Natural Gas Pipeline Benefit Claims are Mostly Fraudulent

Large Diameter Long Distance Gas Pipelines are a Boondoggle by the Gas Companies

Commentary by S. Tom Bond, Jane Lew, Lewis County, WV

Much about long distance pipelines is fraudulent, as you will see upon examination.

Pipelines are an ideal investment for the big banks. The banks are so large it is expensive to break down the vast sums they have to loan. Long, large diameter pipelines are an ideal way for them to put out big dollar loans. On the other hand, things like housing, retail outlets, consumer spending insert another company between the big banks and the eventual spenders of the money, which reduces the rate of return the bank can get.

Pipeline builders are controlled by the government in several ways. The conditions under which land is acquired is regulated by national and state governments, such things as: (1) can the company come on the private property they wish to take for right of way for surveys; (2) what restrictions will apply because of environment, health, historical, scenic, and other values; (3) what precautions must be taken because of slope, karst, soil conditions; (4) compensation (fair market value?); and a host of other conditions. Government control means these things can be manipulated by money and influence, unlike common law.

So big chunks of money go to the pipeline builders. These are derivative companies, set up so if they fail to build the line, it doesn’t injure the parent gas transporting company significantly. The gas transporting company, in turn, is diversified, so that the risk is minimized on its small investment in setting up the builder. They are connected to the gas company that distributes gas to the customer, but independent. The distributor is set up, by law, on a cost plus basis. Extra cost is passed on to the consumer, who ultimately pays the bill.

These big pipelines, dozens of which are in the planning or construction phase, don’t need to be driven for a need for gas, they are driven by the lead-pipe logic of sure thing investment. Extra gas, putting people to work, increase in business activity aren’t the inducement.

You couldn’t imagine a more efficient way to get a little bit of money from each and every one of us folded into a big chunk to be passed back to the big banks, could you? They don’t teach this sort of thing in high school civics classes, nor in college. You have to figure it out for yourself or get it from a friend.

Now, what fraud is used in justifying the rash of long distance transportation gas pipelines? In calculating need, projections of increasing use of natural gas do not take into account the rising use of solar and wind sure to take place, or the possibility of much needed encouragement of use of more insulation. The cost of solar and wind is decreasing exponentially, in other words, becoming lower more rapidly each year.

Gas will not be cheaper, particularly since it will have to be recovered by the more costly fracking method, and even more expensive if the U. S. follows the foolish course of exporting to Europe and China to counter Russia and Iran, which have, respectively, four and a half times as much as the U. S and three and a third times as much. Qatar has two and a half and Turkmenistan has nearly twice as much, natural gas all of that conventional – no chemicals, no vast amounts of water and much less pollution. Plus all of their gas could be delivered by pipeline, without the loss and cost of liquefaction and re-gasification. One wonders whether even the gas people understand this.

Huge fraud there. Then there is claim that new jobs will be formed. Of course, a few.  But the solar industry uses three times as much labor per kilowatt installed, and it eliminates the dangerous work of gas drilling and heavy equipment operation. Men with solar jobs live at home at night, so no need for “man camps,” and the vice they produce. And no worker exposure to dangerous chemicals. The fact is that natural gas is a very high capital, very low labor, and very dangerous business.

There is fraud involving the effect on the health of neighbors. This is primarily around pumping stations and compressor stations. This is generally ignored in the industry account of economic benefits. They don’t even receive mention. If the subject is brought up, it is denied.

There is fraud about the effect on land values in the neighborhood. The pipeline company typically wants a 75 foot permanent right of way, plus an additional 50 foot temporary right of way. That permanent right of way is constantly theirs forever – not until the use that prompts its acquisition is complete, but forever. It includes the first pipeline, with access to repair it and remove it, which pipeline is size specified plus the contract allows additional pipelines later, plus a road or roads over it, and in some cases, even electrical lines. If you can farm around that, OK, go ahead. But count on trespasser access to the rest of your property, a four-wheeler road for young guys that want a challenge, gates left open (everybody in the community will soon have a key) and illicit hunters if you do not want to play policeman. Plus you get to pay the taxes on it! What an honor!

The temporary right of way will be commandeered each time a new pipeline is put in. If your crop is grass, you will get some (maybe). Land for planted crops will be covered with subsoil. Forest land is worthless. Once cleared it takes 70 years for a merchantable crop to develop under ideal circumstances.

