Down the Pipe

When the drilling rigs are long gone, the dangers of gas pipelines will be just beginning.
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Posted November 30, 2011 by PETER GORMAN in News

Chuck Paul bought 64 acres of land in DISH, Texas, north of Denton, several years ago. The father of four intended to live there with his family until the Metroplex grew to reach his area, then sell it to a developer.

Cover11_30_11“When I bought it, there was an Atmos gas pipeline easement already on the property,” said Paul, 64. “I was aware of that. What I never could have imagined was that three more easements were going to be taken as well, leaving me with a patchwork property so crisscrossed with 50-foot easements that I can’t walk anywhere without crossing one. And since you cannot build on an easement, well, that did it for my property.”

The property, which was supposed to be an investment for his family, is now appraised at only about a third of the price he paid for it years ago, and he can’t find a buyer even at that price.

“It’s a horse pasture forever,” he said. “Or until one of those lines blows up.”

As Paul’s concluding comment suggests, the substantial loss of property and property value to pipeline companies and their use of eminent domain is only one of the problems with this aspect of the gas drilling industry. 

Long after the rigs and big trucks are gone, long after the frack ponds have dried up and the debate over cleaner drilling technologies has ended, the most insidious element of natural gas drilling, particularly in urban areas, will remain: the thousands of miles of pipeline carrying gas beneath sidewalks and streets in North Texas cities and towns, through backyards, and along highways and railroad tracks.

And as the memory of acrid fumes from fresh wells fades, the danger posed by pipelines will grow. Every day older, another day weaker. Another day closer to a pipeline rupturing underground and sending a fireball into the sky, as happened in San Bruno, Cal., last year, a disaster that killed eight people and destroyed 38 homes. Such explosions aren’t that rare: Between 2000 and 2009 there were more than 115 serious pipeline incidents in Texas, meaning incidents that causes death, serious injury, or major property damage.

The Fort Worth League of Neighborhood Associations tried to bring all those issues to public attention when it released the results last fall of a study by the independent Pipeline Safety Trust. Recommendations ranged from studying the benefits of odorizing gas in urban pipelines to forming an independent pipeline siting commission to establish safe pipeline routes in heavily populated areas. Despite the serious nature of the recommendations and the widely acknowledged quality of the study, it has pretty much fallen on deaf ears.

“Pipelines are the forgotten part of the gas industry. Pipeline companies just take whatever they want,” said Calvin Tillman, former mayor of DISH, the town that is a poster child for the problems involved in the Barnett Shale natural gas play. The DISH area is a spider web of pipelines that converge on a bank of natural gas compressors just outside the town limits. “It is a mess. People don’t realize just how wide a 100-foot easement is, and they don’t know that once that easement is there, you can never put anything on it, ever.”

Pipeline companies have been given the right to take land through eminent domain on the theory that they are public utilities, like power companies. But unlike power companies, pipeline companies are not in any way controlled by the Public Utility Commission. Instead they’re under the supervision of the Texas Railroad Commission, which has the power to enforce some tough regulations over pipelines but never has. Many people also question whether pipelines that carry gas for only one company can indeed be considered to be a “common purchaser” to qualify for public utility status.

In a rare outcome in pipeline litigation, the Texas Supreme Court ruled in August against a pipeline company’s use of eminent domain in a case in south Texas. Gas drilling critics got their hopes up: Maybe this would open the door to the state exercising some control over where pipelines are put.

Not likely, say industry insiders, who fear that the court will be coerced into rehearing the case and changing the outcome due to pressure from the immensely wealthy and powerful gas companies and the Railroad Commission, which, in the opinion of many observers, has become a captive of the industry it is supposed to regulate. The agency’s official stance, after all, is that its mission is to protect the public good, and that the public good is defined by whatever helps get more oil and gas out of the ground.

In late October, an attorney for the commission filed a friend-of-the-court brief with the Supreme Court, predicting disastrous consequences if the court’s ruling remains unchanged.

