Pipelines, Courts and Reports

Storage Tanks and pipelines in the refinery.

Pipeline issues continue to dominate the natural gas news.  Last week, the pipeline industry got some good news, some bad news, and some news potentially so devastating it could threaten the entire industry.

Good news came for Mariner East 2.  First, the Pennsylvania Supreme Court rejected a challenge from the Clean Air Council and some landowners in Delaware and Chester Counties to the utilization by the pipeline builder, Sunoco Logistic, of eminent domain along its 350 mile route.  Later in the week, an Administrative Law Judge for the Pennsylvania State Public Utilities Commission rejected a request from seven citizens in Delaware and Chester Counties to shut down finishing of Mariner East 2 and to stop existing operations on Mariner East 1.

Sunoco Logistics repeated again that it would get Mariner East 2 in service by the end of the year, but not in the form originally intended.  In certain areas, Mariner East 2 only will be 20 inches in diameter, with older pipe being attached to newer pipe.  Sunoco Logistics never has fully explained why this is happening.  Is it because of an operational problem?  A cost cutting move?  A supply issue?  A timing issue?  Especially with the use of older pipe that was never part of the original plans and the use of smaller diameter pipe than was originally proposed, concern with safety should be paramount.  At the very least, the public is entitled to a full explanation from the pipeline company.

Make no mistake, Mariner East 2 is a very important project.  It secures the supply of gas to Marcus Hook, where it either can be exported to help free Western Europe from reliance on Vladimir Putin or it can be moved domestically to ensure our national supply.  It’s for this very reason that the PUC should demand answers.  For years, Mariner East was proposed as a certain type of project.  In the end, Sunoco Logistics is delivering another one, with a slightly different route, less capacity, and older pipe in certain places.  If the PUC doesn’t know why this is, it needs to find out and publicize its findings.

While Sunoco Logistics received its good news on Mariner East 2, Penn East Pipeline, which will go from Northeastern Pennsylvania to Central New Jersey, also got positive court results.  On Friday, US District Court Judge Brian Martinotti ruled that PennEast Pipeline Co. LLC, the owner of the pipeline, can use eminent domain to take properties in New Jersey – although initially, PennEast may only be seeking survey access to those properties as it still needs to address local environmental concerns for which the New Jersey Department of Environmental Protection has still not given State blessing.  The pipeline will go through Hunterdon and Mercer Counties in New Jersey, allowing connection to pipelines that serve New Jersey and potentially the New York City Metropolitan Area.  The New Jersey Attorney General’s Office had no comment.  Since the election of Democrat Phil Murphy in 2017, New Jersey has done an about-face and is not friendly to natural gas development.  As with other opponents, however, Governor Murphy has no real plan to live without it.

There was bad news also.  On Friday a pipeline owned by Mark West exploded in Washington County in Western Pennsylvania, injuring four people, one critically.  It is believed that workers were cleaning the pipeline when vapors caught fire and ignited other combustible material.  No matter how you slice it, pipelines are serious business, and safety should always be, but sometimes is not, given the full attention that it deserves.

More bad news for the pipeline industry came further south.  A panel of judges for the Fourth Circuit vacated certain permits issued by the United States Forest Service to the Atlantic Coast Pipeline that would have allowed the pipeline to be built through the George Washington and Monongahela national forests. Atlantic Coast would run 600 miles from West Virginia through Virginia and into Eastern North Carolina.  Twenty one of those miles would be through national forests.  The Forest Service repeatedly told Dominion Energy, Duke Energy and the Southern Company, co-owners of the pipeline, that the pipeline might violate environmental standards.  In 2017, however, the Forest Service issued permits allowing for the pipeline’s building through these forests.  The Fourth Circuit Panel vacated the permits, stating in effect that the Forest Service isn’t doing its job properly.  The pipeline owners intend to fight the decision, saying the judges are undermining the judgment of seasoned professionals.

Finally, the really devastating news came from California, where the California Public Utilities Commission charged utility Pacific Electric & Gas with falsifying safety and maintenance records.  PE&G in effect admitted the accusation.  Now the utility is facing massive criticism in light of the recent wildfires that were the most destructive in California history.  While there is no evidence tying natural gas pipelines to the wildfires, PE&G’s system is antiquated and poorly maintained.  It also doesn’t have enough inspectors to fulfill its reporting obligations.

Should any evidence arise that ties the pipelines to the fires, and then to PE&G’s malfeasance, the entire industry could be at risk.  Once again, it is up to the industry, and its trade groups like the Marcellus Shale Coalition, to start supporting the industry and not just reflexively opposing all government regulation and involvement.  Like all of our nation’s infrastructure, the pipeline system is antiquated and wearing out.  It needs to be rebuilt, using new materials and state of the art construction techniques, and it needs companies willing to do so.  It also needs government both willing to let them do so and to hold them to the highest standards.  Let’s all focus on that.