Guess who decides “current worth?” They don’t even have to go through a local firm like the Corps of Engineers does for their takings. The pipeline company, the ephemeral pipeline company, set up as discussed above, has its own captive “experts” to evaluate your property. If you don’t agree you can argue on your own behalf, or hire a lawyer, whose fee must come out of any increase he may or may not be able to get. (Almost as good as the Chinese communist system for getting land , isn’t it?)

Then there is the safety angle. The blast radius for a hole through the pipe, due to breaking or natural causes is one mile. Everything within a mile might be incinerated. In the kind of landscape we have in West Virginia, many people could be caught in some areas with no exit. Those living close would be fried instantly, while those a little further away would take a little longer. Property, including livestock would be lost.

That’s a long time in the future, they claim. Are these areas going to depopulate? Likely, the other way. Never happens to new lines! Some of these new lines will go through terrain that is very steep. Judging from the MVP that is South of where I live, these steep, remote lines will not receive good, prompt cover and reclamation. Many will be left with voids around the pipe because they had to be built through essentially solid rock and only chunky rock was available to use for backfill. Karst and very high altitude locations crossing the mountains to the East also cause percolation of water. In places the coating of the pipe will be scratched.

Neither the pipeline building companies, nor their parent gas transportation companies assume responsibility for community safety. That is wholly the responsibility of the County Government, in West Virginia the County Commission. No one has to tell them. These are older folk, well known and respected, quite competent to rule over local problems, but not very inclined to research, deep thinking or very imaginative. What could happen is totally out of their reach. When the nice men in suits come and talk to them, they resemble the gentry of the county and every word is taken in with total acceptance. Of course the pipeline people don’t alarm them with stories about danger and their responsibilities.

The last seven paragraphs describe a significant burden on landowners and the community. You think anyone who understands what will be obvious after the pipelines are put in will pay the same price as for the unhindered properties? Yet propaganda claim after propaganda claim says they would. In at least one instance the writer claims the pipeline will increase the value of the property! Huge fraud.

The recreational value of the community is decreased. Who wants to go on a drive or camp in a landscape where there are lines of scrub through the forest or water diversions and access roads across the land. Who wants to buy a retirement home where the land is burdened with four-wheeler roads that cross properties nearby. With the possibility of huge accidents? Would you?

One of the biggest frauds of all is ignoring the fact that the huge pipelines encourage the foolishness of, in effect, “exporting coals to Newcastle,” to use an old expression, by exporting an increasingly rare resource when you look at the long future ahead of us. I had a professor at WVU, Charles Lazzel, who once said in Organic Chemistry class, “What a shame to burn coal – you can make so many fine things out of it.” This applies to gas as well – you can make so many finer things out of it. To which we add “if it had not been burned.”

Pipeline building companies in their accounting also fail to recognize one of the most serious world problems, global warming. Pipelines encourage fracking, which will be an inceasingly major source of carbon dioxide as coal mines are shut down, and coal burning declines. How much better it would be to let energy cost rise and encourage substitution of renewables and insulation! The damage done by carbon dioxide is being quantified and the result is called the social cost of carbon, abbreviated SCC.

One non-industry article has appeared which carefully counts the cost (but not the associated SCC resulting from the fracking). The research covers the economic cost of the Atlantic Coast Pipeline in four counties in Virginia, Highland, Augusta, Nelson, and Buckingham. The people of these counties, seeing the ridiculous claims of the companies trying to put the pipeline in, got together and hired Key-Log Economics to do careful research on property value, ecosystem services, and economic development. The work was done by Spencer Philips, Ph. D. and coworkers, published in February and updated in May 2016.

It is called Economic Costs of the Atlantic Coast Pipeline. A second follow-up research article is the Southern Environmental Law Center funded work done by Synapse Energy Economics, Inc. of Cambridge, Massachusetts, called Atlantic Coast Pipeline Benefits Review.

It is an interesting exercise to search the internet for the title, since it is a topic, as well as a title. When you look at the things that have been put on paper (as my mother used to say) “consider the source” (who wants the APC). It gives an increased meaning to the old saying, “figures don’t lie, but liars do figure.” A balance sheet without debit side is not a “balance.” Remember, “power concedes nothing without a fight.”

>>> S. Tom Bond maintains a cattle farm at Jane Lew in Lewis County.  He is a former chemistry teacher and is active with the Mountain Lakes Preservation Alliance and other conservation and watershed groups.

Tagged as: compressor stations, drilling, FERC, fracking, land disturbances, large investments, marcellus shale, pipelines, property rights, public conflict, wv