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Proposed Conversion of Gas Pipeline to Carry Natural Gas Liquids Through Kentucky Raises Questions, Concerns

Throughout this farmland near Lebanon, the markers are almost as ubiquitous as silos, split-rail fences and hay bales.

“The gas lines start crossing right in here,” Joe Spalding said.

These are parts of the Tennessee Gas Pipeline, which has been in the ground for more than 70 years here in Marion County. For the most part, the community is used to it.

But now, one of these lines is potentially part of the Utica Marcellus Texas Pipeline, too.

The Tennessee Gas Pipeline has carried natural gas across the state for 70 years, but a company is proposing a switch to natural gas liquids has worried some landowners.

That's raising concern from Kentuckians who live along or near the 200 miles of the pipeline's stretch through the state—they know the risks of a natural gas pipeline. But a natural gas liquids pipeline? Not so much.

“You kind of don’t worry about it, but then you read somewhere that there’s an explosion or a pipeline blow out,” Spalding said. “That’s a concern, since they run so close to our community here.”

The proposed switch comes from the energy company Kinder Morgan. If it comes to fruition, the repurposed pipeline will carry natural gas liquids—or NGLs—from the Northeast to the Gulf of Mexico for processing along a 1,400-mile stretch. The existing line is buried under the ground in 18 Kentucky counties.

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Some residents in Marion and other Kentucky counties say they want to know more about NGLs now that Kinder Morgan is considering converting the pipeline.

NGLs are the byproducts of natural gas drilling: hydrocarbons such as ethane, butane and propane. They’re used in manufacturing plastics, synthetic rubber and antifreeze, and they’re worth money.

If it’s converted, the pipeline flow will reverse directions, transporting NGLs from drilling operations in Pennsylvania and Ohio to processing plants near the Gulf of Mexico.

As more and more natural gas is extracted from the Marcellus and Utica shale in the Northeast, producers have more and more NGLs. Natural gas prices fluctuate, and operators need to sell the byproducts to make drilling work financially. But first, they have to get the NGLs from drilling operations in the Northeast to processing plants in the South.

And one way to do that is with a pipeline.

Sound familiar? A similar project was proposed in 2013. The Bluegrass Pipeline would have crossed Kentucky to carry NGLs to the Gulf of Mexico. Last year, after significant opposition, the project was put on hold. But the Bluegrass Pipeline was going to be new construction, and would have required the company to secure new easements from landowners along the pipeline’s path. The Utica Marcellus Texas Pipeline project involves converting an existing line—a line for which Kinder Morgan already has easements and permission to use.

Some residents along the pipeline say they haven't gotten answers to their questions about the conversions, and they have a lot of them. Several said they feel that swapping out natural gas for NGLs isn’t an even trade, when the safety risks to landowners and the environment are considered.

For Larry Caldwell and Joe Spalding, water contamination is one of their top concerns.

Several of the current natural gas lines run across Caldwell’s brother’s property, less than a mile from the Rolling Fork River and the county’s water treatment plant. The pipelines cross the river, and an NGL leak could result in widespread water contamination.

And critics of the project question whether the pipeline is adequately built and regulated to prevent a leak. According to the company, it will be.

“Natural gas, you have a leak, it either explodes or it dissipates,” said Tom FitzGerald, executive director of the Kentucky Resources Council, an environmental non-profit.

“Natural gas liquids, you have a leak, you end up with an asphyxiation hazard because they tend to cling near the ground. You have an explosion hazard because they are flammable. And then you have a groundwater pollution and land pollution problem.”

Regulators 'Spread Thin'

There have been several significant NGL leaks across the country over the past few years, in pipelines not affiliated with Kinder Morgan. In Iowa, as much as 140,000 gallons of NGLs leaked into the Missouri River in 2011. In December 2012, a leak began at an NGL pipeline in Parachute, Colorado. The spill wasn’t detected for a month, and caused widespread groundwater contamination.

And some say repurposing an aging natural gas pipeline to carry these NGLs may not be advisable.

“The pipeline safety regulations are getting stricter and stronger all the time,” said Elisabeth Myers, an oil and gas lawyer and energy regulation expert in Washington, D.C. “I really I don’t think that it’s comparable to the time when that pipeline was first put in.”

The main regulatory hurdle Kinder Morgan faces with the proposed project is getting permission from theFederal Energy Regulatory Commission to stop carrying natural gas in the pipeline.

“Other than FERC’s jurisdiction over the abandonment process, nobody is really minding the store when it comes to assuring that this is a good idea, that this is a sound idea, to repurpose this pipeline,” FitzGerald said.

A separate federal agency—the Pipeline and Hazardous Materials Safety Administration—has already warned against converting and reversing the flow in certain types of pipelines.

FitzGerald said in some cases, testing the integrity of the pipeline can cause additional structural problems. And he’s worried that switching from natural gas to NGLs could result in an unsafe situation.