Questions? Let Dan know.

Daniel Markind of Flaster Greenberg

Daniel Markind is a shareholder at Flaster Greenberg PC with over 35 years of experience as a real estate and corporate transactional attorney. He has represented individuals and companies in the energy industry for over 20 years. Dan is a frequent lecturer on Marcellus Shale and other mineral extraction issues and is regularly asked to speak at conferences, in the media and at other venues regarding energy issues and their legal and political implications.

 

When Gas Pipelines Explode

20180911_Marcellus Shale Update

At 5:00 a.m. yesterday, a portion of the newly-built Revolution pipeline exploded in Center Township, Beaver County, western Pennsylvania.  Luckily nobody was hurt, but one home, two garages, a barn and several vehicles were destroyed.  Nearby residents described what at first sounded like an airplane crash or a freight train, then a fireball.  The fire burned out by 7:00 a.m., but parts of Interstate 376 were closed for hours and the Central Valley school district cancelled classes.

The Revolution Pipeline is a 24 inch gathering line owned by the star-crossed Energy Transfer Partners.  It is used to feed ETP’s Rover and Mariner East 2 pipelines.  Officials believe that a mudslide occurred in the vicinity and may have caused the explosion.

ETP of course, is the same company that has had such difficulty with Mariner East 2.  It is instructive that fear of moving earth in the form of sinkholes in Chester County caused the suspension of construction of Mariner East 2 earlier this year.  If a mudslide was sufficient to cause such a fireball in the Revolution, then ETP has some serious explaining to do about how Mariner East 2 will be safe given the geology of Chester County.

As I’ve written numerous times before, ETP has done itself no favors with its dismissive attitude toward governmental oversight and regulation.  Now, at perhaps the worst possible time (right before an election and with Mariner East 2 still not completed and operational) and with little to no goodwill among Pennsylvania State legislators or DEP officials, ETP must show how and why the Revolution exploded, why this won’t happen again and why residents near Mariner East 2 shouldn’t be suspicious of that pipeline.

The leaders of this demand for explanation should come from the industry itself.  The people at the Marcellus Shale Coalition and at the major producers like Cabot, Range Resources, Chesapeake and EQT need to be insisting that all work on such important projects be done correctly, without cutting corners, with maximum transparency and giving safety ultimate priority.  It is their industry that is at risk, and all of our futures.  It must be the industry standard to insist that all companies use best practices and to demand that any company which fails to do so not be allowed to continue operating in Pennsylvania.

There is no risk free method of energy generation and transmission.  We all know about the dangers of nuclear power.  You can generate electricity by solar and wind but you need dangerous high tension wires to transmit it.  Given the modern political realities regarding fracking and natural gas, however, it is in the industry’s interest to show that it will not tolerate anyone who won’t walk the extra mile for the safety of all Pennsylvanians.

In more mundane legal news, last week the industry received a split decision from Pennsylvania Commonwealth Court.  Ruling in the case of Marcellus Shale Coalition v. Pennsylvania Department of Environmental Protection, the Court struck down part of the Act 78a Regulations  which stated that as part of the well-permitting process the DEP had to consider comments and recommendations submitted by municipalities.

The background is a little confusing.  Previously in the Robinson case, the Pennsylvania Supreme Court invalidated what was known as Section 3215(d) of the regulations that said the Environmental Quality Board of the DEP “may” take such comments into account.  This was considered improperly minimizing local input.  The new regulation sought to cure this defect, but the Court said this fix would not work because the clause in the Act 13 Oil and Gas Law that gave the DEP the right to promulgate such regulations in the first place no longer exists.

The result of the ruling is hard to predict.  The Court also said the DEP did not exceed its authority in the regulations when it allowed applicants and public resource agencies, including municipalities, to provide information that could assist the Agency in deciding whether or not to grant a permit.  A lot of this seems inherently contradictory.

On the plus side for the industry, the Court ruled that the expansion of the definition of “public resources” in the Act 78a Regulations to include “common areas of a school’s property” and “playgrounds” was unlawful as it was “unduly burdensome” on the applicants.  The Court noted that a McDonald’s playground or a school parking lot utilized as a playground would be covered by this definition.  These uses were not of the same class or nature as a scenic river or public park.

Finally, north and east of the Pennsylvania border New York State goes to the polls today for its primary election.  Two-term Governor Andrew Cuomo has run an uninspired campaign against challenger Cynthia Nixon.  Ms. Nixon, known most for her role in Sex and the City, has forced Cuomo even more to the left than before.  Specifically, Nixon proposes that New York adopt a law requiring it to obtain all of its energy through renewable sources by 2050.  In her platform, Ms. Nixon criticizes the Governor by saying “his plan still won’t fully halt all new fossil fuel infrastructure.”

