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Pipeline News

Why Pipeline Opposition Undermines Environmental Progress And Safety

5,242 views|Jan 17, 2019,4:03 pm Source

Brigham A. McCown Contributor EnergyFormer regulator & public policy expert

Pipelines have been quietly providing most of the energy used in America on a daily basis for nearly a century. That is, until most recently as small, yet very vocal groups of environmentalists have argued pipelines are bad for the environment. Opponents have often attempted to portray themselves as “water protectors” and “friend of the earth.” Projects like Keystone, Dakota Access, Bayou Bridge, Atlantic Sunrise, and Mariner East have all experienced well coordinated, nationally inspired opposition campaigns.

Hollywood stars and others have expressed their profound opposition to fossil fuel, notwithstanding the fact that those same people often fly to protest sites on private jets. A California mayor expressed her opposition to the Keystone XL project during a national listening session in Washington, D.C. by saying her citizens did not need the pipeline and that items based on fossil fuel were bad for the environment. She went on to say that her citizens wanted better roads and their potholes patched. Curious, given this person flew to Washington on a plane and spoke about the need to use more asphalt made from oil to fix her streets.

While one may or may not doubt the sincerity of their cause, the truth is that attempts to block new pipeline infrastructure projects are, well, bad for the environment.

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One need only look at projects such as the Mountain Valley Pipeline as a notable example of the many considerations on both sides of the argument. Despite numerous legal challenges and a few environmental snafus, it is poised to safely serve many communities while helping reduce greenhouse gas emissions.

Passing through West Virginia, Virginia, and parts of North Carolina, the Mountain Valley Pipeline project has been delayed by court battles for several months. Complaints concerning the construction process and long-term implications have been raised. Often concerns serve as opportunities to improve an infrastructure project and should be given credence which results in all sides agreeing to modifications. Other times however, objections are thinly veiled attempts to permanently derail projects, not make them better, and policymakers need to understand the difference between concern and obstructionism.

Construction activities are industrial in nature, and that is true with any infrastructure building project. In other words, disruptions are to be expected. Often trenching activities for pipelines disrupt adjacent land and may be exacerbated by weather. That said, pipeline companies can help themselves by working closely with federal, state, and local officials to minimize local impacts to ensure construction activities are tailored to minimize disruptions. Newer techniques like horizontal directional drilling (HDD) can be used whenever possible to place pipelines underground without disrupting the surface, and even where traditional trenching is used, restoration following construction activities makes it difficult to see where construction occurred.

Some environmentalist delay tactics halting construction end up locking these unfinished trench conditions in place for extended periods of time, inviting future damage to the vulnerable areas. Only a completed project resets the area by covering theses channels while also allowing safe, efficient energy to flow beneath. The finished, supervised project is the compromise.

Activists often talk about America’s need to reduce our carbon footprint and to better preserve our natural resources, and they would be completely right. Unfortunately objecting to these infrastructure projects does not improve our conditions.

To say that opposition to the Mountain Valley Pipeline, or pipelines generally, is misguided is not to criticize those opposing them, but to explain why the benefits outweigh the costs. Pipelines replace more carbon-intensive transport methods, meaning that they are the greenest way to move enormous volumes of energy supplies like natural gas, propane, and gasoline. Pipelines reduce congestion across our roads, rail, and shipping transportation networks. Removing trucks from highways makes roadways safer for us all, reduces damage, and eliminates tons of mobile source greenhouse gas emissions.

Pipelines have gotten a rap they have not deserved. Back in the early 2000s, Transportation Secretary Norman Y. Mineta (D-CA) talked about pipelines as the “unsung heroes of our economy” and said that they were like veins and arteries in our own bodies, providing the lifeblood to the American economy. A Democrat from San Jose, California, Secretary Mineta, a noted champion of human rights and justice, expressed a view that was once held by both political parties. Pipelines bring energy resources to families, small businesses, and communities to heat homes, cook food, and support the economy. Most importantly, they are also facilitating environmental progress right below our feet.

The concern that once these pipelines will leak is valid. Leaks do occur which is why the federal government’s Pipeline and Hazardous Material Safety Administration exists to regulate, inspect, and audit pipeline companies. That agency also regulates alternatives to pipelines where the spill rates and incidents are far higher than pipelines.