“You’re looking at changes in pressure, changes potentially in the corrosivity or the interaction of the product in the pipe that’s carrying it,” he said. “You have the problems associated with different types of pipes, depending on how it was seamed.”

Despite PHMSA’s concerns about this type of project, the agency is powerless when it comes to the conversion of the pipeline.

“[Kinder Morgan doesn’t] have to actually go to PHMSA for authority to do it,” Myers said. “They’ve just been told that they should consider not doing it.”

The regulatory agency is, by its own admission, spread thin. The agency has only 12 engineers responsible for inspecting pipelines and investigating accidents in the Southeast, said Joe Mataich, director of community assistance and technical services for PHMSA, at a meeting in Danville about the project earlier this month.

PHMSA has already expressed concerns about the repurposing of pipes. The agency issued an Advisory Bulletin in September that warns against converting and reversing the flow in certain types of pipelines.

When asked about the advisory, Kinder Morgan spokeswoman Melissa Ruiz said via e-mail that the company is confident the pipeline can be converted to carry NGLs, and it will be tested to ensure its integrity:

“The pipeline currently in natural gas service could be used in NGL service. Kinder Morgan has and will continue to analyze and evaluate the internal and external surface of the pipeline with the latest technology for internal inspection devices (such as smart pigs).  

“We will review data and records to identify any unacceptable imperfections in the pipeline considering the proposed repurposing and, where necessary, will upgrade the sections of pipe in question to bring them up to current code, prior to returning the pipeline to service.  Additionally, we will hydrostatically test the entire repurposed pipeline at a pressure higher than the maximum operating pressure of the pipeline as required by federal safety regulations in order to prove its integrity and operating strength at operating pressures in excess of the anticipated operating pressure.”

Eminent Domain

One of the factors that complicated the proposed Bluegrass Pipeline was the necessity of getting easements. Pipeline company Williams spent months negotiating deals with landowners on the pipeline’s path. As of March 2014, Williams representatives reported they had reached deals with 70 percent of individuals along the pipeline’s proposed route, but some landowners were wary of allowing the pipeline to cross their land.

That’s something that seems to be in the Utica Marcellus Texas Pipeline’s favor. Most of the easements for the pipeline were negotiated decades ago. The agreements seem to be broadly written. One for a property in Lebanon signed in 1941lays out what the Hope Natural Gas Company and its successors can carry in the pipeline:

“…for the transportation and regulation of oil, crude petroleum and refined petroleum products or combinations thereof or similar thereto, natural and artificial gas, casinghead and natural gasoline and any other liquids or gases…”

The language appears to cover NGLs, too.

But some of the 14,000 miles of the pipeline may have used eminent domain, though Ruiz of Kinder Morgan said it would require extensive research to determine how much of the land was acquired that way. And Tom FitzGerald said that could end up being an issue in Kentucky.

The ability of NGL pipelines to qualify for eminent domain in the commonwealth is still unclear. A case to settle the matter is currently in the Kentucky Court of Appeals and could be decided by this summer.

But FitzGerald said he’s unsure whether the law would allow land seized for a natural gas pipeline decades ago to be able to use for a project that doesn’t qualify for eminent domain.

“Because you condemned it for a public purpose, according to Congress—the transportation of natural gas,” he said. “And that condemnation power does not apply to natural gas liquids pipelines.”

'All of the Risk, None of the Benefits'

In Marion County, Larry Caldwell and Joe Spalding stand near several of the gas pipeline’s metering stations. Cattle belonging to Caldwell’s brother graze nearby.

Spalding begins to list his unanswered questions.

“I guess my concern is what’s going to be running through it, liability issues, since it is right here, crosses the rivers and streams of our water system,” he said. “What kind of product they’re going to run through. What are the dangers? What kind of exposure is there? Nobody’s told us anything; that’s some of the things we’d like to know.”

Some landowners have received letters telling them there’s a possibility the pipeline might be converted. One of the lines runs across a corner of Spalding’s property; he said he hasn’t received any communication from the company.

Melissa Ruiz of Kinder Morgan said further community outreach is planned.

“We have contacted landowners who may be affected by the proposed project, and also existing landowners who have already granted us easements, in order to do environmental surveys,” she said via e-mail. “As part of the FERC process, town hall meetings will be set up for the general public to attend, and all landowners in proximity to the pipeline will be notified.”

And above all, the men worry their community will be shouldering all of the risk of a natural gas liquids pipeline, with none of the benefits.

“It had a purpose,” Caldwell said of the natural gas line. “It helped places along the way. This is not going to help anybody along the way. They’re piping it from up north to the Gulf and then going to send it somewhere. So it’s not really a benefit to anybody here that I can find out.”

Kinder Morgan has said publicly that it doesn’t yet have customers for the Utica Marcellus Texas Pipeline, and it won’t move forward until it does. But Ruiz said that next month, the company does plan to file its application to abandon the natural gas line.

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