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Another U.S. Pipeline Project Collapses

Oil and gas pipeline opponents scored a win this week after PennEast Pipeline Co. said it would drop a gas pipeline project that would have shipped the commodity from Pennsylvania to New Jersey after it failed to secure a water quality certification permit from New Jersey authorities.

"The PennEast partners, following extensive evaluation and discussion, recently determined further development of the project no longer is supported," the company said in an emailed statement as quoted by Reuters, adding that it "has ceased all further development of the project."

Bloomberg recalls that last year alone, two gas pipeline projects were canceled—the $8-billion Atlantic Coast pipeline and the Constitution pipeline—and another one's completion was pushed to 2022 because of permitting obstacles.

Interestingly enough and telling about the extent of pipeline opposition among some local and state governments, the PennEast project got a nod from none other than the Supreme Court earlier this year. The consortium behind the project and New Jersey clashed over the use of eminent domain to secure the land necessary to build the pipeline, and the Supreme Court ruled in favor of the consortium.

The case followed a federal appeals court ruling from 2019 against PennEast Pipeline Co., which said that PennEast could not use eminent domain to seize land owned by the state of New Jersey for pipeline construction. The federal appeals court argued in 2019 that taking the New Jersey-owned land went against the 11th Amendment, which protects states from certain lawsuits.

The Supreme Court overturned the appeals court ruling in June this year, saying, "Specifically, we are asked to decide whether the federal government can constitutionally confer on pipeline companies the authority to condemn necessary rights-of-way in which a state has an interest. We hold that it can."

Even the Biden administration, generally not a fan of oil and gas infrastructure, threw its weight behind the PennEast project. However, this appears to have not been enough to guarantee the project will see the light of day. 

By Charles Kennedy for Oilprice.com

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