The state Department of Environmental Conservation’s denial of a water quality certificate to National Fuel effectively stops the company’s proposed $455 million Northern Access natural gas pipeline project.
The Williamsville-based gas company warned Monday about the consequences for Western New York.
• A loss of more than 1,000 new jobs.
• Millions of dollars in lost tax revenue to school districts and municipalities.
• Higher costs for energy consumers.
• A reduction in the state’s energy reliability
“While New York proclaims it is ‘open for business,’ and a ‘premier place to invest and grow,’ the DEC’s action belies that claim,” said Ronald J. Tanski, president and CEO of the National Fuel Gas Supply Co.
The DEC rejected the company’s proposed pipeline – which was to cross 192 creeks or streams along a 97-mile path from Pennsylvania to Elma – on grounds it was too big of a threat to water quality and wildlife.
The agency identified eight trout streams by name in its denial, including Cattaraugus Creek, Ischua Creek and Elton Creek.
Cattaraugus Creek’s watershed is also designated as a “sole-source aquifer,” meaning it's the only drinking water source for residents and farmers in a 325-square-mile area.
That was a main point of contention for many residents in the area who opposed the project.
National Fuel called the DEC’s “11th hour” decision issued on Friday “troubling,” especially given the agency’s approval of several other projects it contends had a bigger affect on the environment, including Cattaraugus Creek.
“These construction activities would certainly have less effect than either exploding an entire bridge structure and dropping it into Cattaraugus Creek (Route 219) or developing and continuously operating a massive construction zone in the middle of the Hudson River (Tappan Zee Bridge) for a minimum of five years – both DEC approved projects,” Tanski stated.
Tanski said his company provided DEC "voluminous detailed studies" showing effects on streams would be "temporary and minor."
The DEC received more than 5,700 comments on the project and a trio of public hearings were held in February in the region.
The DEC said it relied on "an in-depth review" of National Fuel's materials and feedback it received during its public comment period in making its decision.
It reinforced its decision on Monday in light of National Fuel's comments stating that the agency "has been consistent with all applicable laws and regulations pertaining to water quality standards and the protection of water bodies."
"DEC stands by this decision to deny this water quality certificate on the grounds that the proposed project would have impacted a large area including more than 192 streams and over 73 acres of federal and state wetlands, and the Applicant did not demonstrate that the proposed project would comply with New York’s water quality standards, the same standards that have been in place for decades," the agency said in a statement to The Buffalo News.
Opponents of the pipeline were overjoyed – and in some cases surprised – by the result.
“Many people out here were very fatalistic about it,” said Lia Oprea, a Sardinia landowner facing eminent domain. “We were all like ‘Whoa! They listened to us.’ ”
Oprea led the Wyoming, Erie and Cattaraugus Communities Act on the Pipeline resistance group that included numerous landowners and farmers.
“It’s such a powerful, wonderful feeling,” Oprea said. “I can’t believe this worked.”
It’s the second time in less than a year that the DEC has shot down a proposal for a major pipeline that was to transport natural gas obtained by deep-well, hydraulic fracturing (“fracking”) from Pennsylvania through New York to market.
Last April, the agency rejected the same water quality certificate to Williams Companies’ proposed Constitution Pipeline in the eastern Southern Tier for many of the same reasons.
That case is being appealed.
National Fuel declined to say Monday what its next move will be other than that it is continuing “to analyze the DEC’s rationale.”
Meanwhile, area labor leaders expected to be involved in the project plan a meeting this week.
The Business Council of New York State criticized the DEC Monday for impeding construction "of a critically needed natural gas pipeline."
"The (DEC’s) decision to establish new criteria to review this project will jeopardize the Northern Access Project, and any other infrastructure projects in the state which happen to cross streams or wetlands," according to Darren Suarez, the Business Council's director of government affairs. "This project would benefit the entire upstate New York economy, and provide critically needed natural gas. The project would also bring abundant employment opportunities and tax revenues to the areas where the project is proposed to be constructed and operated.”
National Fuel's plans included constructing a 24-inch pipeline to carry gas from Pennsylvania up through Allegany, Cattaraugus and southern Erie counties to a connection point at a compressor station in Elma. It also planned upgrades to a Porterville compression station, installation of a new compression station in Pendleton, a dehydration facility in Wheatfield and two more miles of pipeline in Niagara County.
Earlier this year, National Fuel officials called the nearly half-billion project a necessary step for the future growth of the locally-headquartered company.
“It doesn’t do anybody any good to drill natural gas in north central Pennsylvania if you can’t get it to market,” Ron Kraemer, the senior vice president of National Fuel’s Gas Supply Corp. and president of the existing Empire Pipeline told the News in February. “We need to move it to where people use it.”
The company, in its statement Monday, pointed out that 57 percent of the state’s electric generation is powered by natural gas – a figure that’s only expected to increase as the state transitions away from coal and nuclear plants for electricity.
“As New York continues a long-term transition to more and more renewable electric generation, it is essential for the natural gas industry to stand ready, at a moment’s notice, to provide the gas supply necessary to generate the power to support the reliability of the power grid,” Tanski said. “National Fuel remains committed to this energy infrastructure project that will be an important contributor to the energy dependability and economic vibrancy of New York State.”
The Northern Access Pipeline, according to National Fuel, was designed to provide increased reliability to natural gas markets in the region and access to affordable energy for its customers.
“What is perhaps the most troubling aspect of this decision is that DEC waited literally until the 11th hour to issue this denial, even though we had detailed discussions with DEC staff over a 34-month period and undertook detailed engineering and environmental studies at the agency’s request to support the stream-crossing techniques that now form the basis of their denial,” Tanski said.
While elated at the results, opponents of the pipeline said they recognize the DEC’s decision was just a single victory in their “battle” against National Fuel.
The next battle will come in the courtroom in coming weeks as eminent domain procedures loom in Allegany, Cattaraugus and Erie counties.
Oprea will be fighting to keep the gas company from accessing any of her 188 acres.
Her day – and those of more than a dozen other landowners – in court comes on May 3.
“We’re all fighting it,” Oprea said. “Our case just got stronger, and theirs just got weaker.”
The rejection is a blow to National Fuel, which viewed the Northern Access Pipeline project as a central piece of its broader plan to increase the capacity of its pipelines that can carry natural gas from the Marcellus Shale region of central and western Pennsylvania to markets, especially in Canada, that are hungry for new sources of cheap natural gas.
Marcellus natural gas is cheap. Because there is less pipeline capacity than is needed to carry all of the natural gas being produced in the region to markets in New York, Canada and the East Coast that can use it, the price of natural gas in Pennsylvania’s gas-producing hotbed has been significantly depressed.
While prices in the Marcellus region have jumped over the past year as some new pipeline capacity has been added, gas producers still are being paid around 15 percent less for their gas than the national spot price of around $3.30 per 1,000 cubic feet.
The rejection of the Northern Access Pipeline project will have a dampening effect on gas prices in the Marcellus region because it will eliminate what would have eased the pipeline bottleneck that now keeps a lid on prices, even as gas producers, including National Fuel, have cut back on their drilling programs because of the depressed prices.
The rejection caused National Fuel’s stock price to tumble by nearly 9 percent to a two-month low, falling $5.22 to $55.47.
News Business Reporter David Robinson contributed to this report.
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