The ruling “will likely make it more difficult to obtain pipeline right-of-way easements in Texas and could significantly impact the development of needed pipeline infrastructure within the state,” attorney Landil C. Fowler Jr. wrote. “To the extent the opinion has such a limiting effect on new pipeline construction, there will likely be a corresponding limiting effect on new oil and gas development.”

“I was proud as hell of the Supreme Court standing up for a landowner,” said Glenn Sodd, an attorney based in Corsicana who specializes in eminent domain pipeline cases. “That would have changed the game. Unfortunately, it’s not over yet.”

For a company to be declared a public utility usually involves trade-offs: A power company, for instance, may have a quasi-monopoly, and it needs the right to run a web of power lines in order to serve the public. In return for those concessions, and in recognition of the fact that power plants and power lines also represent a risk to the public, the company usually faces tighter restrictions and more legal scrutiny than, say, a garage owner or a discount store.

Not so, however, with pipeline companies. There are few restrictions as to where a pipeline can be laid, and those decisions are made by the pipeline companies, with no public input, no Railroad Commission hearing, and — until this past September — no public notices. Nor are there any setback requirements that would ensure that pipelines be kept a certain distance from homes, schools, hospitals, or other occupied buildings.

While a homeowner may not build on top of a gas company easement, a pipeline could be laid, at least in theory, under an existing apartment building or home. If that’s the route the company deems best, that’s what they are going to use. And if having a pipeline running across the front yard devalues your property — well, tough luck. Just ask the folks on Carter Avenue in Fort Worth, many of whom had their tiny front yards taken via eminent domain by Chesapeake’s pipeline company in 2009. Eventually, public sentiment ran so high that Chesapeake punted and chose an alternate route for their pipeline.

Fort Worth Weekly repeatedly contacted the gas companies and their subsidiaries that are the primary pipeline companies in  Tarrant County, seeking response to the issues raised in this story. Essentially, the only response came from XTO’s pipeline company, Barnett Gathering, which was required to provide some information under state open-records law. The question to Barnett Gathering was how many times the company had used eminent domain in Tarrant County since 2006. The answer: 66 times thus far.

 


Interstate pipelines are regulated by the federal government, but for any pipeline that stays within the boundaries of Texas, companies can pretty much do as they like. For instance, pipeline companies, by law, have to be willing to transport natural gas for any gas producer that asks them, for a stated price. But in the Barnett Shale, most energy companies, and certainly all of the big ones, have created their own pipeline companies. They often share the same board of directors and even the same physical address with the parent company, but they are independent and so qualify as “gas corporations” for public utility status, which the parent company itself could not qualify for. And none of those gas companies carry anyone’s gas but their own.

 

FEATURE_1“Every company that can afford it wants their own lines because of the enormous amount of money involved. Gas pipelines are gold mines,” said a consultant for the gas industry, who asked that his name not be used. There are many public advantages to having gas companies share pipelines. But building your own line rather than paying someone else to share theirs saves huge amounts of money for the gas companies. He described how the process works for gathering lines, the lines that transport gas from the wellhead to a processing plant or compressor station. 

“Take XTO’s Tarrant County pipeline company, Barnett Gathering,” he said. “Their published price for moving gas through their gathering lines is 40 cents per MMBTU — million British thermal units. Now figure a gathering line in the Fort Worth or Tarrant area is maybe two miles long. Let’s say it cost $4 million to lay that pipe. If it’s a typical 16-inch gathering line, it can probably move more than 100,000 MMBTUs a day. Do the math.”

The math comes to $40,000 a day for a single line. “That pipe pays for itself in 100 days. Hell, if it’s 10 miles long, it pays for itself in a year and a half! And every penny goes right back to the parent company. And these guys are saying the Barnett play will last 30 years. Well, that is a lot of money. And no gas company big enough to lay its own pipe is going to hand that money over to someone else.”

