Thursday, February 23, 2012

Landowners Ahead of Media on Big Upstate News: Tennessee Gas has a Pipeline Planned

[Originally posted February 10, 2012.  A checkmark (√) marks an update February 23, 2012.  Bullets immediately below that (• ) mark five updates February 21, 2012.]

√  As foreshadowed below — and if reports flowing Feb. 23 from in-the-loop landowners are reliable, which I think they are — El Paso-TGP's pipeline plan has been put on indefinite hold in the wake of the Cabot-Williams announcement.  This leaves hopeful Upstate landowners, and skittish others, to await presentations from Cabot-Williams, which — contrary to media reports — have not yet actually been made.  TGP's details are still relevant mainly to the extent that they generally frame this sort of project's economic impact, infrastructural need, and approximate routing.

•  First, as you can see, I managed to get my hands on a scanned copy of the map for Tennesee Gas Pipeline's as-initially-proposed Northeast Exchange pipeline — as we now know it to be named.  At the risk of bogging down your page-loading speed, I've spliced together the two sheets and stuck the full picture above at the same resolution as was sent to me.  (Very sorry, dial-up people.)  Download it or click it into a new window for your maximum viewing edification.  (Incidentally, if you have an interest in Upstate, remain pro- or open-minded on fossil fuels, but are still unfamiliar with the resources and the philosophy of the CNY Landowner's Coalition, I cannot recommend strongly enough that you consider joining them, one way or another.)

•  I've also obtained and uploaded a landowner-scanned version of the parent El Paso Pipeline Group's preliminary presentation on this project, which should be viewable as linked off-site.  Selected details not previously reported:  7,165 job-years in just the NY portion (which works out to nearly four times greater jobs impact as TGP's already underway Northeast Upgrade Project — designed to move way more natgas from PA through NJ to markets east); $297.4 million in temporary construction-related jobs (again, four times greater); $15 million per year in property taxes (seven times as much); and, lastly, note that the envisioned route requires the crossing of Melondy Hill State Forest, situate mostly in eastern Broome County, NY.

•  After significant public and private nurging, Steve Reilly of the Upstate-heavy Gannett chain put out much more widely the news of this proposed pipeline today — together with generalized confirmations from company executives, and some words of cautious optimism from a few Upstate Landowner Coalition Sages.  (Boy, is that exactly the kind of journalism I like to see!)]

•  Hours later, these developments were amplified by Jim Willis' Marcellus Drilling News, which — over many months of barely compensated labor — has earned a remarkably huge readership for itself, a group which should include anyone with an interest in shale gas developments in the Northeast.

•  Lastly, hours later, Cabot Oil and Gas announced a 25-75 joint venture with Williams Partners to build essentially the same sort of pipeline (dubbed "Constitution Pipeline"), with essentially the same connection points, for essentially the same sort of infrastructural (and business) reasons.  If I was a paid reporter — which I'm not — I would be asking if this is truly two lines capable of ever being permitted construction, or is this the same plan spelled out by two different investment sources, or is this the Early Stages of a Competitive Free-Enterprise Struggle — over which of the two packages might ultimately be deemed "necessary" by the public-interest specialists at FERC.

Anyway, back to work...


Upstate New York landowners who originally organized years ago for oil and gas leasing purposes have shared some new information about having been approached by Tennessee Gas Pipeline, a subsidiary of the El Paso Corporation — in order to permit surveys, and to consider easements, for a new natgas connector pipeline, this time running deep into Upstate from Pennsylvania.

CNY Landowner's Coalition Discussion Forums and Natural Gas Forums mainstay Chasgas, working from a copy of a glossy brochure, recently posted some details, and I re-run them here in hopes of nudging a larger Google-findable and newspaper-findable audience:

Quarter 4 2011-Quarter 1 2012:  Select proposed route.
Quarter 1-Quarter 2 2012:  Execute commercial agreements.
Quarter 2 2012:  Civil and environmental surveys.
Quarter 2 (May 2012):  Initiate FERC pre-filing process.
Quarter 4 2012:  File FERC application; fed and state permits.
Quarter 4 2013:  Receive FERC permits; fed and state permits (request).
[Corrected Feb. 21] Quarter 1 2014:  Commence project construction.
Quarter 4 2014:  Complete construction.
Quarter 4 (Dec. 1) 2014:  Commercial in-service.