Letting the good be the enemy of the perfect slows the fight for climate balance. Even as no single transportation system for resources is perfect, pipelines are impressively close. Since 2013, the data shows that over 99.999% of petroleum product made it end to end in pipelines without incident.

Highlighting the 0.001% leak is legitimate – especially for areas affected. But standards are constantly improving, and the tiny volume leaked is far preferable over the risks associated with other transportation methods. This statistically near-perfect safety rate accounts for all existing pipelines, meaning state-of-the-art pipe laid today is of the highest quality and features more monitoring and safety features. And natural gas has boasted as high as 99.999997% safe product transportation.

Companies are also deploying innovative technology. mIQrotech, a recent startup that I have advised, is using artificial intelligence and sensors to envelop pipelines with safety and security systems aimed at identifying and stopping leaks before they occur. Companies like General Electric are developing inspection tools that present three-dimensional MRI-like models of lines that can be evaluated over time. It should go without saying that energy companies have a financial incentive to prevent leaks in the first place.

There is more to say for the environmental benefit of liquid and natural gas pipelines. Natural gas pipelines for example are a key instrument in the transition away from coal, helping the U.S. decrease its carbon emissions by as much as 50 percent. The far cleaner-burning natural gas is an essential bridge fuel on the move toward renewable resources and greater green efficiency. Halting or delaying pipelines thwarts or delays the phase-out of coal and other higher intensive carbon-based fuels.

Last month, opponents of the Mariner East pipeline project sat in a Harrisburg, Pennsylvania courtroom where they told a judge that allowing natural gas liquids to flow East from western Pennsylvania would wreak havoc. One woman testified that she didn’t need these products at all because she used home heating oil to warm her house, apparently oblivious to the fact that the truck bringing her that very oil likely picked it up from a pipeline.

The lack of sufficient energy infrastructure also negatively impacts our own economy, and in some cases, American foreign policy itself. Mariner East and other projects are designed to ease inadequate supplies and soaring prices Americans are paying to keep the Northeast warm during the winter. One critical example is the Russian gas import into Boston Harbor last spring despite plenty and bountiful supplies of natural gas that will be accessed by new pipelines less than a day’s drive away. Not only should we avoid financially benefitting countries like Russia, but that natural gas had to travel across the entire Atlantic Ocean, powered by large vessels producing significant emissions from low-grade fuels. It is far better for gas to travel a few hundred miles in a secure high-tech pipeline than several thousand miles on the open ocean, where leaks are more difficult to contain.  

Economic and environmental progress means building state-of-the-art energy highways that safely and efficiently move materials to where they are needed so that we can move away from high-carbon emitting fuels. While critics have every reason to watch them under a magnifying glass to ensure the environment is preserved, it is equally important to zoom out and see how pipelines play into the broader picture of the community, economy, and climate.

If projects like Mariner East and the Mountain Valley Pipeline can serve Americans, thwart Russian imports, and help to reduce carbon emissions, we should not support delays, but encourage best practices and ensure the project is completed to the highest caliber and standards we all expect.

Brigham McCown is a former federal government safety regulator, adjunct professor, and the founder of the non-profit Aii.org. You can follow him on Twitter and Facebook.

Brigham McCown is a former federal government safety regulator, adjunct professor, and the founder of the non-profit Aii.org. You can follow him on Twitter and Facebook.

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Shell Falcon Pipeline Gets Important FERC Approval

By Tom Ewing, Business and Environmental Reporter 

Falcon Pipeline Route Map

At least a small measure of celebration likely buzzed through the offices at Shell Pipeline Company (SPLC) on Sept. 7. The reason: a mid-day announcement from the Federal Energy Regulatory Commission (FERC) that the company’s petition for a declaratory order pertaining to a new interstate pipeline had been granted.

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The project at issue is Shell’s $90-100 million Falcon Ethane Pipeline System, a 98-mile long pipeline to transport ethane within and between Pennsylvania, West Virginia and Ohio. It’s been a long time in the planning stage and – just as critically – fundamental to the success the company’s $6 billion ethane cracker plant under construction in Monaca, Pa., about 30 miles north of Pittsburgh, on the banks of the Ohio River. 
According to IHS Markit, an economic consultant working on behalf of Pennsylvania, the cracker is the largest private investment project in the history of the Commonwealth. Operating employment is estimated to reach 600 full-time jobs.