“These companies are very powerful in Texas,” said Sodd. “They’ve created a lot of jobs, a lot of wealth. Imagine that the pipeline companies do not even have to get their routes approved by anyone. Even power companies have to design three potential routes for new power lines that involve eminent domain and have public hearings on which route is the least intrusive. With pipelines, there is no process for public input.”

Say a homeowner is fighting a gas company that wants to lay a pipeline across her land, near an existing line owned by another company. The homeowner suggests that company B use company A’s line. The company responds that there isn’t sufficient capacity in the existing line. The same goes for easement sharing: While more than one pipeline can be laid in the same easement, no one, including the Railroad Commission, has the authority to make pipelines share an easement.

“And if you want to fight that second company, you will spend hundreds of thousands trying to prove them wrong, because they are given the benefit of the doubt,” Sodd said. “Pipeline companies don’t have to prove anything, so the burden is yours alone.”

It’s a fight even wealthy people can’t generally afford. “Pipelines are very profitable. Gas producers make a ton of money from them, or at least they get to keep all their own money, which comes to the same thing,” Sodd said. “And stopping them? Just remember that they have the lobbyists, they contribute to political elections, and they’re sacrosanct here in Texas.”

At their worst, pipeline companies and their eminent domain tactics can ruin people, like they did Chuck Paul. “I just didn’t see it coming,” he said. The first pipeline, in place when he bought the property, he could live with and could have developed his property around. Then in 2005, Atmos, which owned the first easement, put in a second line in that same easement, which wasn’t so bad, he said.

But in 2006 and 2007, everything changed. A second pipeline company came by and told him they wanted to run a new line through his place. When he told them he wasn’t interested, they said they’d take the land they needed by eminent domain. Without the funds to hire a lawyer to try to fight it, he took what they offered. And then it happened again. And again.

“Energy Transfer put in two lines on two separate easements, one 30 feet wide and one 50 feet wide, and they were separated by a 20-foot stretch of property. Those easements ran north and south for nearly half a mile. And then Atmos put in a third line in another 50-foot easement that runs more or less parallel — but separated by more dead land — to their first, which runs east and west.”

The result is 64 acres that look like a tic-tac-toe board.

He’s had his property for sale since the second pipeline went in, but prospective buyers show no further interest once they are told about the easements.

“I have 100 feet by a half-mile of land I can never use except as horse pasture. And I’ve got better than 100 feet of easements running perpendicular to those, that I can never use either. And you know what’s ironic? I still have to pay taxes on those easements. So I can’t sell my property, I can’t use it, but I can still pay property tax on it.”

Paul said that people don’t understand how allowing for-profit companies to use eminent domain in such an unregulated manner is turning the world on its head.

“When municipalities use eminent domain for roads, that’s not for profit. And if some giant retailer came in and said they were going to lay their driveway across your property, it would never be allowed. But that’s what this is: a for-profit company taking private property to make money.”

The worst part, Paul said, is that a solution was offered by the Texas Legislature in 2009. “There was a bill passed by both houses that was put on Gov. Perry’s desk that would have permitted gas pipeline companies to use public rights of way — like [the state highway department’s] — instead of private property. And Perry vetoed it.”

“That bill, authored by Wendy Davis created quite a dustup,” said Jim Bradbury, a prominent Fort Worth eminent domain lawyer, “because [the Texas Department of Transportation] had made an internal decision that gathering line companies did not have the right of eminent domain. They didn’t want those lines in their rights of way. So the dustup was between the pipeline companies and TxDOT.”

Perry did sign a second bill that allows pipeline companies to lay pipe across roads, railroad rights of way, canals, streams, and municipal streets. The difference in the two bills, Tillman said, was that Davis’ bill would have given some protection to towns and cities. The second one, he said, “more or less screwed municipalities and didn’t affect state rights of way very much at all.”