Cuomo’s policies already have led to a halt in the pipeline infrastructure for New York and New England, as well as a stoppage of much power plant construction.  Events like today’s explosion in western Pennsylvania can only add to the pressure on natural gas proponents.  Unfortunately for New York, their governmental officials have been overly optimistic in describing the current science for renewable energy.  New York officials will shut down Indian Point Nuclear Power Plant by 2021.  Given Massachusetts’s sad experience in predicting how it will make up the energy shortfall from mothballed nuclear plants, expect New York’s energy situation to become dire quite soon.

With Massachusetts likely to import more natural gas from Russia this winter, New Jersey and Maryland officials limiting construction of offshore wind and solar farms and Pennsylvania natural gas pipelines exploding, the time is more critical than ever to have an honest conversation on energy.  It needs to be led not by Cynthia Nixon, Josh Fox or the executives at ETP but by people who recognize the pluses and minuses of all forms of energy generation, storage and transmission, and who are not afraid to ask the stupid questions.

Questions? Let Dan know.

Daniel Markind of Flaster Greenberg

Daniel Markind is a shareholder at Flaster Greenberg PC with over 35 years of experience as a real estate and corporate transactional attorney. He has represented individuals and companies in the energy industry for over 20 years. Dan is a frequent lecturer on Marcellus Shale and other mineral extraction issues and is regularly asked to speak at conferences, in the media and at other venues regarding energy issues and their legal and political implications.

Marcellus Shale Update – 1.29.2018

The Delaware River Basin Commission held public hearings last week on the proposed ban on hydraulic fracturing in the basin.  On Thursday, the DRBC met near Philadelphia International Airport.

Public comment lasted three hours.  Each speaker was allowed three minutes.  Within the first half hour, a man named Jonathan Lutz from the American Petroleum Institute stated that the industry supports 320,000 jobs and encourages healthy regulation but opposes the full ban.  He questioned the science quoted by many of the speakers.  After his three minutes, Mr. Lutz walked out (at least I think so, I didn’t see him afterwards).

I was speaker 52.  With the exception of me, every speaker afterwards spoke in favor of the DRBC’s proposal.  Every one!  Many asked the DRBC to go further and to expand the ban to include the prohibition of water withdrawal for fracking purposes from the basin or the treatment or storage of flowback within the basin.

A good approximation of what I said can be found here.  This is not verbatim as I ad libbed my testimony based on notes I took during the meeting.  I listened to every speaker, heard what they said, addressed some key points they made and stayed afterward for anyone who wanted to talk about the issues.  A couple actually did.

Where was the industry?  Did they care that to the uninformed who were present, the only points made were the same ones, over and over, unchallenged, about how many scientific studies linked fracking to health problems, how bad fracking is for the environment and what it does to property values?  Of course,  the overwhelming majority of the 100-150 people in attendance were anti-fracking activists who had their minds made up, BUT NOT ALL.  In fact, I would guess that most of the attendees had never heard the industry’s environmental case articulated.  They certainly didn’t hear it Thursday.

Despite paying lip service to the need to outreach to the people of Southeastern Pennsylvania (where the majority of votes are in this State), on Thursday the industry was AWOL.

The Marcellus Shale Coalition sent nobody.

The Northeastern Pennsylvania energy producers sent nobody.

The pipeline companies sent nobody.

The Pennsylvania and Philadelphia Chambers of Commerce sent nobody.

Had only three or four people spoken in opposition to the “groupthink”, the whole tenor of the meeting could have been different.  Certainly the press coverage might have been.

Not surprisingly,  “Dimock” was mentioned at least ten times.  Imagine if a representative of Cabot Oil and Gas had been present, gotten up and said:

“Hello, I’m Joe Smith from Cabot Oil and Gas.  It was my company that had the spill in Dimock and we’ve been working with the residents there since then.  I can never promise that we’ll be perfect from now on, but we’ll try our best.  It’s been almost a decade since that spill and nothing like that has happened since.

By the way, you might be interested to learn that about three years after that spill Cabot had to decide where to build our Northeastern Pennsylvania headquarters.  We chose Dimock.  The residents were thrilled.  Local Dimock residents come to our headquarters every day.  Quite a few of them work for us.  From what you’ve been told today, you would think that the people of Dimock hate us.  Actually, the opposite is true.  Every poll that’s been taken of the local residents shows overwhelming support for fracking.  But please don’t take my word for it, why don’t you come up and see for yourselves.  On behalf of Cabot, I’m inviting everyone here to come up to Dimock and visit.  I’ll show you around our offices, you can drive around the area and judge the situation for yourself.  I think you’ll be very surprised.”

