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Kentucky Resources Council, PO Box 1070, Frankfort, KY 40602 Phone [502] 875-2428

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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

SOME BACKGROUND ON THE UTICA MARCELLUS TEXAS PIPELINE PROJECT  Posted: March 20, 2015

SOME BACKGROUND ON THE UTICA MARCELLUS TEXAS PIPELINE PROJECT

According to materials filed by Tennessee Gas Pipeline Company, LLC with the Federal Energy Regulatory Commission (FERC), the company proposes to “abandon in place” the gas service provided by one of Tennessee Gas’ existing pipelines. An application has been filed with FERC on February 13, 2015 requesting authority to abandon one of its multiple looped parallel pipelines, which runs some 964 miles from Natchitoches Parish, Louisiana to Columbiana County, Ohio. If FERC approves the request, the “abandoned” pipeline will be sold to an affiliated company, the Utica Marcellus Texas Pipeline LLC (UMTP), which would use the pipeline to transport “natural gas liquids” produced from the Marcellus and Utica shale formations in Ohio, West Virginia, and Pennsylvania, to Mont Belvieu, Texas.

If FERC approves the “abandonment in place,” UMTP would convert the Existing Pipeline Segment to NGL service, including construction of some 160 miles of new lateral/collector lines in Ohio, Pennsylvania, and West Virginia and from Natchitoches Parish to Mont Belvieu, Texas.

In Kentucky, 7.6 miles of new pipeline would be constructed in Lewis and Carter Counties in order to restore lost gas capacity, and 2 new compressors would be installed at existing compressor stations. 4 “workspaces” of around ½ acre each would be sited along the route, primarily within the existing right-of-way. Additionally, 4 new main line valves of 1 acre in size and 7 new pump stations requiring 5 acres for development, would be installed in Kentucky.

What are “Natural Gas Liquids?”

Most natural gas (methane) extracted from the Earth contains, to varying degrees, low molecular weight hydrocarbon compounds including ethane, propane, isobutane, butane, and natural gasoline. Collectively, they are called natural gas liquids (NGLs). Various NGLs are used as raw materials by the petrochemical industry, as feedstocks by refiners in the production of motor gasoline, and as fuel by industrial and residential users.

Ethane is a “highly flammable gas and a dangerous fire hazard.” Under pressure as a liquid, exposure can cause frostbite. Propane is a colorless, odorless, flammable gas. Butane and isobutane are colorless, flammable gases with a gasoline-like or natural gas odor that are shipped as a liquefied compressed gas. None of these are listed as a known or “reasonably anticipated to be a” carcinogen according to the National Toxicology Program, although benzene, where present, is a carcinogen. All have the potential for adverse effects on the respiratory and neurological systems at high concentrations. The primary concerns relative to public health and safety are injuries or fatalities from fires or explosions caused by ignition of the NGLs, soil and groundwater contamination, and asphyxiation.

NGL Pipelines fall into a category of low-occurrence, high-hazard risks. Though infrequent, pipeline ruptures often have catastrophic consequences. Risks associated with transmission pipelines result from accidental releases of the transported products, which can impact public safety, the environment, national security and our economy. Economic impacts may result from business interruptions, damaged infrastructure, and loss of energy fuel supplies.

Who will regulate the UMTP Project?

a. Federal Energy Regulatory Commission

While the Federal Energy Regulatory Commission regulates natural gas pipelines such as the Tennessee Gas Pipeline in question here, there is no FERC jurisdiction over the construction, siting, or environmental consequences of a natural gas liquids pipeline. FERC authority over the NGL pipelines is limited to economic regulation through the approval of “tariffs” (rates).

FERC has been asked to allow the abandonment of 964 miles of mainline pipeline (identified as 100 and 200 lines), and has opened a proceeding in which interested parties can comment, and may also intervene. The Docket Number is CP15-88, and the filed application, public comments, and intervention motions can be viewed by going to http://elibrary.ferc.gov/idmws/search/fercgensearch.asp and entering “CP15-88” in the “Docket Number” box.