“You know what those pipeline companies cost me? Everything,” Paul said. “I can’t build on my property, and I can’t sell it, which means I can’t afford to move. If everybody in Texas knew what these companies could do and what they will eventually do to you, there would be a revolution.”

In 2000 the Gas Research Institute, a research and development arm of the natural gas industry, hired a company called C-FER Technologies to produce a model of what would happen in case of a catastrophic pipeline failure. A small 6-inch pipe operating at 500 pounds of pressure would blow up everything within a diameter of about 140 feet.

Standard gathering lines, however, are 16-inchers operating at up to 1200 PSI, and in that case the circle of destruction expands to about 400 feet. Failure of a 30-inch transmission line operating at the same 1200 psi takes out an area 850 feet in diameter.

 


“In the country, that’s a huge hole in the ground,” said Carl Weimer, executive director of the Pipeline Safety Trust, a nonprofit that advocates for safe fuel transportation. “In Fort Worth, that’s a whole different story.”

 

But surely, you might say, gas pipe-lines are nothing new in Texas — there must be some system in place to inspect them and make sure they are safe.

Well, sort of — but only if your definition of “inspect” and “safe” are very loose.

Texas has about 137,000 miles of gas pipelines and only 33 gas pipeline inspectors. In Region Six, which includes Fort Worth and most of the Barnett Shale in surrounding counties, there are only seven inspectors.

Most of the 115 serious pipeline incidents reported in this state over a recent 10-year period occurred in rural areas, and only 15 people died as a result of them. But that decade reaches back, in part, to before shale drilling began in Fort Worth and other urban areas.

FEATURE_2Pipeline incidents affecting populated areas are becoming more common. On Nov. 21, a gas pipeline explosion near Batesville, Miss., forced the evacuation of 20 families and the temporary closure of a state highway. On Nov. 16, a gas pipeline explosion in southern Ohio destroyed a home and barns. In February, a gas pipeline explosion in Allentown, Pa., left five dead and damaged 47 homes and businesses.

Sodd’s outlook is cynical. “There haven’t been enough pipeline explosions in Texas to cause sufficient funds to go to the Railroad Commission so that they can hire and train enough inspectors to really watch that pipe from the moment it’s brought to the site until it’s been welded and tested and then for that pipe to be inspected regularly,” he said. “I’m afraid we’ll need to see some more explosions for that to happen.”

“People just don’t understand how dire the situation really is,” said Libby Willis, president of the neighborhoods league. Willis and the FWLNA used a federal grant to pay for the pipeline study they commissioned from the Pipeline Safety Trust.

“For so long in this state, the drilling activity has gone on out in the rural areas, and I don’t think the people in Fort Worth really understand what this drilling might mean to them,” she said. “And just because it’s a technical area doesn’t mean this issue should be left to legislators who may or may not have the public’s best interest in mind.”

Willis said she’s concerned about what might happen as the pipeline infrastructure gets sold to second- and third-tier companies in the future. “Because maintenance is the key. I’d rather the city and Railroad Commission be proactive instead of waiting until something terrible happens before we act.”

Railroad Commission spokeswoman Ramona Nye wrote in an e-mail to the Weekly that “federal and state pipeline safety regulations require pipeline operators to inspect and monitor their own systems,” in addition to the 33 state inspectors.

“The problem with that,” said Weimer, “is that the Railroad Commission inspectors aren’t actually inspecting those pipelines. What they do is sit in offices and inspect the paperwork the pipeline companies give them to make certain that paperwork matches the regulations. But there is nobody out there actually kicking the tires, so to speak. Nobody is watching that pipe go into the ground except for the people putting it there. The RRC simply hasn’t the manpower.”

Texas must institute some real regulation if public safety is going to be maintained, Weimer said. He thinks a system of rules similar to that applied to federally regulated pipelines is needed throughout the state. Those rules, he said, cover things like who can lay pipe, how much experience welders need to have, and how the pipeline has to be tested prior to its use.

