by Tim Truscott
There has been plenty of energy pipeline news in the Capital Region of New York during the month of April. Here is some of it:
Northeast Energy Direct Pipeline “Suspended”
On April 20, Kinder Morgan, the developer for the Northeast Energy Direct (NED) 30-inch diameter natural gas pipeline, announced it was “suspending” the 400-mile, $3 billion proposed project, which would have run from the fracking fields of northern Pennsylvania to Dracut, Massachusetts, near Boston. The NED would have paralleled the Constitution gas pipeline through New York from the Pennsylvania border to the Town of Wright, in Schoharie County, then continued east through Albany County, crossing the Hudson River and passing through Rensselaer County on its way to the Massachusetts state border. Locally, the pipeline would have had huge, noisy, air polluting compressor stations in the Town of Wright and in the Town of Nassau, Rensselaer County, perhaps near Burden Lake.
The project was said by its developers to have been suspended because of low gas prices and “insufficient contractual commitments from customers in the New England market”. However, despite Kinder Morgan’s announcement that the project has been “suspended” or “shelved”, the Federal Energy Regulatory Commission (FERC) has stated it has received no notification from Kinder Morgan that it is withdrawing its proposal. The FERC also states that they have no project status classification akin to “suspended”, “shelved” on “on hold”. So the precise status of the project is uncertain at this point.
KM was said by a company spokesman to have secured commitments for roughly half of the pipeline’s capacity. Planning a project to the point of actually surveying they right-of-way, as KM apparently has done, yet having only has as much business lined up as is needed to make the project successful, seems like a major error. Or evidence of a major gamble. There were assertions by environmentalists, months before the project suspension took place, that the major purpose of the NED was to carry fracked gas to export terminals. The NED would have been able to connect to another pipeline near Boston and carried the gas north to Canadian ports, probably in Nova Scotia.
It appears that the NED (and probably other proposed gas pipeline projects) were being developed under the guise of serving domestic residential and electric power generating customers, but were really planning and making most of their profit on exporting LNG overseas.
Water Permits Denied by DEC
On April 22, Earth Day, the Cuomo administration denied the water quality permits for the proposed Constitution natural gas pipeline, which would have run from the Pennsylvania border south of Binghamton, to the Town of Wright in Schoharie County, paralleling the proposed Northeast Energy Direct (NED) pipeline. The water quality permits are needed by the pipeline developers in order to begin to begin construction. Most of the pipeline’s federal permits have already been approved and the project developers have already shipped all of the pieces into the state. In Pennsylvania, they’ve even begun clearing trees.
The Constitution would carry gas from the fracking fields of northern Pennsylvania through parts of Broome, Delaware, Otsego and Schoharie counties in order to connect with existing pipelines in the Town of Wright. While it was billed as a pipeline which would have served domestic customers, at Wright, the Constitution would have been able to connect to a pipeline (the Iroquois pipeline) which could have carried fracked gas to export terminals proposed to be built on the east coast of Canada.
The DEC’s chief permit administrator, John Ferguson, wrote in the rejection that the Constitution pipeline application did not contain adequate information to determine whether it would meet water quality standards.
Predictably, DEC’s decision angered business. According to Heather Briccetti, president The Business Council of New York State, rejection of the Constitution will cost New York jobs and put further strain on the state’s energy grid. Even top Cuomo Administration officials, including Public Service Commission Chairwoman Audrey Zibelman, have said the energy grid will need more pipeline capacity in the future.
What’s Been Happening Here With Gas Pipelines?
While it’s good news that both of these gas pipeline projects have been cancelled (or at least delayed), I think these events have come about for slightly different reasons. The Constitution Pipeline project was stopped because of citizen opposition resulting in heavy pressure being placed on the Cuomo Administration. The Administration would have faced thousands of angry environmentalists, had the DEC approved the water permits.
Similarly, the NED faced heavy and growing opposition across New York, Massachusetts and New Hampshire (the proposed NED route would have entered New Hampshire from Massachusetts then crossed back into Massachusetts again before reaching Dracut). In addition to ordinary concerned citizens, pipeline opponents had organized both Republican and Democratic opposition among political representatives on the local, state and federal levels. Opponents had also started zooming in on specific local environmental issues, such as the effects of compressor stations, the issue of eminent domain and illegal trespassing by contractors of the pipeline company.
Perhaps more importantly, the entire project (or the entire fracked gas industry) has been based on shaky financial footing, making it a gamble. It appears that this industry has been based on the premise that fracked U.S. natural gas will be exported to other parts of the world, which is potentially a huge market, as liquefied natural gas (LNG) carried on large ships. The liquefying facilities, to be located at ports on the west coast of the U.S. and Canada, and on the east coast of Canada, would be terribly expensive to build (costing in the billions for each one) and would require numerous permits, resulting in numerous lawsuits. Local opposition to these port facilities has caused permitting to drag on for as much as ten years, with each year making the proposed projects more expensive. The skyrocketing costs of port facilities projects, along with escalating costs of the pipelines themselves and a weaker than expected demand of LNG overseas, resulted in most of these projects becoming infeasible.
