Williams cancels New York Constitution natural gas pipeline

[BENGALURU] Williams Companies said on Monday it canceled the proposed Constitution natural gas pipeline from Pennsylvania to New York following years of opposition from politicians and environmental groups in New York.

"Williams ... has halted investment in the proposed Constitution project," the company said in a statement, noting "The underlying risk adjusted return for this greenfield pipeline project has diminished in such a way that further development is no longer supported."

That decision followed Williams' announcement last week that its fourth quarter and full year 2019 earnings were negatively impacted by a US$354 million impairment of the Constitution project.

Constitution and other gas pipelines in the US Northeast have been stuck in a battle between energy companies supported by US President Donald Trump, who wants more pipelines and other energy infrastructure built, and environmental groups and New York Governor Andrew Cuomo, who favor investment in more energy efficiency and renewables projects.

President Trump and his administration have warned that the federal government could overturn state decisions that block projects, like Constitution, citing national security reasons.

The US Federal Energy Regulatory Commission (FERC) approved construction of Constitution in December 2014, but the project remained stalled primarily due to legal and regulatory battles over a New York water permit.

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Williams gave up on Constitution even though FERC ruled that New York waived its authority to decide on the water permit because state regulators waited too long before rejecting the company's application.

Other gas pipes held up due to New York opposition include National Fuel Gas Co's Northern Access from Pennsylvania to New York and Williams' Northeast Supply Enhancement from Pennsylvania to New Jersey and New York.

Constitution was designed to transport 0.65 billion cubic feet per day (bcfd) of gas 201km from the Marcellus shale in Pennsylvania to New York. In 2019, New York consumed roughly 3.5 bcfd of gas, down from about 3.6 bcfd in 2018, according to federal energy data.

One billion cubic feet is enough gas to supply about five million US homes for a day.

When Williams proposed Constitution in 2013, it estimated the project would cost about US$683 million and enter service in 2016. Delays, however, boosted that estimate to as high as US$1 billion, according to local newspapers.

Constitution is owned by subsidiaries of Williams, Cabot Oil & Gas Corp, Duke Energy Corp and AltaGas.

REUTERS