One of the biggest holes in pipeline safety that Weimer sees is that there is no requirement that natural gas be dehydrated and processed before it goes into the gathering lines and no requirement that a significant measure called “pigging” be done to cut down on corrosion. As it is, he said, those lines carry natural gas laden with corrosive water and other gas products. He thinks companies should be required to “pig” those lines — that is, to periodically put a device into the lines that eliminates water and detects corrosion.

“In Fort Worth you need to have a rule about pigging in place,” he said, “because smart pigs are the best way to see to the integrity of a pipe carrying gas that will corrode it.” Distribution lines — those that carry processed gas, often across state lines — have to be pigged regularly, by federal regulation, he said.

“And there is no data that I’ve ever seen on how well the mom-and-pop operators maintain older lines — probably because most of those lines were laid in rural areas where there are no regulations to speak of,” Weimer said.

But he said he can’t imagine those second- and third-tier gas companies having the money to properly maintain the lines. “I’ve even heard people in the industry express concern over that issue,” he said, “because if something goes wrong in an urban setting, it will paint even the top-tier producers with the same bad broad brush.”

It’s not as though people have not tried to regulate pipelines. When Tillman was mayor of DISH, he got several companies to voluntarily sign a “best practices” document he had drawn up. Those firms promised to read the city’s ordinances prior to obtaining easements and planning pipeline routes. They also promised to present the town with preliminary routes to comment on. The gas companies also agreed to consider using existing easements and public rights of way and to respect private property rights, among other things.

Unfortunately, voluntary agreements are just that — voluntary. And there is not much that even a city the size of Fort Worth can do about passing ordinances to regulate them.

Gary Hogan, longtime activist and a former member of both of Fort Worth’s gas drilling ordinance committees, knows that firsthand.

“When we were crafting the new city gas ordinance in 2008, a gas drilling review committee was put in place that would review proposed pipelines. But what we were told was that, in fact, it would just be a notification process and that when push came to shove, the pipeline companies would have the last word.”

Cities do have some power to regulate pipeline routes through the use of zoning, rules on where a pipeline can cross public streets and run through city water sources, but it’s not much help. “Basically,” said Hogan, “you can tell them they will have to move their proposed line if it is going to hit an existing public water or sewage line, but that’s about it.”

Zoning regulations should make a difference: Putting an industrial line in a residential neighborhood should be a zoning violation, but gas companies trump those most of the time as well, since they have the right to get their product to market. 

When the Fort Worth League of Neighborhood Associations set out to influence pipeline decision-making, they didn’t rely on anecdotes. The group ordered up a professional study, aimed at describing the types and locations of gas pipelines in Fort Worth and answering questions about who decides where to put the lines and who regulates their operation. And of course, the league asked researchers to discuss the risks to public safety.

The finished study made recommendations to the Federal Office of Pipeline Safety, state regulators, Fort Worth city officials, pipeline companies, and citizens. The 25 recommendations ranged from possibly odorizing gas in gathering lines — the lines that run from the well to gas processing plants to forming an independent pipeline siting commission that would be “empowered to establish safe pipeline routes for high-stress pipelines in populated urban areas.”

“These were basic common-sense and low-economic-impact suggestions,” Willis said.

Though the report got some attention from the press when it was released, it was ignored for the most part by everyone with the power to implement any of those recommendations.

 


“The city council thought there were a lot of substantive things in the report, and they were high on some of the recommendations,” Willis said. Two that drew attention at city hall involved creating a “consultation zone” and a “notification zone” around any proposed pipeline in the city. The consultation zone would involve pipeline companies talking with land developers to decide where a proposed pipeline should go to provide the best emergency access to homes, for evacuation, and to reach the line itself. The notification zone would let residents know about a new pipeline going in near them. If included in the city gas ordinance, both of those would have been compulsory.

 

Those were presented to the council almost a year ago. “Nothing was done,” said Willis. “We thought we had another opportunity to push these … ideas in October, when the city council was going to consider redoing the gas ordinance. But then you know how that went: They decided to not do anything.”

