The Court of Common Pleas of Lycoming County, Pennsylvania recently granted the condemnation of a temporary construction easement to UGI Penn Natural Gas, Inc. (UGI). UGI is a public utility, regulated by the Pennsylvania Public Utility Commission. The term of the easement is for 1 year in order to park and store vehicles and equipment and materials related to the construction, maintenance, replacing and changing of one or more pipelines for the transportation, transmission and distribution of gas.
The issue in the case was whether a public utility’s condemnation for the construction and maintenance of a pipeline for the transportation, transmission and distribution of natural gas to a private business which operates as a power generating plant within its service area violates Pennsylvania’s Property Rights Protection Act. The court concluded that it did not. Because UGI is a public utility, regulated by the Public Utility Commission, it falls within “the limited, defined class of condemners” permitted to use the eminent domain power to provide public services in tandem with benefits to a private enterprise. 26 Pa.C.S. Sec. 204(b)(2)(i). The Court also distinguished the present case from prior cases in that UGI, as the public utility, will own the easement rather than the private enterprise.
According to a report published by Pennsylvania Business Daily, Reading-based UGI Utilities, Inc. recently became Pennsylvania’s first natural gas utility to connect one of its pipelines to a Utica Shale well, thereby increasing the supply of natural gas available to customers in Tioga and Potter counties. The expansion required UGI to construct a new meter and regulator station system, but it is estimated that the natural gas resources in the expanded system, which includes one Utica well and two Marcellus wells, can meet the energy needs of more than 50,000 households. According to a statement by Kelly Beaver, UGI’s Vice President of Supply, “[m]ore than 70 percent of the natural gas we deliver through our system is produced in the Marcellus Shale region. We are pleased to add volumes of lower-cost Utica Shale natural gas to our portfolio as another supply source.”
Fox Business reported that Sunoco Logistics Partners will invest $2.5 billion in the Mariner East 2 pipeline, which will carry natural gas liquids from the Marcellus and Utica Shale plays to an East Coast port. Mariner East 2 will connect processing plants in Pennsylvania, West Virginia and eastern Ohio with the Marcus Hook Industrial Complex near Philadelphia, which will distribute liquefied natural gas to domestic and international markets. The pipeline is the second phase of the Mariner East project, the first phase of which is expected to begin transporting gas later this year. Mariner East 2 is scheduled to begin service by the end of 2016.
As reported by the Pittsburgh Business Times on October 15, 2014, Wexford-based Marcellus driller Mountaineer Keystone LLC has finalized its acquisition of joint-venture partner PDC Mountaineer LLC for a reported sale price of $500 million. PDC Mountaineer was created in 2009 by PDC Energy and Lime Rock Partners as a joint venture for the purposes of exploring the Marcellus Shale. Mountaineer Keystone LLC currently operates in northern West Virginia and eastern Ohio and drilled its first Utica and Marcellus wells in 2012. As a part of the deal, Mountaineer Keystone acquired 131,000 acres for its West Virginia Marcellus Shale position while also agreeing to sell the joint-venture’s midstream assets, consisting of 24 miles of high pressure gathering lines, to MK Midstream Holdings LLC, a separate joint venture in which Mountaineer Keystone holds a fifty (50%) percent stake.
As reported on Bloomberg.com, Spectra Energy Corporation, a Houston-based pipeline operator, and Northeast Utilities, a Connecticut-based utility provider, have partnered in proposing a $3 billion pipeline expansion that will increase natural gas supply to the six New England states. The project, known as “Access Northeast,” will provide fuel for power plants and home heating in an attempt to combat soaring energy prices in the New England region. According to the report, power prices in New England reached a 6-year high last spring due to extreme cold temperatures and a shortfall in pipeline capacity, which restricted gas supply. The proposed Access Northeast project plans to boost the capacity of Spectra’s existing Algonquin and Maritimes pipelines, by as much as 1 billion cubic feet per day and create additional delivery points for local distribution. The project is expected to be in service by November 2018.
According to the report, Access Northeast is not the only pipeline project aimed at connecting the booming Marcellus Shale gas formation with other states: (i) Kinder Morgan Energy Partners LP’s proposed “Northeast Energy Direct” project will also supply natural gas to New England, (ii) Duke Energy Corp., Dominion Resources, Inc., Piedmont Natural Gas Co. and AGL Resources Inc. have partnered to construct a $5 billion pipeline from West Virginia to North Carolina, (iii) NextEra Energy Inc. and EQT have paired up to build a 330-mile pipeline from West Virginia to the southeastern states, and (iv) Spectra is also seeking to expand its Texas Eastern pipeline system in Ohio pursuant to an agreement with American Electric Power Co. and Chesapeake Energy Corp.
Energy Transfer Partners, L.P.’s board of directors has approved the construction of a new pipeline to transport gas to markets in the United States and Canada. The pipeline’s capacity is proposed to transport 2.2 billion cubic feet per day and may be expanded up to 3.25 billion cubic feet. The pipeline has already received commitments from some of the largest producers in the area and is expected to gain additional commitments in the future.
On October 24, 2013, the U.S. District Court for the Middle District of Pennsylvania denied Columbia Gas Transmission, LLC’s (Columbia) request to use the eminent domain authority provided in the Natural Gas Act to acquire new pipeline easements from certain landowners in York County, Pennsylvania. Columbia filed the request to facilitate its efforts to replace and relocate portions of an existing gas pipeline in order to comply with the Pipeline and Hazardous Materials Safety Administration’s integrity management program requirements in Subpart O of 49 C.F.R. Part 192. Although the company’s efforts obtain the necessary easements through private negotiation had proved unsuccessful, the Court concluded that Columbia had not shown that the Federal Energy Regulatory Commission’s regulations for performing activities under a blanket certificate would allow the easements to be acquired through the use of eminent domain.
