Kinder pipeline plan faces 'unprecedented' foes

OREANDA-NEWS. July 13, 2015. An odd alliance between environmentalists, an oil company and a media baron are proving to be tough opposition to Kinder Morgan's plans for a South Carolina-to-Florida products pipeline.

The proposed 360-mile Palmetto pipeline would move 150,000 b/d of gasoline, distillates and jet fuel from Belton, South Carolina, to Jacksonville, Florida. The project has the support of retailers in Florida — the third largest state for gasoline demand — refiner Marathon Petroleum and the Renewable Fuels Association.

But environmental groups concerned about wetlands along the 200 mile stretch of the pipeline in eastern Georgia, an oil supply company that could see it's business threatened by the project, and a newspaper chain owner who owns land along the proposed right-of-way convinced Georgia's transportation department to reject the project in May.

Kinder must now make its case in an appeal of the decision before a Georgia superior court, in what's become another example of broader scrutiny on new US energy infrastructure.

"This is unprecedented, where you have an oil company and an environmental organization working together opposing a project," Kinder Morgan vice president Allen Fore said. "You combine that with the newspaper component — it's an unusual situation."

Opposition to pipeline projects like that faced by Kinder in Georgia has only grown over the past decade as groups target midstream development as a proxy for battles against upstream oil and natural gas development. Both public and governmental scrutiny on energy transportation increased as well, driven by high-profile pipeline spills and fatal rail accidents.

TransCanada's Keystone XL expansion remains the highest-profile project snared by public opposition and regulator wariness. The proposed \\$8bn, 830,000 b/d expansion project connecting Canadian oil sands production to the US Gulf coast is in its sixth year of review.

Kinder Morgan's own outlet for Canadian production in Alberta, an expansion to the TransMountain pipeline, has met intense resistance from both local governments and citizen groups along the pipeline's path. The company late last year revised its proposed Northeast Energy Direct pipeline, moving natural gas from midcontinent shale fields to the US northeast for power and heat, in response to concern about the line's environmental impact.

And Kinder Morgan was sued for converting a California rail terminal from ethanol service to crude oil amid widespread scrutiny over crude by rail shipments to the US west coast that has ground new construction of such projects to a near halt.

Georgia law differs from that of many states in that it requires a special permit process for petroleum pipelines that includes acquiring a certificate of necessity before the state will allow the condemnation of property along a route. In its application for the certificate Kinder Morgan argued the project would reduce Georgia retail gasoline prices and emissions by adding pipeline supply to a market currently supplied by barge or truck.

But opposition to the special certificate came from Sierra Club chapters and peer environmental groups that joined the state's wildlife division to raise alarm on Palmetto's path through watersheds as well as wetlands used by vulnerable tortoises and other fauna.

Colonial Oil, the current fuel supplier to the east Georgia market by truck and barge through its Savannah terminal, also questioned Kinder Morgan's transparency and the risk to local jobs.

But it's the potential forced sale of easement along the route that has produced some of the most emotional opposition to the pipeline. Georgia residents bristled at the idea of a Texas company on their land, and many accused Kinder Morgan of trespassing.

"Please don't allow them the opportunity to take the land that was granted to my family by the King of England," one resident wrote to transportation commissioners.

The line would also cross the property of William Morris III, head of the Morris Communications news company which has three papers along the east Georgia route. Morris, like the environmental groups, questioned the risks and necessity of a products pipeline.

"Pipelines are inherently risky, regardless of steps taken and best intentions," Morris wrote in formal comments to the reviewing agency.

Logistics companies pursuing any project who ignore this heightened attention do so "at their own peril," Kinder Morgan's Fore said. So while the company is sharpening its legal arguments for the courthouse, it has also expanded how it makes its case directly to the public. Kinder Morgan now uses paid advertising to augment more traditional public hearings and landowner meetings along the route.

Fore declined to comment on how much the company had invested in such advertising.

"We're prepared to invest the resources necessary to make sure the truth is getting out," Fore said.