PennEast’s Puff Balls

puff balls

The Citizen’s Voice, a local newspaper in Luzerne County, Pennsylvania ran a Q&A article with representatives of the PennEast Pipeline.

The approximate 108-mile PennEast Pipeline is proposed to be constructed from Dallas, Luzerne County, PA to Pennington, Mercer County, NJ and has been experiencing fierce opposition. PennEast filed their official application to the Federal Energy Regulatory Commission (FERC) in September 2015.

The 21 day period for filing a Motion to Intervene resulted in 1,473 unique filers with 1,427 expressing opposition, 36 did not state a position of support or opposition, and 10 (all with direct PennEast interests) filed in support. See: The Bee on PennEast’s Nose)

With such opposition, PennEast is scrambling for “good press” which explains the Citizen’s Voice article.

“PennEast project manager Anthony Cox and PennEast Spokeswoman Patricia Kornick answer some commonly asked questions about the project, such as whether it would benefit northeastern Pennsylvania residents and why the pipeline is going to be so big.”

Lobbing Puff Balls

To describe the questions in the article as being softballs is an insult to softballs. The questions, with no follow-up questions were more like puff balls – very soft and fuzzy.  If there were ‘harder questions” asked, they did not appear in the article.

Q: How is the PennEast going to benefit our region?

A: PennEast Pipeline project manager Anthony Cox answer:  Cox said there are requests for connections for gas service in the Jack Frost and Split Rock areas, and UGI has had interest from some folks in Laflin and the Old Boston section of Jenkins Township.

PennEast promotes itself as “Bringing affordable local natural gas to Pennsylvania and New Jersey families and businesses”, except no local families or business will be getting the gas. They will be getting a huge pipeline in their backyard.

Q: Would we have lower gas prices because of PennEast?

A: “You don’t have to be buying PennEast gas to be the beneficiary of lower prices,” Cox said

He gave as an example lower gasoline prices at the pump due to supplies from South Dakota. An increase in supply in the areas that need the natural gas lowers the price for everybody, he said.

Cox also believes there will be direct benefits to consumers in Luzerne and Lackawanna counties in terms of lower costs for electricity generation by natural gas-fired power plants.

 

Natural gas prices are low because the industry has created a glut. Too much supply and not enough demand cause prices to drop.   And what does the PennEast Pipeline have to do with gasoline prices in South Dakota?

PennEast “customers” do include electricity generation plants, in New Jersey and do not service Luzerne or Lackawanna counties.

FirstEnergy, one of PennEast’s customers, was approved for a rate increase in July 2015: The distribution rate increase, the first in at least 20 years, was approved by regulators for FirstEnergy Corp.’s four Pennsylvania utilities. This meant a 13.1 percent rise for West Penn Power, or a monthly bill of $104.62 instead of $92.47 for a typical customer.

Q:Why is the pipeline 36 inches in diameter? Isn’t that pretty big?

A: Because there will be a lot of gas: The pipeline’s full capacity is 1.1 billion cubic feet per day, and that’s what the people who are paying for it intend to use, Cox said.

According to US Department of Energy (DOE) Secretary Ernest:  High-volume transmission pipelines, which carry gas from wells to refineries and storage facilities, remain “underutilized” and still have room to spare, but smaller distribution lines – which carry gas to customers – are aging and at capacity, harming the environment and putting consumers at risk of explosions.

New pipelines will essentially STORE the gas coming from gas well pads and only relieve the glut at the well heads. The bigger the pipeline means there is more room to store more gas. (See: Natural Gas – Got Glut?)

Q: What about eminent domain?

A: Cox said PennEast has just begun the land acquisition process. One of the things the company works with landowners on is fair compensation for their land, as well as for any inconvenience caused by construction, such as lost crops, he said. After the pipeline is installed, the property returns to its original use, he said.

Not mentioned is threats of eminent domain are being used by the land acquisition companies hired by PennEast.   For many people, their property will be bisected or crossed in such a manner which would prevent any future plans for developing their property.

Landowners have asked PennEast to shift the pipeline to another place on the property which would be less intrusive.

PennEast said NO.

Q: Pennsylvania doesn’t tax pipelines. How would the state benefit?

A: Although the state doesn’t charge a property tax on the pipeline, there will be sales tax and income tax paid by the people who work on it, Cox said.