If FERC had dismissed the petition, there would have been no reason to proceed with the construct of the pipeline since the company would not have been allowed to enact the revenue and business practices necessary to make it work financially.

The Monaca plant will be the first regional cracker plant in the northeast, within what Shell calls “the heart of the market” for polyethylene production. The Monaca location, according to Shell, presents access to “more than 70% of the North American polyethylene market,” and the pipeline will “allow enhanced access to growing domestic Appalachian production in the Marcellus and Utica shale reservoirs.”

Shell Pipeline Company LP will own the Falcon Ethane Pipeline, and Shell Chemical will own and operate the cracker plant. Planning for the cracker started in 2012; Falcon planning began in 2015. Capacity is about 70,000 bpd.

Eastern Ohio and western Pennsylvania have a long history of energy production. To a large extent, though, surely in the past half-century, this regional energy wealth has been exported. Now, the Falcon pipeline and cracker plant present new opportunities to recover raw material wealth and the chance to exploit that wealth at home, to use it locally for production and then export higher value products and materials, from food packaging to housewares to automotive and medical devices.

IHS Markit references a “roadmap for the petrochemical and plastics value chains in Pennsylvania.” This kind of optimistic, robust economic development doesn’t just happen – it takes a lot of coordinated work and planning among public and private sector leadership. FERC’s decision is critical within this big-picture vision.

In its petition to FERC, Shell references these future regional energy-economic opportunities. The Falcon pipeline, Shell writes, in addition to serving the new cracker at Monaca, would be situated to “provide additional transportation options for interstate shippers of ethane in the growing market created by continued Utica and Marcellus natural gas production and the associated creation of ethane supplies at natural gas processing plants located in the areas to be served by the Falcon Pipeline.”

IHS forecasts $7.3-10 billion will be invested in NGL assets (gas processing facilities, NGL fractionators, NGL pipelines and NGL storage facilities) in three states (Pennsylvania, Ohio and West Virginia) between 2017 and 2025. That sum does not include the new Monaca cracker.

IHS forecasts between 2026 and 2030 ethane from the Marcellus and Utica Shale plays will be enough to support up to four additional world-scale ethane steam crackers in the region, after meeting the demand from Shell’s Monaca cracker. (Planning is underway for a second cracker in Belmont County, Ohio, south of Harrison County, which contains one of the Falcon starting points in Ohio.)

Even more impressively, this projected supply exceeds current demand from pipelines currently shipping ethane out of the region, as well as future exports. The Falcon project – and getting it done – presents economic benefits well beyond one company’s success. It portends an economic boom and a sustainable one, not boom-and-bust.

Liquids pipelines, such as those for ethane, advance to construction largely through state permitting processes, as well federal agencies, such as the Army Corp of Engineers, for example, if rivers and streams are involved. With liquid pipelines, at least compared to (interstate) natural gas pipelines, FERC’s authority differs and is more limited; it does not extend to rights-of-way and siting issues.

FERC’s liquids pipeline authority includes providing “advance holdings” via the issuance of a declaratory order regarding the lawfulness of rates and terms of service for projects like Falcon. Shell’s filing notes FERC has “repeatedly recognized the need for pipelines to obtain up-front regulatory approvals before undertaking major capital expenditures;” a process “in the public interest,” according to FERC guidance documents.

For projects like Falcon, then, FERC’s move is primary, avoiding a stalemate. FERC’s decision provides the upfront certainty a project needs, regarding rates and terms of service. SPLC writes that without this certainty “shippers will not be able to justify taking up the balance sheet and commercial burdens associated with the ship or pay commitment required by the TSA (transportation service agreement); in turn, SPLC would not be able to justify the cost of the project.”

Shell filed its petition for declaratory order on July 3 (and, of course, the required $27,130 filing fee). It wrote “in anticipation and furtherance of the project commencing service in early 2020, SPLC respectfully requests that the Commission act on this Petition by no later than Sept. 7, 2018.” Once a company files its petition it then just waits; there is no follow up between company and FERC, say, for additional information or clarifying text or comments.

Importantly, FERC’s move was timely, keeping Falcon aligned with separate, multiple parts in complex state and federal regulatory processes. Shell wants to start pipeline construction soon, extending through 2019, with service starting in early 2020. That schedule would have faltered if FERC’s decision had been delayed; a decision in February, for example, would be more of a monkey-wrench than a lever.

