Algonquin partners with Kinder Morgan on northeastern U.S. pipeline project

Algonquin Power & Utilities Corp. (TSX: AQN) plans to participate in the development of Kinder Morgan‘s proposed Northeast Energy Direct (NED) natural gas pipeline project. 

Liberty Utilities (Pipeline & Transmission) Corp., a wholly owned subsidiary of Algonquin, and Kinder Morgan Operating LP “A” have agreed to form a new entity (called “Northeast Expansion LLC“) to undertake the development, construction and ownership of a 30-inch or 36-inch natural gas transmission pipeline to be located between Wright, N.Y., and Dracut, Mass. The project is scalable up to 2.2 billion cubic feet per day (Bcf/d), and the pipeline capacity will be contracted with local distribution utilities, and other customers, to help ease constraints on natural gas supply in the northeast U.S. and help ensure much needed reliability to the power-generation grid.

It is anticipated that the project will receive a Federal Energy Regulatory Commission certificate in the fourth quarter of 2016, with commercial operations occurring by late 2018.

Under the agreement, Algonquin will initially subscribe for a 2.5% interest in Northeast Expansion LLC with an opportunity to increase its participation up to 10%. The total capital investment opportunity for Algonquin could be up to US$400m, depending on the final pipeline configuration and design capacity.

“I am pleased to announce our first natural gas transmission pipeline investment in the U.S. Northeast,” said Ian Robertson, Chief Executive Officer of Algonquin, in a Nov. 24 statement. “This initial investment with global leader Kinder Morgan represents a strategic initiative that connects our generation and distribution businesses across the utility value continuum. The partnership agreement provides APUC with the opportunity for additional investment in project expansions offering further diversification to our dynamic organization.”

“We are pleased to have a customer such as Algonquin partner with us for such a significant project for the region. The NED project could move up to 2.2 Bcf/d of supply originating from the Marcellus area from Wright, New York, to Dracut, Massachusetts and other customer-designated points to serve the New England market,” said Kinder Morgan Natural Gas Pipelines President Thomas A. Martin. “The Tennessee Gas Pipeline system provides unmatched supply diversity, including incremental access to the prolific Marcellus and other shale plays, making the Northeast Energy Direct project an ideal solution to satisfy rapidly growing natural gas demand that is forecasted in the Northeast and New England in the years ahead.” 

Algonquin Power & Utilities is a North American diversified generation, transmission and distribution utility. The distribution and transmission utilities operate in the United States and provide rate regulated water, electricity and natural gas utility services to over 488,000 customers. The non-regulated generation utility owns or has interests in a portfolio of contracted wind, solar, hydroelectric and natural gas powered generating facilities representing more than 1,100 MW of installed capacity in the United States and Canada.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.