Kinder Morgan canceled its $3.1 billion Northeast Direct pipeline project, which was scheduled to bring gas to Boston and the New England area starting in 2018.
In July, Kinder Morgan’s board authorized subsidiary Tennessee Gas Pipeline (TGP) to move forward with the project’s “market path” segment from Wright, NY to Dracut, MA, in an effort to “help alleviate New England’s uniquely high natural gas and electricity costs” caused by limited access to natural gas.
The board’s initial approval was based on contractual commitments at the time by LDCs and expected commitments from additional LDCs, electric distribution companies, and other market participants in New England.
“Unfortunately, despite working for more than two years and expending substantial shareholder resources, TGP did not receive the additional commitments it expected,” Kinder Morgan said in a written statement Wednesday.
The company added current market conditions and “counter-party financial instability” have “called into question” TGP’s ability to secure incremental supply for the project.
The 30-inch, 1.3 Bcf/d pipeline, would have been an extension off of Kinder Morgans’ existing TGP pipeline, which has delivered natural gas to New England since the 1950s.
According to the independent electric system operator ISO New England, New Englanders paid over $7 billion more for electricity during the winters of 2013 and 2014 than what they paid for electricity during the winter of 2011, largely as a result of the existing lack of pipeline capacity servicing the region.
Independent studies have concluded that the New England region will require 2 Bcf/d of gas capacity over the coming years.
By Michael Reed, Managing Editor