Does the industry care whether or not people in non-shale areas understand its position?  With a little foresight, the industry could have begun to engage the residents of Southeastern Pennsylvania at an event where there was local press coverage and in a way that makes their point.  The industry knew the scientific studies would be raised.  Did anyone even consider bringing down a health professional from Susquehanna County to give the true story of how life expectancy has increased there since fracking started and overall public health is better?

Who exactly is getting paid right not to act as public relations consultants for the natural gas industry, and what are they doing?  Until the industry gets serious about making its legitimate case to everyone in the State, it has no right to complain about how the public in Pennsylvania doesn’t understand the good it provides.

Questions? Let Dan know.

Marcellus Shale Update – 1.29.2018

The Delaware River Basin Commission held public hearings last week on the proposed ban on hydraulic fracturing in the basin.  On Thursday, the DRBC met near Philadelphia International Airport.

Public comment lasted three hours.  Each speaker was allowed three minutes.  Within the first half hour, a man named Jonathan Lutz from the American Petroleum Institute stated that the industry supports 320,000 jobs and encourages healthy regulation but opposes the full ban.  He questioned the science quoted by many of the speakers.  After his three minutes, Mr. Lutz walked out (at least I think so, I didn’t see him afterwards).

I was speaker 52.  With the exception of me, every speaker afterwards spoke in favor of the DRBC’s proposal.  Every one!  Many asked the DRBC to go further and to expand the ban to include the prohibition of water withdrawal for fracking purposes from the basin or the treatment or storage of flowback within the basin.

A good approximation of what I said can be found here.  This is not verbatim as I ad libbed my testimony based on notes I took during the meeting.  I listened to every speaker, heard what they said, addressed some key points they made and stayed afterward for anyone who wanted to talk about the issues.  A couple actually did.

Where was the industry?  Did they care that to the uninformed who were present, the only points made were the same ones, over and over, unchallenged, about how many scientific studies linked fracking to health problems, how bad fracking is for the environment and what it does to property values?  Of course,  the overwhelming majority of the 100-150 people in attendance were anti-fracking activists who had their minds made up, BUT NOT ALL.  In fact, I would guess that most of the attendees had never heard the industry’s environmental case articulated.  They certainly didn’t hear it Thursday.

Despite paying lip service to the need to outreach to the people of Southeastern Pennsylvania (where the majority of votes are in this State), on Thursday the industry was AWOL.

The Marcellus Shale Coalition sent nobody.

The Northeastern Pennsylvania energy producers sent nobody.

The pipeline companies sent nobody.

The Pennsylvania and Philadelphia Chambers of Commerce sent nobody.

Had only three or four people spoken in opposition to the “groupthink”, the whole tenor of the meeting could have been different.  Certainly the press coverage might have been.

Not surprisingly, “Dimock” was mentioned at least ten times.  Imagine if a representative of Cabot Oil and Gas had been present, gotten up and said:

“Hello, I’m Joe Smith from Cabot Oil and Gas.  It was my company that had the spill in Dimock and we’ve been working with the residents there since then.  I can never promise that we’ll be perfect from now on, but we’ll try our best.  It’s been almost a decade since that spill and nothing like that has happened since.

By the way, you might be interested to learn that about three years after that spill Cabot had to decide where to build our Northeastern Pennsylvania headquarters.  We chose Dimock.  The residents were thrilled.  Local Dimock residents come to our headquarters every day.  Quite a few of them work for us.  From what you’ve been told today, you would think that the people of Dimock hate us.  Actually, the opposite is true.  Every poll that’s been taken of the local residents shows overwhelming support for fracking.  But please don’t take my word for it, why don’t you come up and see for yourselves.  On behalf of Cabot, I’m inviting everyone here to come up to Dimock and visit.  I’ll show you around our offices, you can drive around the area and judge the situation for yourself.  I think you’ll be very surprised.”

Does the industry care whether or not people in non-shale areas understand its position? With a little foresight, the industry could have begun to engage the residents of Southeastern Pennsylvania at an event where there was local press coverage and in a way that makes their point.  The industry knew the scientific studies would be raised.  Did anyone even consider bringing down a health professional from Susquehanna County to give the true story of how life expectancy has increased there since fracking started and overall public health is better?

Who exactly is getting paid right not to act as public relations consultants for the natural gas industry, and what are they doing?  Until the industry gets serious about making its legitimate case to everyone in the State, it has no right to complain about how the public in Pennsylvania doesn’t understand the good it provides.

Questions? Let Dan know.