Jobs:  [Corrected Feb. 21] 7,165 job-years (NY portion only)

Size:  36" line [diameter].

Incremental volume:  650 MDth/d [I believe that represents thousands of decatherms per day].

Counties:  Susquehanna (PA), Broome, Delaware, and Schoharie.

Total route length:  114.3 miles (NY 92.2; PA 22.1).

Market:  Upstate, Downstate, and New England.

Per Chasgas' reading of the likely-generalized map:  Pipeline starts in South Montrose (PA), heads just to the east of Oakland (PA), heads north to the Millennium Pipeline (just west of Deposit, NY), tracks north just to the southeast of Sidney, then runs [northeast] and roughly parallel to Route 88 to Central Bridge, where a new compressor station is shown, and it intersects an existing TGP pipeline.


Another source — an intercept from the anti side — indicates the line has been explained to certain aghast NY Leatherstocking Region landowners as also continuing beyond Schoharie County, on into Albany, and then further north and northeast.  It's true the natgas would be intended to flow that way, but I suspect any such extension would be unnecessary — representing another miscomprehension by the anti forces.  TGP owns the already-built inter-connecting line running west-east through New York, roughly parallel with the Thruway-Route 20 corridor.


This would have to be double-checked, but the NY news may well relate to recent announcements — fairly complete versions here and here — that a separate entity, Penn Virginia Resource Partners, succeeded in buying an easement option from the seemingly green Rail-Trail Council of Northeastern PA — which holds rights to an old D&H corridor snaking through eastern Susquehanna County, PA, at least as far as the NYS line.  The project was reported as intending to link up with TGP's line, but most observers would have interpreted that to mean southerly to TGP's PA line, rather than additionally leaping all the way north to TGP's NY line.


But further to some perspective from me.  And to a few long-winded digressions.  And to some very real-world reasons why this development should not be allowed to turn into yet another reason for New Yorkers to find themselves freaked out by freshly riled opponents of the Entire Natural Gas Industry, of which the state currently carries a surplus:

•  At the moment there are very few qualified pipeline workers currently (unwillingly) unemployed anywhere in the Northeast.  [Here's a local and timely anecdote bearing up this assertion:  A pipeline job through New York's North Country was reported as on hold due in part to the high costs associated with high demand for the necessary specialized labor.]  But keep in mind that the lion's share of the thousands of job-years we're talking about here would run the gamut from title searchers (ahem) to heavy equipment operators, surveyors, engineers, timber crews, environmental consultants, truck drivers, landmen, and even lawyers.  You know anybody needing that kind of work?

•  Though New York State currently remains bottled up, on the cusp of Year 4 of its Supposedly Temporary Shale Gas Drilling Moratorium, this pipeline project represents a very strong and very close-to-home example of the awesome geographic sprawl economically triggered by the Shale Gas RevolutionNew York Times reporters may have spent months, cobbling together years-old fringe analyses skeptical of the Marcellus shale's ultimate production.  But the fact remains that this project means actual capitalists are poised to spend actual millions in unsubsidized, private-sector dollars to try and build this sort of thing in New York State — which is much closer to my kind of proof of reality.  Expert infrastructure analysts see a lot of natgas coming out of PA, much more than the capacity available to get it to big city markets, and I'm in no position to argue with them — and neither, frankly, are any newspaper reporters.  (If it turns out the business community might require restraint beforehand from over-building, then I'd much prefer to let the market — or the pro's at FERC/NYS Public Service Commission — make that analysis, rather than to leave it to the self-serving thoughtlessness of a NIMBY veto.)

•  The consumer market is (currently) enjoying a 10-year rollback on the glut-depressed price of natgas, inexpensively running furnaces, fireplace inserts, water heaters, stoves, and clothes dryers, to say nothing of their subtler gains from lowered electricity costs.  Folks living in these fully piped areas are showing no ideological signs whatsoever of refraining from methane use — at the exact same time as they disproportionately glom onto "kill the drill" campaigns, and support politicians who behave in similarly hypocritical ways.  (What can I say?  There's an ethical disconnect here that few East Coast observers seem to think needs calling out.)

