Public Service Enterprise Group Inc. (PEG) unit, PSEG Power LLC will join PennEast Pipeline Company, LLC (PennEast Pipeline) as a member with a 12% interest.
PennEast Pipeline will construct a 100-mile and 30-inch diameter pipeline, spanning from Luzerne County in northeastern Pennsylvania to Transco’s Trenton-Woodbury interconnection in New Jersey. The estimated cost of the project is $1 billion.
The other members in the pipeline project are AGL Resources Inc. (GAS), New Jersey Resources Corporation's (NJR) subsidiary NJR Pipeline Company, UGI Corporation’s (UGI) unit UGI Energy Services and South Jersey Industries.
PennEast Pipeline has started initial engineering studies for the project. In 2015, it will submit a formal application before the Federal Energy Regulatory Commission. Upon customary approval, the construction will start in 2017.
Once completed, the pipeline will transport up to 1 billion cubic feet of natural gas per day. The pipeline will offer natural gas service to around 4.7 million homes.
PennEast Pipeline had first announced plans for the development of the pipeline on Aug 12, 2014. The objective of the project is to provide clean-burning natural gas, produced in the Marcellus Shale region, to the homes and businesses in Pennsylvania and New Jersey at a lower cost. Lower energy and gas transportation costs will allow PennEast Pipeline to provide cost savings to its consumers. In addition, the project will create around 2,000 jobs during the construction phase.
As per a U.S. Energy Information Administration report, published in Apr 2014, the Marcellus Shale in the Appalachian Basin had proved natural gas reserves of 42.8 trillion cubic feet in 2011-12. Currently, the Marcellus is the largest shale gas play in the U.S. The upstream players are active in the Marcellus Shale region to unlock its vast resources.
PennEast Pipeline’s plan to construct a pipeline in the region will allow it to tap the mid-Atlantic market and serve its growing customer base. Subsequently, the proposed pipeline will boost future cash inflow.
Public Service Enterprise maintains a stable cash position backed by a strong cash generation capacity. The company had a cash balance of $0.57 billion as of Jun 30, 2014 and operating cash flow of $1.4 billion in the first half of 2014. A stable financial position allows Public Service Enterprise to expand its utility systems. Within a time span of 2014 to 2018, the company plans to invest $13.1 billion, including more than $2.2 billion in 2014 in distribution and transmission projects. These initiatives will enable Public Service Enterprise to provide reliable services to its customers.
Public Service Enterprise currently holds a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment