PORTLAND, Maine — Kinder Morgan has halted plans for a new pipeline to deliver fracked natural gas from the Marcellus Shale into New England, where natural gas fuels most of the power generation.
Tennessee Gas, a Kinder Morgan subsidiary, said it has suspended work on the project because too few local gas companies signed on for capacity.
“As a result, there are currently neither sufficient volumes, nor a reasonable expectation of securing them, to proceed with the project as it is currently configured,” the company said in a statement.
The 188-mile project was designed to deliver up to 1.3 billion cubic feet of natural gas per day into New England and Canada, according to the company’s website.
Tennessee Gas was one of three firms hoping to get money from Maine ratepayers to support expanded natural gas capacity into the region, using a provision in a sweeping energy bill the Legislature approved in 2013.
The company said the failure of other states to pass similar rules allowing electric companies to enter binding contracts with pipeline developers was part of the reason it curtailed work on the Northeast Energy Direct line.
The law passed in Maine gave utility regulators authority to have power companies enter long-term contracts for natural gas pipeline capacity. The utilities could then recover the cost of those contracts from ratepayers with the idea that increased natural gas capacity would benefit ratepayers by cutting electricity costs in the long-run.
The Tennessee Gas project was the only proposal before Maine regulators that called for constructing a new pipeline. Gov. Paul LePage urged federal regulators in a letter in February to ” expeditiously move forward” in reviewing the plan.
LePage, who has pushed generally for expanded natural gas pipeline capacity, said in a 2014 interview he supported committing ratepayer funds to a competing pipeline expansion from Spectra Energy, using the authority in the 2013 bill.
Regulators determined in 2014 that likely would not be worth ratepayer money but have continued to evaluate the costs and benefits of individual pipeline proposals, including the one from Tennessee Gas.
The region depends highly on natural gas for generating electricity, as nuclear and other generators retire. That dependency in recent years led to spikes in electricity prices, as pipeline capacity was not able to meet peak power demands. The past mild winter was an exception, when imports of liquefied natural gas and mild weather curbed price spikes, according to the Energy Information Administration.
The Boston Globe reported environmental groups long opposed to the project cheered the announcement Wednesday.
Kinder Morgan said that although it’s suspended work on its Northeast Energy Direct project, it “remains committed to meeting the critical need for constructing additional natural gas infrastructure in the region” and will continue to explore alternatives to supply local gas utilities, such as Bangor Gas and Unitil.
The company said in earnings statements Wednesday that the decision made up the bulk of its $1.3 billion cutback in capital project spending for 2016, down to $2.9 billion.