The Pennsylvania Public Utility Commission (“PUC”) unanimously approved a settlement that merges Equitable Gas Co. with Peoples Natural Gas Co. and transfers certain pipeline assets from Peoples to EQT Corp., the parent company of Equitable. The PUC approved Administrative Law Judge Mark Hoyer’s Initial Decision, which found the settlement to be in the public interest. The companies filed a joint application for all of the necessary PUC approvals on March 19, 2013.
Transcontinental Gas Pipe Line Company, LLC (“Transco”) recently filed an application with the Federal Energy Regulatory Commission (“FERC”) for authorization to construct and operate the Leidy Southeast Project. According to the application, the Leidy Southeast Project would involve the installation of approximately 30 miles of new 42-inch pipeline and associated facilities in Northeastern Pennsylvania and Northern New Jersey. The new pipelines, if approved by FERC, would be used to transport gas produced in North Central Pennsylvania. Transco asked FERC to issue a certificate of public convenience and necessity for the Project by August 1, 2014, so that the company could meet its targeted in-service date of December 1, 2015. The Times Tribune provides additional coverage here.
Steered by an executive of Philadelphia Energy Solutions, a group of business and political leaders is discussing the extent to which a natural gas pipeline can be constructed that would connect the natural gas fields of the Marcellus Shale to the City of Philadelphia. According to the group, “We’re trying to work on how to get that gas here to valorize it.” The group, however, recognizes that there will be challenges, including how to feed the pipeline through the city’s densely populated suburbs. The Philadelphia Inquirer has more here.
The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) published a final rule in today’s edition of the Federal Register that amends its administrative procedures for federal enforcement actions effective October 25, 2013. The final rule is intended to comply with a mandate in Section 20 of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, the most recent reauthorization of the federal pipeline safety laws. Section 20 directed PHMSA to issue regulations that (1) require hearings to be convened before a dedicated “presiding official,” a term defined by statute as an attorney on the staff of the Deputy Chief Counsel that is not engaged in investigative or prosecutorial functions; (2) ensure the expedited review of corrective action orders, which are issued in cases where a pipeline facility is hazardous to life, property, or the environment; (3) create a separation of functions between agency personnel who perform investigatory and prosecutorial duties and those who are responsible for deciding the final outcome of cases; and (4) prohibit ex parte communications on relevant matters by the parties to those actions. The final rule addresses these issues and includes some changes to the draft regulations that the agency published in an August 13, 2012 notice of proposed rulemaking. The changes are largely based on comments submitted by industry trade organizations and the federal committee that advises PHMSA on pipeline safety matters.
As announced in today’s Federal Register, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) has released a new draft of its proposed Integrity Verification Process (IVP) for gas transmission lines and extended the period for submitting public comments on the proposal from September 9, 2013, to October 7, 2013. PHMSA revised its original version of the draft IVP in response to comments received from various stakeholders at an August 7, 2013 public workshop. While still in the early stages of development, the IVP is part of PHMSA’s efforts to comply with a mandate in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, the most recent reauthorization of the federal pipeline safety laws, and to address the recommendations issued by the National Transportation Safety Board following its investigation of a September 2010 natural gas transmission line failure in San Bruno, California.
Essroc Cement Corporation, with locations scattered across the Midwest and Northeast, has filed a federal lawsuit in Pittsburgh, seeking to stop a planned pipeline from crossing property in Lawrence County. The pipeline is a joint venture operation between NiSource Inc., of Indiana, and Hilcorp Energy Co., of Texas, and is planned to travel upwards of 50 miles from Utica Shale wells in Pennsylvania and Ohio to a liquids processing plant in Ohio.
According to Essroc, the 20-inch pipeline would materially affect its ability to extract valuable coal and limestone from Essroc’s property. The company, which holds nearly 4,000 acres of subsurface rights around the North Beaver plant, is attempting to sell the property, according to the lawsuit.
On August 1, 2013, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) published a notice in the Federal Register seeking public comment on whether to apply its integrity management (IM) program requirements to pipelines located outside of high consequence areas (HCAs) and, if so, whether that decision would obviate the need for its class location requirements. A mandate in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, the most recent reauthorization of the federal pipeline safety laws, requires PHMSA to evaluate these issues and provide a report to the U.S. Congress with its findings by January 2014. After providing an overview of the current requirements, the notice discusses the comments that PHMSA received on its proposal to expand its IM requirements in an August 25, 2011 advance notice of proposed rulemaking, which the agency issued in response to the September 2010 gas transmission line failure that occurred in San Bruno, California. The notice also requests public comment on a series of additional questions, particularly with respect to whether its class location requirements should be eliminated and replaced with a single design factor that would apply to all (or certain) levels of population density and categories of pipelines. The deadline for submitting comments on the notice is September 30, 2013.
On July 9, 2013, the House Energy and Committee voted in favor of legislation that would expedite the process of obtaining federal approval of natural gas pipeline projects. The bill, H.R. 1900, would establish deadlines for the issuance of any federal permits, licenses, or approvals for such projects and would deem those requests granted by default if an agency fails to act within that time.
On July 16, 2013, the U.S. House of Representatives voted 405-2 in favor of extending a deadline that restricts the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration’s (PHMSA) ability to reference consensus industry standards in its regulations and guidance documents. The restriction, enacted in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (PL 112-90), the most recent reauthorization of the federal pipeline safety laws, states that as of January 3, 2013, an industry standard cannot be incorporated by reference into a new pipeline safety standard or guidance document unless it is available to the public, free of charge, on an internet website. The House bill, H.R. 2576, would extend the effective date of that provision for two more years to provide PHMSA and the industry standards organizations additional time to achieve compliance.