True, FERC barely met Shell’s requested deadline. However, there are no statutory requirements for FERC to respond to petitions for a declaratory order by a certain date. On some issues, there’s no requirements for FERC to respond at all. However, the commission “makes an effort to respond by the deadline dates requested,” said a FERC spokesman in an email. This effort is important considering the current expansive dynamics characterizing energy expansion in the United States.

FERC staff has noticed an increase in petitions filed by interstate oil pipelines seeking commission approval of rate structures for new or expansion pipeline projects. Interestingly, though, the commission does not maintain statistics or track filings, so it cannot compare year-to-year activity.

The Falcon Pipeline will traverse three states (see map). Ethane will originate at three locations – two in Ohio, in Harrison County, about 120 miles east of Columbus, and one in Houston, Penn., in Washington County. The east-west Falcon portion will traverse about 43.6 miles in Ohio, 8.5 miles in WV and 45.5 miles in PA. The intrastate north-south route from Houston to Monaca is about 35 miles.

The pipeline starting points are at natural gas processing and fractionation facilities, at Cadiz and Scio, in Ohio and at Houston. After separation, the liquid ethane will be transported via 12-inch pipelines to a junction meter site in Raccoon Township, Beaver County, Penn. From there, the pipeline increases to 16 inches, terminating at the cracker plant in Monaca. The routing includes an Ohio River intersection a few miles south of East Liverpool, Ohio. Details are not yet available on this river crossing. State permitting remains very much at play.

The shortest portion of the pipeline route is in W. Va. and its permit was approved by the state in February, although a section of that permit was reopened for review in late August because Shell is seeking some modifications.

In Ohio, a state EPA spokesperson said the “Falcon/Shell water quality application is still under review by Ohio EPA.” He suggested checking back “in a couple weeks for a status update.” 
In addition to federal water and wetland issues, wildlife and endangered species analyses range from bald eagles to Indiana Bat habitats.

On June 1, Pennsylvania’s Department of Environmental Protection (DEP) sent “technical deficiency letters” to Shell Pipeline regarding Chapter 105 applications – “Water Obstruction and Encroachment Permits,” required for activities “located in, along, across or projecting into a watercourse, floodway or body of water, including wetlands.” On Aug. 1, Shell responded to DEP’s technical deficiency letters, preparing a separate response for each county – Allegheny, Beaver and Washington counties.

In its July petition, Shell sought FERC approval on 10 business-related proposals, including the appropriateness of Shell’s open season efforts, committed rate structures and approval of anchor shipper terms and extension rights.

In its order, FERC wrote “based on the representations in the petition, the commission will grant all the rulings requested by Shell as consistent with commission precedent and policy.” It commented Shell held a “well-publicized open season during which the preferential capacity rights it seeks approval for were made available to any interested shipper that was willing and able to meet the pipeline’s contractual requirements.” 
FERC also noted the petition was unopposed, at least at the federal level. FERC’s process allows interested parties to comment or, more substantively, to formally intervene in these cases.

At the state level, the public hearing process is different, and there is consistent opposition at each stage of Falcon development, particularly in Pennsylvania. One local concern is possible risk to the 405-acre Ambridge Reservoir in Beaver County, a source of drinking water.

In a “Proposed Project Antidegradation Analysis” Shell writes that “the pipeline will be operated and maintained in accordance with government regulations so that integrity of the pipeline remains intact.”

Oversight will include “frequent use” of smart pigs. Meter and valve sites will be tested every six months and monitored remotely. Critical station valves will be tested every six months. Leak detection will be monitored remotely 24 hours per day.

FERC’s ruling concludes that the petition is “consistent with precedent,” and accordingly, “based on the facts and representations made by Shell, confirms and approves the rulings as requested in the petition.”

Shell’s original petition provides insight into the depth of the Marcellus-Utica natural gas market. The petition notes, for example, that after its one-month (Oct. 17, 2016 to Nov. 18, 2016) open season effort “SPLC received sufficient shipper commitments to support the project.”

In other words, they got the business. Shell said Falcon will provide needed new capacity “to serve the growing polyethylene market,” in addition, of course, to the Monaca plant.

