A new study of the proposed PennEast Pipeline project delved into the economic jolt the $1 billion investment could have on jobs, wages and spending in Pennsylvania and New Jersey.
Several speakers discussed the study during an open forum for the project hosted by the Greater Lehigh Valley Chamber of Commerce this morning at DeSales University in Upper Saucon Township. Officials said the construction of the pipeline would result in direct, indirect and induced spending that totals $1.6 billion for the duration of the construction.
PennEast Pipeline Co. LLC in Wyomissing is looking to build a 114-mile, 36-inch pipeline from Luzerne County in northeastern Pennsylvania into Mercer County, N.J. PennEast Pipeline LLC is a consortium of energy companies that includes AGL Resources, NJR Pipeline Co., PSEG Power LLC, South Jersey Industries, Spectra Energy Partners and UGI Energy Services.
The pipeline would provide gas markets in eastern and southeastern Pennsylvania and New Jersey with natural gas produced in the Marcellus Shale region, with a proposed path that crosses Carbon, Northampton and a small portion of Upper Bucks counties before ending at Transco’s natural gas pipeline interconnection near Pennington, N.J.
“The lack of pipeline infrastructure is real, it’s quantitative and it’s a significant disadvantage to folks in the market,” said Peter Terranova, vice president, midstream services for UGI Energy Services in Wyomissing.
Pennsylvania and New Jersey residents, commercial businesses, industrial production plants and power generation facilities are expected to benefit from the construction and ongoing operations of the pipeline, Terranova said.
The increased income from the potential downward price impact of a new, steady supply of natural gas in the region is another added benefit, according to the study, which was submitted by Econsult Solutions Inc. and Drexel University School of Economics. Econsult is an economic consulting services firm in Philadelphia.
The pipeline would dramatically lower energy costs for consumers, Terranova said.
While the plan is to get the pipeline in service by 2017, Terranova said PennEast “has a lot of work to do.”
PennEast is looking to file its formal application with the Federal Energy Regulatory Commission in July, which could take a year for the agency to review, said Patricia Kornick, spokeswoman for PennEast Pipeline.
Pending approval, construction would begin in spring 2017 and take eight to nine months to complete. The depth of the pipeline would be three to five feet.
SEEKING LOCAL VENDORS
The company has started an expansive effort of planning, engineering and early stage construction scoping so some of the money gets spent this summer when it begins acquiring pipes for the construction of the pipeline, Terranova said. The width of the construction-work area for the pipeline is expected to be 100 feet, he added.
PennEast would like to find local suppliers as early as possible, but Terranova said it’s difficult to find local companies that make the materials it would need and that are not backed up with other projects.
“We will source pipes and materials as close to home as we can,” he said. “Our goal here is to use local vendors as much as possible.”
$740M IN CONSTRUCTION WAGES
The project is a crucial part of the natural gas infrastructure and would generate a tremendous amount of employment during construction, said Stephen Mullin, president and principal of Econsult Solutions.
Mullin said the construction of the pipeline would result in direct, indirect and induced spending that totals $1.6 billion for the duration of the project’s design and construction. This amount includes $740 million in construction worker wages that would support more than 12,000 jobs during construction and $890 million in construction and design costs.
Induced spending would be generated by employees who are spending money in the communities and neighborhoods during construction, Mullin said.
98 PERMANENT JOBS
In Pennsylvania and New Jersey combined, the ongoing operations of the project are estimated to annually generate an approximate $23 million in total economic impact, supporting 98 jobs with $8.3 million in wages, according to estimates from the study.
Consumers also will likely benefit from lower energy prices, said Paul Jensen, associate dean for graduate and undergraduate programs at Drexel University’s LeBow College of Business in Philadelphia.
“What happens when energy prices fall … consumers now have more disposable income,” Jensen said.
For every $10 million that consumers save in this region, $13.5 million are the economic impact of that, plus 90 jobs, Jensen said, referring to both Pennsylvania and New Jersey.
TAX WOULD PASS THROUGH
Several topics came up during Monday’s question-and-answer session, including Pennsylvania Gov. Tom Wolf’s proposed tax on Marcellus Shale gas producers and its effect on natural gas prices.
“I think it’s fairly obvious if you tax the producing industry, the price of natural gas is going to go up,” Terranova said. “That clearly will be an impact.”
The pipeline would also help meet compliance standards set by the Environmental Protection Agency’s environmental standards on power plants, creating opportunities for more conversions of coal-to-gas facilities, he said.
PennEast does not plan to build facilities to export natural gas out of the nation. The natural gas produced for this pipeline would be used only by Pennsylvania and New Jersey customers, Terranova said.
“There’s more than enough reason here to build the pipeline,” he said.
The Greater Lehigh Valley Chamber will evaluate its position on the PennEast project and is expected to make a statement in the next few months, according to Michelle Griffin-Young, executive vice president, government and external relations for the chamber.
Several state business organizations have shown their support for the PennEast Pipeline project, including Pennsylvania Chamber of Business and Industry, Pennsylvania Manufacturers Association and Pennsylvania Business Council.