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A map of the proposed Tennessee Gas Pipeline Northeast Energy Direct pipeline shows compressor stations planned in the Massachusetts towns of Windsor, Northfield and Dracut.

(KINDER MORGAN MAP)

Citing inadequate capacity commitments from prospective customers, the Board of Directors of the Texas-based Kinder Morgan has voted to suspend further work and expenditures on its proposed 120-mile pipeline known as Northeast Energy Direct, the company announced late Wednesday afternoon.

"Unfortunately, despite working for more than two years and expending substantial shareholder resources, TGP did not receive the additional commitments it expected," wrote Kinder Morgan spokesman Stephen Crawford. "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."

"Given these market conditions, continuing to develop the project is not an acceptable use of shareholder funds," Crawford wrote in his statement.

Last July, Kinder Morgan's board authorized Tennessee to proceed with the project's "market path" segment from Wright, New York, to Dracut, Massachusetts, a $3.3 billion investment, but stopped short of authorizing money for the "supply path" segment from Pennsylvania to Wright.

FERC scoping session, Kinder Morgan pipeline 12 Gallery: FERC scoping session, Kinder Morgan pipeline

The board's initial approval was based on existing commitments by local gas distribution companies, as well as expected commitments from additional gas and electric utilities and other market participants in New England, Crawford wrote.

Kinder Morgan attributed the insufficient contracted capacity to factors including regulatory procedures in New England states that do not allow binding commitments for pipeline capacity from electric utilities. The company also cited low natural gas prices, current market conditions and "counter-party financial instability" which have "called into question Tennessee's ability to secure incremental supply for the project."

Tennessee has operated in New England more than 60 years and "remains committed to meeting the critical need for constructing additional natural gas infrastructure in the region," Crawford wrote. Tennessee "will continue to work with customers to explore alternative solutions to address their needs, particularly local distribution companies that are unable to fully serve consumers and businesses in their areas because of the lack of access to abundant, low-cost domestic natural gas."

The interstate pipeline has been the source of bitter opposition in western Massachusetts and parts of the Merrimack Valley and North Shore. Kinder Morgan filed its application for the project with the Federal Energy Regulatory Commission in November.

Massachusetts Senate President Stanley Rosenberg called Kinder Morgan's decision to suspend the Northeast Energy Direct project a "game changer."

"This allows us to have a broader discussion about how to meet Massachusetts' energy needs," wrote Rosenberg in a statement. "Our discussions moving forward must include a comprehensive approach to reducing energy costs for all while meeting our increasing renewable energy needs and continuing to protect our priceless public spaces."

Mary Serreze can be reached at mserreze@gmail.com