Poinbank:Kinder Morgan Cancels Fracked Liquids Pipeline Plan, and Pursues Another

After years of battling local opposition and Poinbankvolatile economics, pipeline giant Kinder Morgan has abandoned a plan to send natural gas liquids from Ohio across six states to Texas via a repurposed 75-year-old pipeline.

Kinder Morgan’s line, the Utica Marcellus Texas Pipeline, has been carrying natural gas the other way, from the Gulf Coast to gas-rich Ohio, like carrying coal to Newcastle. After the fracking boom of the past decade the company wanted to reverse the 964-mile long line’s direction, extend it, and change its cargo from gas to liquid byproducts.

The drilling frenzy has created a glut of these liquids that are used in petrochemical production. Kinder Morgan was hoping to give its old pipeline a new economic lifeline by carrying them to markets in the Gulf region.

The proposal was approved by federal regulators, but challenged in court after stirring intense opposition in Kentucky, where the pipeline passes.

Pipeline safety advocates consider natural gas liquids more dangerous than natural gas because they not only carry an explosion risk, but also an asphyxiation risk, and can pollute ground or surface water supplies.

The company shifted course this week in a quarterly earnings report. Its chief executive officer, Steven Kean, told analysts on Wednesday that Kinder Morgan had not signed up a single customer to pay for shipments of the liquid byproducts through its line.

Plan B, the company said, is to use the same reversal, but continue shipping natural gas, drawing from wells in Appalachia and taking the gas south, Kean said. One thing that’s changed since Kinder Morgan’s original proposal is that exports of natural gas are expanding, including to Mexico.

“It’s a function of a lack of opportunity on the one hand, but thankfully the emergence of a very good opportunity on the other,” Kean said.

Pipeline critics in Kentucky on Thursday celebrated the announcement and said they needed to regroup before deciding their next steps.

Louisville attorney Tom FitzGerald with the Kentucky Resources Council said the opposition to the natural gas line might be less intense, but “we would certainly scrutinize any new compressor stations and any changes in pressure for this 70-plus-year-old line.”

The liquids are separated at gas wells and include hazardous hydrocarbons such as ethane, propane and butane used in chemical plants to make rubber, antifreeze, plastics, solvents and refrigerants. They would have been moved to the nation’s petrochemical hub in Louisiana and Texas, which meant adding 200 miles of new pipeline from Louisiana to Texas.

In Kentucky, there were potential risks to a drinking water source for the city of Lexington as well as to the ecology Mammoth Cave National Park, established to protect the world’s longest cave system. Several counties passed resolutions objecting to the pipeline, or imposed zoning restrictions, and there was opposition from two colleges, a local development district and one city’s chamber of commerce.

A similar Kentucky coalition fought the development of an unrelated Bluegrass Pipeline—also for natural gas liquids—until its developers, the Williams Co., backed away from it in 2014.

Craig Williams with the Kentucky Environmental Foundation, a Goldman Environmental Prize winner for his work on safely eliminating the nation’s chemical weapons stockpile, said the opposition had been very effective and likely played a role in the company’s decision.

“Maybe they even came to their senses that repurposing a 75-year-old pipeline was not a good idea,” he said.