•  A perfectly timely example of this Want-It-All Phenomenon among Urban Defenders of the Environment is a piece of proposed legislation currently making its way through Congress:  H.R. 2606, the New York City Natural Gas Supply Enhancement Act.  This below-the-radar bill calls for the Department of the Interior, overseer of the National Park Service, to refrain from throwing up its hands against pipeline construction running right through the Gateway National Recreation Area near Kennedy Airport.  When it's about shale gas drilling in Upstate (and no skin off their backs), Downstate pol's have strongly voted twice in the State Legislature to symbolically (and unnecessarily) impose overlapping moratoria.  But when it's about actual commodity supply to their own constituents — even if parkland needs to be dug up to get it done — their peers in Congress representing these very same urban areas are all for it.

•  The economics of deciding a big long-distance pipeline are very different from the economics of deciding who gets natgas supplied to their homes and businesses — and who remains stuck relying on much higher-priced fuel oil, propane, or electric.  Nonetheless, it's conceivable that certain, somewhat densely populated areas within reach of this pipeline will suddenly find themselves being asked by local utilities to think about switching over, offering them a chance to save a lot of bucks in the long-run.  (Expect opposition from the truck-delivered-fuel industry.)

•  The threat of the pipeline developer winning the power of eminent domain from state or federal authorities will undoubtedly be among the Top Three Emotional Angles deployed in the inevitable outcry against this development.  These flames are sure to be fanned by NY anti-drilling forces, who typically resort to whatever argument seems best calculated to help their side — even if it might mean calling upon a Redneck Resistance directly counter to their usual pleas that (their version of) the public interest should thwart all (their personally disapproved of) private endeavors from others.

•  Pro-drilling landowners, at least those situated in or closest to the Southern Tier, who find themselves anywhere within several miles of the proposed path should also consider that the pipeline's very existence will put all their acreage into a special class of being more prone to early development, down the road, for shale gas.  As I'm sure the developer will soon discover, there will be an element of Good News-Bad News in this realization among the populace.

•  PA and NY landowners along the once-vaguely-defined route of the Laser Northeast Gathering System have already established the method and the model for maximizing the financial return, while minimizing the impact (and the transaction costs), for hosting such infrastructure.  What they did was this:  Many months prior to any application to the governmental authorities, spelling out the final or near-final routing, landowners gathered in local fire halls; pieced together a more precise picture of the developer's preferred-but-intentionally-withheld routing (by sharing information); put out the word (on their computer forums, and by old media); reached out to absentee landowners with a little research in the county tax office; put together an LLC represented by a lawyer who worked only for them en masse — and then negotiated in as tight a block as they could, achieving equitable, best-possible deals.  Borrowing a trick from the left (hey, whatever works), let's call this what it is:  Collective bargaining by landowners!

•  The pipeline developer will possibly attempt to circumvent this Ingenious Posture From The Local Worthies by continually (and quietly) re-routing the lay of the line.  This is the same technique they will (practically speaking, due to the political fallout sure to surround any actual attempts to rely on eminent domain) be forced to deploy every time they run into a landowner who (for whatever reason) is dead-set against it.  This work-around strategy works best when land agents find landowners who are so out of the loop, or hard-up, they sign the company's form early-on for the original offer.  And so a Game of Cat and Mouse ensues, in which landowners with an open mind toward hosting — for the right price — prevail by sticking together, staying informed, and supporting the sharper dudes among them.

This whole thing can be a Huge Win-Win-Win-Win for My Upstate — pipeline developer, host landowners, working stiffs, and end consumers — and I wish all affected landowners the best in helping make it happen, peacefully.


qaqcpipeman said...

Good piece Andy, keep up the good work.

MiserableOldFart said...

This is a disaster in the making and must be stopped.

pCBB said...

Northeast Exchange is name of the project not not the name of the pipeline. TGP numbers its pipelines: 100, 200, etc.
This is the second route. El Paso presented the first route to DEC in December. Because that route went though the watersheds of the NYC reservoirs, DEC recommended that they try again.
While both pipelines at the northeast end would tie into the intersection of Iroquois and Tennessee #200, but at the southwest end El Paso's ties into the Tennessee #300 whereas C&W's ties into the Williams TRANSCO.
Word from El Paso's Connecticut office is the Northeast Exchange project in not on hold. Instead they have shifted resources from the ground work to commercial development.
Last week, share holders of El Paso voted to accept Kinder Morgan's offer of a $21 billion buyout, thereby forming the largest domestic gas pipeline company this spring.