For Shell and Falcon, there’s a lot more work ahead but FERC’s move keeps this critical project on track. Source: P&GJ

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Michigan Senate OK’s Bill to Enable Great Lakes Pipeline Deal

January 25th, 2019

The Michigan Senate voted to enable a deal to replace a contentious 65-year-old oil pipeline in the Great Lakes, approving legislation to empower a new authority to oversee the construction and operation of a utility tunnel that would encase the new pipeline.

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The bill, approved on a 25-13 mostly party-line vote in the Republican-controlled chamber, was sent to the House for consideration next. It would create the three-member Mackinac Straights Corridor Authority to handle functions related to building the tunnel, which supporters say would better protect against a potential spill.
Outgoing GOP Gov. Rick Snyder – who would appoint the initial members of the authority – is working on several fronts to finalize an October agreement with Canadian oil transport giant Enbridge to replace the underwater segment of its Line 5, which carries about 23 million gallons (87 million liters) of oil and natural gas liquids daily between Superior, Wisc., and Sarnia, Ontario.

A more than 4-mile-long (6.4-km) section, divided into two pipes, lies on the floor of the churning Straits of Mackinac, the convergence of Lakes Huron and Michigan.
The massive engineering project is expected to take seven to 10 years to complete, at a cost of $350 million to $500 million – all of which the company would pay. Opponents of the deal say oil and liquids used to make propane should not continue flowing daily through the lines.

Democratic Gov.-elect Gretchen Whitmer pledged during her campaign to shut down Line 5 and criticized the tunnel plan, as did fellow Democrat Dana Nessel, who won the race for attorney general. Both take office in January and have said the Snyder
administration should not steamroll the plan to enactment in the meantime.

Republican Sen. Wayne Schmidt of Traverse City, whose district includes the pipeline, said the goal is to protect the Straits while making sure “energy is affordable, reliable and accessible. … By doing a utility corridor, that is the absolutely safest way to do that.” Sen. Adam Hollier of Detroit, the lone Democrat to support the legislation, said it would ensure “people are taken care of in the winter” and also provide work for laborers who build the tunnel.

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Phillips 66 Partners leads joint venture to build ACE Pipeline System in Louisiana

Sergio Chapa, Houston Chronicle Published 2:29 pm CST, Monday, January 14, 2019

Phillips 66 Partners LP have entered into a joint venture to build the ACE Pipeline System in Louisiana. Houston pipeline and storage terminal company Phillips 66 Partners LP is leading the joint venture to develop an ACE Pipeline System in Louisiana.

Phillips 66 Partners, Harvest Midstream Company and PBF Logistics LP announced the project in a joint statement issued on Monday morning.

The ACE Pipeline System will move crude oil from the market hub in St. James, Louisiana to nearby downstream refining destinations in Belle Chasse, Meraux, and Chalmette.

Midstream Moves: Energy Transfer moves forward with $4 billion of 

Expected to have an initial throughput capacity of 400,000 barrels per day, the ACE Pipeline System will have the ability to be expanded and add Clovelly as a destination based on shipper interest.

Harvest Midstream has agreed to contribute its existing CAM Pipeline to the ACE Pipeline System, which will include a new-build segment to connect the St. James market center.

Subject to regulatory approvals, the pipeline system is expected to be placed in service in the second half of 2020.

Supersize Me: Enbridge-led JV proposes offshore VLCC terminal south of Freeport

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Epic Pipeline on schedule to move Permian crude in third quarter

Sergio Chapa, Houston Chronicle | on 

San Antonio pipeline company Epic Midstream Holdings remains on schedule to begin moving crude oil from West Texas’ Permian Basin to the Port of Corpus Christi by this fall.

As part of a plan originally announced in October, the company plans to temporarily use its natural gas liquids pipeline to temporarily ship crude oil starting in the third quarter.

Epic said Monday that those plans remain on schedule and that it has secured all of the mainline right of way needed to build a separate crude oil pipeline along the route of natural gas liquids pipeline.

Midstream moves: Phillips 66 Partners leads pipeline joint venture in Louisiana

With steel for the Epic Crude Oil Pipeline being sourced by U.S. mills, delivery of the 30-inch pipeline to build the 700-mile project is expected to take place later this month.

