Commonwealth Pipeline plan officially suspended

Posted: April 20, 2013

There are apparently more than enough Marcellus Shale pipelines in the pipeline, for now at least.

The Commonwealth Pipeline, a $1 billion trunk-line project proposed last year by three companies to transport Marcellus natural gas from Williamsport to Washington, has officially been suspended, according to the venture's website.

There was insufficient demand for the 200-mile, 30-inch pipeline that could carry 800 million cubic feet of gas a day.

The project's suspension was attributed to low gas prices, a slow economy, and the expansion of existing pipelines, said Simon Bowman, a spokesman for UGI Corp., the Valley Forge energy firm that is one of the project's three partners.

The sponsors say they are just deferring plans until market conditions improve.

"We still believe that the project is needed, it's a good project, and it's just a matter of time before it develops," John J. Sherman, chief executive of Inergy Midstream L.P., told investors in February. Inergy, based in Kansas City, Mo., would have built and operated the pipeline.

That the partners were unable to secure sufficient commitments for the pipeline is telling because two of the companies organizing the venture, UGI and WGL Holdings Inc., own natural-gas distribution companies that could have been customers. UGI owns several gas utilities in Pennsylvania, and WGL owns Washington Gas.

The nation's infrastructure is undergoing a major reconfiguration in response to a boom of new gas discoveries in formations like Pennsylvania's Marcellus Shale.

Several existing pipelines are pushing ahead with plans to expand capacity to transport gas out of the Marcellus to East Coast markets. Those plans call for reversing flow on some loops and adding capacity along other segments, so they should cost less and provoke less political resistance than a new pipeline on a virgin route.

Columbia Gas Transmission is currently engaged in the "prefiling" process with the Federal Energy Regulatory Commission to add capacity to its existing route in Chester County, part of a larger plan to push more Marcellus gas to market. Last week, Columbia held open houses in Chester and Gloucester Counties, where construction would take place.

The Commonwealth Pipeline, which had not progressed far in the planning, would have traversed Chester County along a new north-to-south route. In recent months, apprehension has been growing about it.

The three partners behind the Commonwealth Pipeline told investors a few months ago that it was being put on the shelf.

"Initial demand for the project did not meet our expectations," John L. Walsh Jr., the incoming chief executive of UGI, told analysts Jan. 31.

Walsh said the demand was "a little bit uncertain due to the general economy and the fact that there were some incremental options for capacity that soaked up what new demand was there."

Some media outlets, including The Inquirer, reported last month that the project was on hold. The project formally announced the suspension last week on its website, which the Associated Press reported Thursday, a story picked up widely.

Though the venture is no longer actively trying to secure right-of-way for the pipeline, public discomfort continues to grow.

Several public meetings have been held along the Commonwealth Pipeline route recently to organize opposition. Last week, 80 people attended a pipeline workshop in Reading sponsored by the Penn State Cooperative Extension.


Contact Andrew Maykuth

at 215-854-2947 or amaykuth@phillynews.com,

or follow on Twitter @Maykuth.

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