A glimmer of hope for reining in gas pipeline companies was served up by the Texas Supreme Court in August. A land partnership and a farmer who leased the land sued to stop Denbury Green Pipeline-Texas LLC from laying a pipeline across a piece of property. The landowners claimed the line was a private concern that would never be used by another company; that disqualified it from being treated like a “common carrier,” the plaintiffs argued, and therefore prevented Denbury from using eminent domain to obtain the easements.

Supreme Court Justice Don Willett, who delivered the opinion, wrote that “The Texas Constitution safeguards private property by declaring that eminent domain can only be exercised for public use. Even when the legislature grants certain private entities the right and power of eminent domain, the overarching constitutional rule controls: no taking of property for private use.”

Both the trial court and court of appeals ruled in favor of the pipeline company. But the Supreme Court found that to qualify as a common carrier, with the power of eminent domain, “the pipeline must serve the public.” The court ruled that the pipeline would not serve a public purpose if it “were built and maintained only to transport gas belonging to Denbury from one Denbury site to another.”

The ruling sent shudders through the gas pipeline industry.

“I think it was quite a significant ruling,” said a high-ranking gas industry employee who asked that his name not be used. “The court cited the Texas Constitution when discussing the need for a public utility or common carrier with eminent domain privileges needing to have a public purpose.”

What the ruling does, he said, is to potentially give landowners some leeway to demand that pipeline companies prove their public purpose isn’t just to make money by transporting their private gas through their private pipelines.

“The problem with the pipeline companies having the status of a public utility is that while the Common Carrier Act forces them to take gas from any producer without discrimination, the Railroad Commission  has been very lax in enforcing that act,” the industry insider said.

If the state agency did enforce that law, it might have prevented situations like Chuck Paul’s.

But “the law is only as good as the willingness of the authorities to enforce it,” the industry employee said. “The only way that will happen with the Railroad Commission is if someone gets some citizens organized and they begin to hold the commission’s feet to the fire.”

The Denbury opinion was an attempt to “correct some of the problem with eminent domain in this state,” he said. “But look at all the briefs that have been filed in the three months since that opinion: The pipeline companies are crying that the world is ending.”

Sodd agreed. “The court sent this back down to the lower courts to be retried. But there is an awful lot of pressure on the high court to have a rehearing. And these are powerful companies in a state where it’s been at least 13 years since an eminent domain case was lost by the state.”

The only way to stop a pipeline in its tracks, said Sodd, is to prove that its placement is “arbitrary and capricious. In a Texas court, that means proving that no sane person would have chosen that route.”

A slight change in the eminent domain law went into effect in September. The change requires pipeline companies seeking to use eminent domain to provide the landowner with a copy of an official appraisal of the land they plan on taking so that the landowner can at least have an idea of whether the gas company’s offer is fair. It also calls for the pipeline companies to compensate landowners for loss of access to their remaining property.

“The legislature was trying to do something for landowners with that,” said Sodd. “But if they really want to do something, they ought to pass a law that if a second pipeline is going to run parallel to an existing line, the [builder of the second pipeline] would have to prove that easement was necessary. That would give the landowner some weight. Unfortunately, the legislature isn’t likely to do that.”

Jim Bradbury isn’t holding his breath.

“For the people of Fort Worth, those pipelines are going to be down the street or right under your house,” he said. “You are going to wind up with a diminution of property value — and if that hasn’t happened yet, that’s only because buyers don’t understand the implications and so have not put it on their checklist yet.”

When prospective buyers do begin to take that into consideration, he predicted, property values will plummet. “There are big consequences to those pipelines. A backhoe or construction accident will trip those. And I know of no setback that would prevent someone from putting a pipe right under your house. It’s an industry that’s operating as a ghost utility — they’ve got all the rights of the government with none of the responsibilities.”

And the ones who may end up paying a terrible price are the people of Fort Worth.


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