The Epic Crude Oil Pipeline runs from Orla, Pecos, Saragosa, Crane, Wink and Midland in the Permian Basin to Gardendale and Helena in the Eagle Ford Shale to the Port of Corpus Christi.

Construction of the crude oil pipeline is expected to begin shortly after delivery and be completed by January 2020. Using the same construction crews as its natural gas liquids pipeline, Epic expect to realize significant construction synergies along the route.

Financial figures have not been disclosed, but Los Angeles private equity firm Ares Management is backing both the natural gas liquids and crude oil pipelines.

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FERC Approves Final 2 Laterals on Rover Pipeline

January 2019

Energy Transfer said service has begun on the final two laterals of Rover Pipeline following final approval from the Federal Energy Regulatory Commission (FERC).
Rover has been operational since August 2017, but FERC’s approval of the Sherwood Lateral, CGT Lateral and associated compression and metering facilities provides additional receipt and delivery points for natural gas production in West Virginia.

The 713-mile Rover Pipeline transports up to 3.25 Bcf/d of natural gas from the Marcellus and Utica Shale production areas.

Rover transports natural gas from processing plants in West Virginia, Eastern Ohio and Western Pennsylvania to the Midwest Hub, near Defiance, Ohio, for delivery to markets across the U.S., as well as to the Union Gas Dawn Storage Hub in Ontario, Canada.

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WhiteWater Holds Open Season for NM-Texas Pipeline

WhiteWater Midstream commenced a binding open season to solicit commitments for firm natural gas transportation service from multiple points in Eddy County, N.M., to delivery points in northern Culberson County, Texas.

Austin-based WhiteWater said its proposed Steady Eddy Pipeline project would provide 500,000 MMBtu/d of interstate gas transportation service to New Mexico gas processors, allowing them access to multiple delivery point options in New Mexico and Texas.

The Steady Eddy Pipeline project would include construction of a 24” pipeline and associated metering stations in Eddy County connecting to one or more delivery points in Texas.

The open season for the Permian Basin project will conclude Feb. 15.

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Colorado Voters Reject Proposition 112

Colorado Voters Reject Proposition 112

Colorado’s oil and gas industry breathed a sigh of relief as voters rejected a proposal to require oil and gas wells be at least 2,500 feet from homes, schools, waterways and other areas deemed vulnerable. Had Proposition 112 passed it would have made the half-mile buffer state law everywhere except on federal lands. Currently in Colorado, there is a 1,000-foot set-back in place for schools and hospitals, as well as a 500-foot buffer for residential properties.

“We’re grateful that Coloradans stood with the energy sector to oppose this measure,” said Dan Haley, president and CEO of the Colorado Oil and Gas Association, in a statement. “I want every Coloradan to know that we are committed to developing our resources in a responsible manner that protects the environment and keeps our employees and communities healthy and safe.”

Neil Ray, president of the Colorado Alliance of Mineral and Royalty Owners added, “We’re incredibly grateful that Colorado voted against Proposition 112. Beyond the devastating economic impact, Proposition 112 would have stripped mineral owners of their property rights by placing large swaths of the state off limits for mineral development.”

There are over 600,000 mineral owners with property rights in Colorado that Proposition 112 would have affected negatively, along with an estimated 4.6 % in industry job loss. 

Colorado Rising, the group backing the measure, was outspent nearly 43 to one. Protect Colorado, funded almost exclusively by the oil and gas industry, poured in more than $36 million to offset the attack. 

Proponents of the setback increase argued a larger buffer is crucial to preventing adverse health and safety impacts for people who live and work near oil and gas operations. They contended that health risks from being exposed to a heavily industrialized activity like hydraulic fracturing are too high under the current distance restrictions set by the state. They cited methane and cancer-causing benzene as just two of dozens of potentially harmful compounds associated with oil and gas activity.

Kelly Nordini, executive director with Conservation Colorado, said the defeat of Proposition 112 doesn’t mean that “voters want an oil and gas rig closer to their homes, schools, or hospitals,” adding, “Let’s be clear: the oil and gas industry spent at least $30 million to beat this measure. The fact remains the oil and gas problem in this state has not been solved.”

Opponents argued the increase would dislodge an industry crucial to Colorado’s economy and would put the brakes on energy extraction as companies moved from Colorado to explore less restrictive states. 