As an example of what is happening with LNG proposals, the city of Warrenton, Oregon, have been fighting a proposal by Oregon LNG to build a $6 billion LNG export terminal. The fight came to an abrupt halt on April 15 when Oregon LNG notified city and state officials that the company would withdraw the proposal. The holding company behind the project, Leucadia National Corp., was apparently no longer willing to bankroll the effort. The announcement ended a long period of acrimony over a controversial project that galvanized residents to protect the Columbia River and caused political upheaval in Clatsop County.
The provincial government of British Columbia had set a goal of having three LNG projects in operation by 2020. That goal was said to be “a generational opportunity to ship B.C.’s natural gas to Asian markets to reduce climate change.” But, like Warrenton, Oregon, LNG developers have met crippling opposition. And now, with no LNG projects confirmed, British Columbia’s once booming gas fields are now one of the worst places in the province to find work. Like the Bakken crude oil boom, poor planning, deceit, cutting corners and excessive hype have led to desperate times for many people.
There is no doubt in my mind that fossil fuel projects, such as pipelines, have come about because the developers were allowed to take shortcuts and were given unfair benefits (such as eminent domain). But, what can we expect from an industry which is “regulated” by a federal agency (the FERC) which is financially supported by the industry members it regulates and is not answerable to the citizens it is supposed to protect. We need to make sure all fossil fuel projects follow the rules, pay the full costs and don’t end up being subsidized by the citizens. We also need to change state law so that eminent domain is not permitted for projects of this nature.
Opposed by Citizens and Municipalities
The proposed Pilgrim Pipeline, which would actually be two parallel pipelines, would run from the Port of Albany to the Phillips 66 Bayway refinery at Linden, NJ. One of the two pipes of the Pilgrim would carry crude oil from Albany to NJ, while the other pipe would carry finished petroleum products (such as heating oil and gasoline) from the New Jersey refinery back to Albany for distribution throughout the Northeast. Of course, there is nothing to prevent Pilgrim from carrying crude oil from Albany to NJ through both pipelines and not carrying any finished products back to Albany.
If tar sands crude oil were to be shipped from Global in the Port of Albany to a New Jersey refinery (remember Global still wants to build a heating facility in Albany), the tar sands would be diluted with petroleum distillate before it is placed in the pipeline. Something would need be done with the petroleum distillate diluent once it reaches New Jersey, and more petroleum distillate would need to be brought into Albany. It seems logical to me that one pipe could be used to move diluted tar sands to New Jersey, while the second pipe could be used to move petroleum distillate from New Jersey back to Albany.
The Pilgrim Pipeline has the potential to carry far more crude oil from Albany to New Jersey than is currently being carried by water transportation. This means, of course, that there will potentially be much more crude-by-rail traffic traveling over the rail lines coming into Albany, resulting in far greater dangers than New Yorkers and Albanians are already subjected to.
For a large part of its course going south, the Pilgrim is proposed to be installed along the right-of-way of the NYS Thruway.
Initially, the NYS Thruway Authority (NYSTA) sought to be the lead agency for the environmental review (SEQRA). Environmental groups vehemently opposed this proposal, asserting that NYSTA was not equipped to conduct an environmental review, and that only DEC was qualified to take on this responsibility. Further, the environmental groups pointed out the potential conflict of interest brought about by NYSTA being the lead agency for its own project, for which it would reap financial gain.
The Cuomo Administration sought to assuage the concerns of the environmental groups by proposing that DEC and NYSTA share co-lead agency status. This proposal has also been rightly opposed by environmental groups because of the conflict of interest potential, and because DEC’s own rules forbid co-lead agency arrangements for purposes of environmental review. The groups, of course, also oppose the pipeline proposal because of the environmental and pubic safety danger which would be brought by the project.
A unique situation has developed after environmental attorneys researched NYS pipeline transportation law. It has been revealed that, according to an 1800’s provision of the New York State Transportation Corporations Law, non-gas pipelines passing through cities and villages (but not townships) need to be approved by a two-thirds vote of the residents of those municipalities. Crude oil pipelines are not regulated by the Federal Energy Regulatory Commission, as are gas pipelines. Therefore, federal regulation would not pre-empt local control and approval.
The pipelines would cut through 31 towns, villages and cities in Albany, Rensselaer, Greene, Ulster, Orange and Rockland counties. The Pilgrim Pileline has been formally opposed by the environmental groups Catskill Mountainkeeper, the Natural Resources Defense Council, Riverkeeper, Scenic Hudson and the Sierra Club Atlantic Chapter. The groups urge the Thruway Authority and DEC to either direct that Pilgrim withdraw the application or suspend review until Pilgrim demonstrates the project’s feasibility and submits all other necessary permit applications and supporting information. Resolutions opposing the pipeline have been adopted by a number of municipalities and county governments. A Resolution is currently under consideration by the Albany Common Council.
Published in May/June 2016
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