2017 in review: NGL pipeline plan clears federal hurdle, still faces local resistance

Published 6:49 am Tuesday, January 2, 2018

Editor’s note: This is one of six “big stories of the year” as chosen by The Advocate-Messenger.

A plan to repurpose a natural gas pipeline to carry byproducts of hydraulic fracturing made some of the biggest local headlines in 2017, and it may do the same again in 2018.

The story stretches farther back than 2017 — Tennessee Gas Pipeline Company first applied to change the use of its Pipeline No. 1 in February 2015.

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Tennessee Gas is owned by Houston-based energy company Kinder Morgan. For more than two years, Tennessee Gas sought approval from the Federal Energy Regulatory Commission (FERC) to “abandon in-place” the pipeline, meaning it would no longer be used to carry natural gas and FERC would no longer regulate the pipeline’s contents.

According to Kinder Morgan, abandonment is the first step in a larger plan for the pipeline. The plan has Tennessee Gas selling the 964-mile pipeline to another Kinder Morgan-owned company, Utica Marcellus Texas Pipeline LLC. That company would then use the  pipeline to carry “natural gas liquids” (NGLs), byproducts of fracking in northeast shale fields, south to the gulf coast, where they could theoretically be sold for processing into plastics and other materials.

Opponents of the plan, including many public officials in Boyle County, warn the existing pipeline was built to handle natural gas, not heavier NGLs; that NGLs are far more explosive and damaging to the environment than natural gas; and that a leak in the pipeline could have devastating local consequences, such as the poisoning of Herrington Lake — the main potable water source for the region — or the creation of highly flammable, heavier-than-air clouds of gas that would pool at ground-level and could ignite from something as small as a car starting.

2017 began with a note of uncertainty about the future of the project. With the ending of a FERC commissioner’s term on Feb 3, the federal agency was left without a quorum and couldn’t take action to approve or reject any plans before it, including the Tennessee Gas case.

It wasn’t until August that President Donald Trump nominated — and the U.S. Senate approved — two new commissioners to sit on FERC, allowing the agency to once again decide cases. The appointments of Neil Chatterjee and Robert F. Powelson “won praise from industry groups and many regional lawmakers, including West Virginia Sen. Joe Manchin, who called it ‘an important step in ensuring this key independent agency can get back to work,'” according to a report from WFPL at the time.

Many following the situation said they believed the appointments would lead to swift approval for abandonment of the pipeline, 30 miles of which crosses Boyle County. And that’s exactly what happened.

At the end of September, FERC issued an order approving abandonment, affirming the findings of an earlier environmental assessment that “the project would not result in significant environmental impacts.” FERC argued in the order that it cannot address concerns about the dangers of NGLs in the pipeline, because it’s not responsible for regulating the pipeline contents once the pipeline is abandoned.

The FERC order reignited still-smoldering opposition to the plan in Boyle County. In October, Danville Mayor Mike Perros told members of the Economic Development Partnership it was time for a “serious conversation” about combatting the plan.

“My head hurts thinking how in the world do you get any kind of traction in Washington and get some kind of reasonable hearing here?” Perros said at the time. “Because the train is moving down the track and there’s big money behind it — and I mean big money behind it.”

At the same time, however, Tennessee Gas wasn’t ready to take action on FERC’s approval. It filed a document at the end of October accepting FERC’s approval, with a caveat that it wasn’t yet ready to submit an “implementation plan.”

“Due to the length of time that has passed since Tennessee (Gas Pipeline Company) filed its application and uncertainty in current market conditions, Tennessee is working to confirm the degree of market interest in the project,” the filing reads. “As a result, Tennessee is not in a position to prepare and file its implementation plan at this time.”

Also at the end of October, “intervenors” opposed to the plan from Pennsylvania and Kentucky filed a “request for rehearing and motion for stay of order” with FERC. They argued FERC had done a “grave disservice to the health and welfare” of people living in the vicinity of the pipeline and asked the agency to reconsider its ruling. They also asked that FERC bar implementation of the plan until the case could be reheard.

FERC responded to that motion with a “tolling order,” a way of giving itself unlimited time to respond to the intervenors’ filing. And Tennessee Gas filed a response arguing against a stay in the case.

“The motion for stay appears to rest its irreparable harm arguments entirely on the mere fact that the project will cause some impacts to the environment. Intervenors have provided no evidence — beyond unsupported, generalized assertions — that they will suffer irreparable harm,” the answer reads. 

Meanwhile, members of the EDP discussed the matter with local attorney Mark Morgan, who has been involved in the local grassroots effort to stop the repurposing.

Morgan said he had been told that Kinder Morgan was surprised by the pushback that had been received in Kentucky.

“The fracking companies foresaw tremendous resistance if they tried to go to the eastern seaboard and reach a port that way … They anticipated, because of the education level, they would get more push back. They have been surprised at the pushback,” he said. “We are unified. This has been a bipartisan, non-partisan issue.”

One of the final hurdles that may prevent the plan from happening is the creation of local zoning ordinances along the pipeline’s route, which require Kinder Morgan to obtain permits for piping NGLs.

In 2016, Boyle County passed just such an ordinance, which requires applicants wishing to move certain hazardous materials through the county to first obtain a conditional use permit from the Danville-Boyle County Planning and Zoning Commission. Boyle County’s was the first of its kind in Kentucky and other communities have since passed similar ordinances.

The ordinance requires the applicants to prove their project fits in well with how the surrounding land is already being used.

Morgan told EDP board members that the ordinance also puts the burden of paying for expert evaluations on the applicant.

To be ready in case an application is filed, Morgan said, the Danville City Commission and Boyle County Fiscal Court might need to provide funds on a contingency basis, so they are able to have the experts — a pipeline engineer, a chemical engineer and a geologist — lined up.

“We need to be ready to go. … The board of adjustments normally have to respond to applications in a timely fashion,” Morgan said. “I’m hoping we would leave (P&Z Director Steve Hunter) ready to respond quickly so that he had funds soon to go ahead have those people waiting in the wings to consult or call upon.”

Shortly before Christmas came what is likely the final news on the pipeline front for they year: Tennessee Gas provided FERC with an update, stating it is still not ready to move forward with the plan.

“As mentioned in the acceptance letter, due to the length of time that has passed since Tennessee filed its application and uncertainty in current market conditions, Tennessee is working to confirm the degree of market interest in the project,” the Dec. 21 filing reads. “As a result, Tennessee is not in a position to prepare and file its implementation plan … Tennessee will provide quarterly updates regarding the status of the project beginning April 2018 and every three months thereafter.”

Advocate-Messenger staff writer Kendra Peek contributed to this report.