Wouter Van Kempen, CEO of DCP Midstream, a Denver-based natural gas pipeline and processing company, predicts the oil and gas industry will work with the Colorado legislature to keep a near-ban like Proposition 112 from happening again and at the same time, give local communities some measure of comfort about drilling.

“I don’t think the last word has been written on oil and gas in the state,” Van Kempen said. “There are still going to be a couple other chapters.”

Source Article: HERE

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Outgoing Michigan Governor Pushing for Great Lakes Pipeline

11/26/2018
LANSING, Mich. (AP) — Michigan Gov. Rick Snyder hopes to use the final weeks of his tenure to lock in a deal allowing construction of a hotly debated oil pipeline tunnel beneath a channel linking two of the Great Lakes — a plan his successor opposes but may be powerless to stop.

The two-term Republican and his team are working on several fronts to seal an agreement with Canadian oil transport giant Enbridge for replacing the underwater segment of its Line 5, which carries about 23 million gallons (87 million liters) of oil and natural gas liquids daily between Superior, Wisconsin, and Sarnia, Ontario, traversing large sections of northern Michigan.

A more than 4-mile-long section, divided into two pipes, lies on the floor of the churning Straits of Mackinac, the convergence between Lakes Huron and Michigan. Laid in 1953, the twin pipelines have become a target of environmentalists, native tribes, tourism-related businesses and other critics who say it’s ripe for a spill that could do catastrophic damage to the lakes and the regional economy.

While insisting they’re in sound condition, Enbridge reached an agreement with Snyder’s administration in October to decommission the pipes and drill a tunnel for a new line through bedrock below the straits. The project would take seven to 10 years and cost $350 million to $500 million, which Enbridge would pay.

Gov.-elect Gretchen Whitmer, elected this month, pledged during her campaign to shut down Line 5 and criticized the tunnel plan — as did fellow Democrat Dana Nessel, who won the race for attorney general. Both take office in January and have said the Snyder administration should not steamroll the plan to enactment in the meantime.

A spokeswoman for Nessel said she was “deeply concerned and troubled by the hasty legislative rush-to-judgment efforts to push through a proposal that has not been properly vetted, that handcuffs Governor-elect Whitmer and Attorney General-elect Nessel before they even take office, and will have negative repercussions on the state of Michigan and its residents for generations.”

But Snyder’s team is plowing ahead. Keith Creagh, director of the Department of Natural Resources, told The Associated Press this week that he expects the final steps to be completed before Snyder leaves office.

“This is not a rush to finish,” Creagh said. “This is a culmination of four-plus years of looking at a very complex issue.”

A Republican-backed bill to be considered during a lame-duck legislative session resuming Tuesday would designate the Mackinac Bridge Authority as owner of the tunnel, with responsibility for overseeing construction and managing its operations while leasing it to Enbridge and other potential users, such as electric cable companies. Snyder’s office is also requesting $4.5 million for startup administrative costs and radar to monitor wave heights in the straits.

The seven-member bridge authority, whose sole responsibility since its creation in the 1950s has been to maintain the vehicular bridge that crosses the straits and links Michigan’s two peninsulas, heard from supporters and opponents Nov. 8 but took no action. Its next scheduled meeting is in February, but Creagh said he hopes the group will convene before January to ratify the tunnel plan. Snyder recently filled four vacancies on the authority, giving his appointees the majority.

The authority’s Democratic chairman, Patrick “Shorty” Gleason, signaled that he has little interest in calling a special meeting in December to accept oversight responsibility for the proposed structure before the governorship changes hands.

“If they think I or any member of the Mackinac Bridge Authority can be given an agreement with absolutely no negotiations or discussions with Enbridge and have it resolved within a couple weeks, there’s no way that’s possible,” he said. Gleason said the incoming administration’s views are “equally important,” and he hopes Snyder and Whitmer discuss the issue.

Opponents hope concerns about altering the bridge agency’s mission so significantly — raised even by people who don’t necessarily oppose the tunnel — will persuade the panel to delay a decision.

William Gnodtke, the outgoing chairman who was appointed by former Republican Gov. John Engler, and seven other former members issued a statement saying the plan “would mean a major dilution of the authority’s focus on the bridge” and “has the potential to seriously compromise its effectiveness in managing Michigan’s single largest asset.”