Individual comments can be filed by going to http://www.ferc.gov/docs-filing/ecomment.asp and following the instructions. Comments are limited to 6,000 characters, and it’s recommended that you type the comments in word or text format and cut and paste them to the FERC website. In order to e-comment, you will need to use the complete docket no. CP15-88-000. The deadline for commenting is 5 p.m. on March 23, 2015. Two points you might want to make in any comments are:

1. The comment period should be extended in order to allow for more public comment, particularly since the repurposing project is unprecedented. A mere 17 days from public notice to close of the comment period is inadequate.

2. A full Environmental Impact Statement should be developed covering all direct, indirect, and cumulative effects of the abandonment and repurposing of the pipeline, including consideration of the impacts to air, land, and surface and groundwater resources, and to public health and safety, from the conversion of the pipeline to the transportation of natural gas liquids. FERC should coordinate with the U.S. Army Corps of Engineers and other federal and state agencies to assure thorough environmental review.

b. Pipeline and Hazardous Materials Safety Administration

The standards for construction of NGL pipelines are established under the Pipeline and Hazardous Materials Safety Administration within the U.S. Department of Transportation. Their website is at http://www.phmsa.dot.gov/ PHMSA does not regulate the location or routing of pipelines, and has published a guidance specifically addressing the unique risks posed by the reversal of flows, changes of products, and conversions of natural gas pipelines to hazardous liquids pipelines. The document, Guidance to Operators Regarding Flow Reversals, Product Changes, and Conversion to Service, can be downloaded from the PHMSA website.

c. U.S. Army Corps of Engineers

The location of any pipeline across or through a jurisdictional water is subject to review by the Corps of Engineers under Section 404 of the Clean Water Act. As part of the repurposing, existing aerial crossings of the Ohio and Dix Rivers will be replaced by pipeline laid beneath both rivers.

The Division of Water also has regulatory jurisdiction over any new stream crossings, water withdrawals needed for construction and hydrostatic testing of the line, and any discharge any water used for hydrostatic testing. The Division for Air Quality will be requested to review air emissions from two proposed pump stations later in 2015.

d. Local Government

Federal law regarding hazardous liquids pipelines such as NGL pipelines, does not preempt local zoning and planning, which may impose reasonable limitations on the use of lands for hazardous liquids pipelines. Where a zoning classification prohibits the location of NGL pipelines, the conversion of a preexisting natural gas to a natural gas liquids pipeline could be considered an expansion of a nonconforming use.

If the Tennessee Gas pipeline crosses my property, do I have any voice in whether the pipeline can be used for NGLs?

Whether Tennessee Gas can use an existing easement for transporting NGLs and can transfer their rights under any easement to UMTP, depends both on how Tennessee Gas acquired the easement, and the specific language of the easement. The Council recommends that any landowner whose property is crossed by the Tennessee Gas pipeline that is proposed to be “abandoned,” sold, and “repurposed, consult with an attorney to determine whether the existing easement can be transferred, and also whether the easement is written so as to allow a change in the product transported in the pipeline. If the existing easement was obtained by condemnation under the Natural Gas Act, KRC believes that the pipeline could not be used for transporting NGLs without additional authority from the landowner.

Does UMTP have the power to condemn private property in Kentucky for this project?

KRC believes that UMTP does not have the power to condemn property in order to support the NGL pipeline. The Natural Gas Act grants eminent domain powers only to natural gas pipelines. Kentucky grants eminent domain power under KRS 278.502 to companies and individuals that are engaged in constructing pipelines for “transporting or delivering oil and gas, including oil and gas products, in public service[.]” A Franklin Circuit Court decision in the case of Kentuckians United To Restrain Eminent Domain v. Bluegrass Pipeline Company LLC, Civil Action 13-CI-1402 (March 25, 2014), held that NGLs are not oil or gas, or oil or gas products, and that the power of condemnation under that law was limited to utilities regulated by the Public Service Commission.

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