PennEast workers live in the communities as well, and this will be an investment in the community, Kornick said.

At least they admitted pipelines are exempt from paying taxes – so there is no revenue benefit to Pennsylvania from the pipeline. Considering the construction of the pipeline is expected to take 8 weeks – sales and income tax paid by PEOPLE (not by PennEast) will not generate revenue – even if Pennsylvania raises the sales tax in response to the natural gas industry beating back a severance tax.

FERC’s extensive letter to PennEast demanding clarification of their plans and intention: (emphasis added) FERC-PENNEAST 11-24-2015 20151124-3028(31042072):

“Solutions Inc. and Drexel University economic impact analysis referenced in PennEast’s application, which estimates that construction of the project would support a total of 12,160 jobs. The fact sheet on PennEast’s web site states that “slightly less than half (of these jobs) would be in industries other than construction” which implies that more than 6,000 jobs would be direct construction jobs. However, peak employment for the entire project is identified in table 5.3-3 as 2,660 jobs and would last for about 8 weeks with a smaller workforce identified for the rest of the construction schedule. Please explain this discrepancy.”

(Also see: PENNEAST and the TACO PIPELINE)

There was one follow-up question regarding job claims.

Q: So will local people be hired for the project?

A: Kornick said it will be a predominantly local workforce, except when there are specialty skills required.

As stated in PennEast’s own economic analysis Section 3.4, Design and Construction Economic impact – Page 11 : (emphasis added)

In some cases, large and/or specialized construction projects require the use of construction workers who live outside of the region. The workforce for the Project is likely to be comprised of personnel from across the country due to the specialized nature of pipeline construction Although the geographic distribution of the construction workforce is not finalized at this time, it is necessary to account for the non-resident construction workers who spend a portion of their income outside of the region. For example, a construction worker from Texas who moves to Pennsylvania for six months of construction work will not spend his entire income in the area. It is likely the construction worker will spend a portion of that income in Texas. Therefore, the following economic impacts do not include a portion of the induced spending of the non-resident construction workers. It is estimated that 25 percent of the disposable income of the construction workforce will be spent outside of Pennsylvania and New Jersey.”

Much of the PennEast job numbers are bloated by “ancillary” or indirect jobs.   New Jersey On-Line (NJ.com) asked about the ancillary/ indirect jobs: (emphasis added)

The project would employ 2,500 temporary construction workers to actually build the pipeline, a task expected to take about seven months, said to Patricia Kornick, PennEast spokeswoman.

The remainders of the 9,960 jobs cited in the Drexel study are ancillary positions created by the $1.6 billion in economic activity generated by the construction, Kornick said.

“The other jobs would be across other supporting industries,” Kornick said.”There would be consulting and architectural, food services and other sectors.”

For instance, if the operator of a taco truck pulled up to a construction area to feed hungry workers at lunchtime, that operator would be counted as one of the 12,160 jobs “supported” by the a pipeline, under the formula employed by the Drexel study.

“That would fall under the food services category,” Kornick said.

The Expert Report on the PennEast Pipeline Project Economic Impact Analysis for New Jersey and Pennsylvania, presented to the New Jersey Conservation Foundation by Ian Goodman & Brigid Rowan, November 4, 2015 shows a different picture.

This report concludes the PennEast version of job creation is overstated.

The Goodman Group, Ltd. (TGG) also finds that even if the PennEast Analysis’ employment impact estimates were realistic:

  • the employment impacts from the design and construction of the Project are (a) tiny in the context of the New Jersey and Pennsylvania state economies (less than 0.1% of total New Jersey jobs); and (b) very short-term (mainly from actual construction and related spin-offs which occur over a one year period (mostly in2017), but are concentrated into only six months); (Section 3.3.1 and AppendixA);
  • the employment impacts from ongoing activities to operate and maintain the pipeline are infinitesimally small, especially in the context of the New Jersey economy (10 jobs or about 0.0002% of total state jobs). (Section 5.2)

 In a resource report filed by PennEast, PennEast stated: 100 percent of municipalities in New Jersey are being uncooperative.

 Pennsylvania is not quite at being 100% uncooperative, but the appearance of this puff piece does indicate PennEast is worried more municipalities and landowners are becoming “uncooperative.

 

© 2015 by Dory Hippauf

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