and accurate, they are talking about creating a very limited number of jobs for every $1 million invested.”
DRN suggests that money would be better spent on “clean energy strategies.”
Delaware Riverkeeper Maya van Rossum criticized the study’s failure to consider the “adverse impacts to recreation and ecotourism, the economic damage to agricultural crop production, harms to other businesses, the impact on market values and marketability of properties through which the project will cut, the costs to the community to respond to emergencies, to the increased storm-water runoff, pollution inputs, and other adverse impacts that could result from this project and be foisted upon the shoulders of local towns and residents, and they do not consider the health impacts to the residents who will find themselves living next to a compressor station emitting dangerous pollution impacting the health of local residents, family, and kids.”
According to Ms. van Rossum, the Drexel study “presents an incredibly skewed vision of the PennEast pipeline as one that brings with it positive economic benefits. It completely overlooks the considerable economic downsides and vastly exaggerates any alleged upsides.”
She also questions the value to regional consumers of the gas being conveyed. “Given that the PennEast pipeline connects into a system that would allow them to directly take their gas to the recently approved Cove Point export facility raises very serious questions about their heavy reliance on reduced energy costs for Pennsylvania and New Jersey residents — a benefit they characterize as among the most significant claimed economic benefits of the project,” said Ms. van Rossum.
The proposed pipeline has raised opposition from Princeton area residents and environmental groups such as The Sourlands Conservancy, which is strongly opposed to the new pipeline.
The method by which the gas is harvested is highly controversial. Hydraulic fracturing (“fracking”), involves injecting liquid at high pressure into subterranean rocks to force open existing fissures and extract oil or gas. Opponents have described its environmental consequences as including contamination of ground water, depletion of fresh water, degradation of air quality, even the potential to trigger earthquakes.
State Senator Shirley Turner, (D-Mercer, Hunterdon) recently introduced a resolution against the pipeline’s construction and U.S. Rep. Bonnie Watson Colman (D-Mercer) has also expressed opposition.
The PennEast proposal is being reviewed by the Federal Energy Regulatory Commission, which will hold a public meeting on the Penn
East pipeline draft environmental impact statement at the West Trenton Ballroom, 40 West Upper Ferry Road in Ewing, Wednesday, February 25, at 6 p.m.
“We are still waiting for approval from state governments but if approved, the project should get underway in the spring/summer of 2017 and be operational in November of that year,” said PennEast spokesperson Patricia Kornick.
A copy of the full study can be viewed on the PennEast website http://penneastpipeline.com/economic-impact-analysis.