New Fortress doubles down on LNG-by-rail permit

A New Fortress Energy affiliate is doubling down on the importance of transporting liquefied natural gas by rail as part of its plan to export LNG from a plant in Wyalusing, Pa., to a New Jersey port on the Delaware River.

Delaware Currents sought the permit renewal in a public records request. New information about the request was included in a three-page letter to the Pipeline and Hazardous Materials Safety Administration, which has since been posted to the agency’s website.

In the letter, an official for the affiliate, Energy Transfer Partners, said a special permit to allow the transportation of LNG by rail “remains integral to the viability of this enterprise” and “an important component of this undertaking.”

A special permit issued by federal regulators in 2019 allowed the company to ship as much as 3 million gallons of LNG per day via specialized rail tankers nearly 200 miles from Wyalusing to a port in Gibbstown, N.J. The project has drawn intense opposition over public safety, health and environmental concerns over having so-called “bomb trains” carrying highly flammable LNG through populated areas.

In a letter dated Nov. 29, the company sought to renew its permit through Dec. 1, 2025. The permit expired Nov. 30.

The letter came as work on the Wyalusing site has been on hold for more than a year and the plan faces significant economic, political and regulatory headwinds. The company said in previous public filings that it expected the $800 million project 

to be operational in the first quarter of 2022 but as time went on, those expectations failed to materialize.

The company has said in federal regulatory filings that it had “not issued a final notice to proceed to our engineering, procurement and construction contractors” and that it had “repurposed” approximately $17 million of engineering and equipment to another company project.

The letter seeking the special permit renewal acknowledged some of the challenges.

“During the period since the special permit was issued, ETS and its affiliates, including New Fortress Energy Inc. and others across the natural gas production, transportation and distribution industry have experienced a pandemic, massive supply chain and workforce disruptions, and widespread economic and political uncertainties,” the letter said. 

“Although these setbacks have impacted the original business models and construction timelines that were in place when our special permit application was submitted,” the letter continued, “they have not altered NFE’s support for the Wyalusing Facility project, which will produce and sell the LNG product that the special permit allows to be transported.”

The prospects for the permit’s renewal are unclear. The PHMSA has said its review can take “days, weeks, or months, depending on a variety of factors.”

The proposed project would start with fracked natural gas being piped via an interconnection from the Marcellus shale region of Pennsylvania and then sent by truck and rail to Gibbstown. 

Christopher Guinta, the chief financial officer for Energy Transfer Partners, referred questions to press representatives of New Fortress Energy, who did not respond to an email seeking comment.

However, The Rocket-Courier newspaper of Wyalusing this month quoted company officials as saying that New Fortress was “exploring a number of options related to the Wyalusing project” and that it was “evaluating transportation alternatives as the plans for the project develop.”

Delaware Currents has previously reported that, even with the special permit in hand,  too few of the specialized rail tankers that New Fortress would need to transport LNG exist, there is little interest among manufacturers to build them and they can cost as much as $750,000 per tanker to build.

The project calls for as many as 100 LNG rail tankers and/or as many as 400 highway trucks per day snaking through or near densely populated communities, such as Allentown, Philadelphia, Reading, Scranton and Wilkes-Barre, Pa., and Camden, N.J.

While it’s possible the company could still rely on highway tankers to transport LNG, the number of such trucks would have to be drastically increased to match the volume that would otherwise be carried by rail tankers if the company did not gain the special permit renewal.

Two public records requests by Delaware Currents, in April and December, to PennDOT about the project revealed no discussions with the agency about the entirety of the planned highway route. 

A voluminous Transportation Impact Assessment dated April 26, 2019, focused on turning lanes and the flow of traffic into the proposed Wyalusing plant. A June 26, 2020, letter from New Fortress to PennDOT spoke of adding turning lanes on Route 6. 

“The possible 12-month timeline does fit within NFE’s expected construction schedule and projected commercial operations date,” said the letter, which was from Joe Hoyt, vice president of the development group at New Fortress.

However, in a sign of how the project had stalled, intraoffice emails among PennDOT staffers from last December noted there had been no new developments. 

A Dec. 10, 2020, email from Marc Blair, a transportation construction manager at PennDOT, said he had spoken to Hoyt, and “nothing new to add at this time, we agreed that I would contact again 02/2021.”

In reply, another PennDOT staffer, Michael Bender, wryly noted: “June letter had a 12-month window; now it’s a 6-month window with 12 months of work to do if we had a (right-of-way) plan submission today.”

Tellingly, there have been no updates or correspondences this year to PennDOT from New Fortress about the Wyalusing site.