Gnodtke and current bridge authority member Barbara Brown are among leaders of the newly formed Friends of Mackinac Bridge, which will lobby state officials to slow things down and establish a separate agency to manage the tunnel if one is built, said Jim Lively of the Traverse City-based Groundworks Center for Resilient Communities.

For Love of Water, an environmental group, contends the plan would expose the bridge authority to financial and legal liability in the event of a rupture or other disaster, despite a provision in the agreement that Enbridge would pony up at least $1.8 billion to deal with potential spills.

“We’re living in a moment of energy transition and the idea of building a tunnel under the Great Lakes for a foreign oil company to use for the next century has not been given the forethought and due diligence that the public demands,” executive director Liz Kirkwood said.

Creagh said the bridge authority was the logical choice to oversee the tunnel.

“They have an impeccable record, they’ve done a great job with the bridge,” he said. “They’ve been bipartisan, looked out not just for the bridge, but for the straits.”

Enbridge spokesman Ryan Duffy declined to speculate about the fate of the agreement if it isn’t completed before Whitmer becomes governor.

“We believe now is the time to build for the future,” Duffy said. “That’s what our agreement with the state is about — protecting the straits and having energy independence.”

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Aqua America to Acquire Peoples in Merger of Water, Gas Utilities

10/24/2018

Water and wastewater utility Aqua America said it agreed to acquire natural gas utility operator Peoples in a $4.2 billion deal to create a company that is “uniquely positioned to have a powerful impact on improving the nation’s infrastructure reliability.”

The combined company would have $10.8 billion in assets and serve 1.74 million water and gas utility customer connections in 10 U.S. states with a projected regulated rate base of more than $7.2 billion.

Aqua America to Acquire Peoples in Merger of Water, Gas Utilities“By bringing together water and natural gas distribution utility companies that share a core mission of providing essential services to customers, the resulting company will be positioned to grow and drive value, as well as make a long-term, positive contribution to our nation’s infrastructure challenges and ensure service reliability for generations to come,” said Christopher Franklin, chairman and CEO of Aqua America.

“The acquisition of Peoples is a great strategic fit and aligns directly with our growth strategy and core competencies of building and rehabilitating infrastructure, timely regulatory recovery, and operational excellence,” Franklin said, adding that “the new leadership team will take an integrated management approach to cooperatively running the utilities.”

Franklin would continue lead the combined company after the merger, with Aqua’s headquarters remaining in Bryn Mawr, Penn., and Peoples and its employees remaining in Pittsburgh as its natural gas operating subsidiary. Morgan O’Brien would continue to lead Peoples, which consists of Peoples Natural Gas Company, Peoples Gas Company and Delta Natural Gas Company.

In the merger announcement, O’Brien noted “the Pennsylvania Public Utility Commission has demonstrated its support for our infrastructure investment program, through which we will replace more than 3,100 miles of bare steel and cast-iron pipe in the coming years at a current rate of about 150 miles per year,” said O’Brien.




Peoples reportedly has sought to expand into the water and wastewater utility business through a deal with the Pittsburgh Water and Sewer Authority (PWSA) to replace its aging infrastructure, and the Aqua announcement prompted widespread media coverage and speculation in Pennsylvania, which accounts for more than 77 percent of the companies’ combined total rate base.

“Some of the same things that attracted Peoples to make a pitch to help operate the (PWSA) earlier this year also made the Pittsburgh gas company appealing for Aqua.  Namely, old pipes in the ground,” Pittsburgh Post Gazette columnist Anya Litvak wrote.  “Those pipes need to be replaced and utilities can recover the cost of doing so — along with an attractive rate of return — through surcharges on customer bills. That’s quicker than asking regulators to fold those costs into rate increases.”

Aqua said it expects significant growth in rate base and earnings will be “driven by pipe-replacement capital expenditures, new customer connections and continued success in municipal acquisitions.”

The proposed merger reflects an enterprise value of Peoples of $4.275 billion, which includes the assumption of approximately $1.3 billion of debt. The acquisition is supported by a fully committed bridge facility, with permanent financing to include “an appropriate mix of equity and debt to target a strong balance sheet and investment-grade credit ratings,” Aqua said.

The transaction is projected to close in mid-2019, subject to approval by public utility commissions in Pennsylvania, Kentucky and West Virginia.

Source – P&GJ Staff Report


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