Bluegrass Pipeline developers halt spending on project - WDRB 41 Louisville News

Bluegrass Pipeline developers halt spending on project

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LOUISVILLE, Ky. (WDRB) – The companies developing the proposed Bluegrass Pipeline said Monday they will no longer invest in the project due to a shortage of buyers for natural gas liquids.

The Williams Cos. of Tulsa, Okla., said in a statement Monday morning that an "insufficient level of firm customer commitments" led to the move.  Later in the day, representatives from Williams and Boardwalk Pipeline Partners L.P. called the pipeline a “project that’s ahead of its time.”

“We will continue to have discussions with potential customers to determine their needs, the needs of the market and our project,” executives Bill Lawson and Michael McMahon said in a statement.

The announcement left the future of the pipeline, which would include 189 new miles of line among roughly 275 total miles in Kentucky, in doubt.

A posting on the project's website said the pipeline is not "dead." Asked when work will resume, Williams spokesman Tom Droege said in an email: "We'd be able to talk about a timeline forward once the necessary customer commitments are made."

He declined to provide additional details.

READ WILLIAMS' FULL STATEMENT HERE

Hailed by developers as a boon for the local economy and the nation's energy independence, the pipeline also has galvanized critics who worry that the project could trample on landowners' rights and contaminate soil and groundwater in the event of a leak.

Tim Joice, water policy director of the Kentucky Waterways Alliance, said there is "tentative optimism" after the decision to halt the project.

"Sometimes industry will ‘suspend’ operations or 'suspend' the future of a project, but in reality, behind the scenes they’ll still be working on it," he said. "This is a billion-dollar project for them and if they can get it moving again, they will.”

The project would cross the Ohio River, and nearly 700 streams are located in the pipeline’s right of way, according to filings with the U.S. Army Corps of Engineers. More than 580 bodies of water would be affected during construction.

WDRB News reported last year that federal regulators fined subsidiaries of Boardwalk Pipeline Partners and Williams nearly $2.4 million over the last five years for 18 incidents that include failing to monitor corrosion and waiting to repair a natural gas line showing metal loss.

READ THE WDRB NEWS INVESTIGATION OF THE PIPELINE COMPANIES' SAFETY RECORDS

The pipeline would carry natural gas liquids -- naturally occurring substances found in natural gas -- for use in plastics, automotive fuels and other products. They are classified as hazardous materials under federal rules.

Kentucky would be the midpoint of a route stretching from natural gas fields in the northeast to the Gulf Coast.

Construction had been scheduled to start this fall and be complete by early 2016. Williams later pushed back the completion date to mid- to late-2016.

The pipeline has secured about two-thirds of the easements needed for the Kentucky route, Droege said.

The project has already made some "upfront, nonrefundable" payments to property owners who agreed to let the pipeline pass through their land, and the companies indicated that any additional payments would be made only if Williams and Boardwalk exercise their option for the land within three years. If not, no additional payment will be made and the rights will revert back to the land's owner.

Franklin Circuit Judge Phillip J. Shepherd ruled last month that the project can't use eminent domain to secure easements if landowners aren't willing to sell. But the Kentucky General Assembly ended the 2014 legislative session without acting on measures that would have banned condemnation for the pipeline.

Rep. David Floyd, a Bardstown Republican who pushed for more protection for landowners, said he was disappointed that lawmakers adjourned without addressing the eminent domain laws. He intends to introduce similar legislation next year.

At the same time, Floyd noted that the pipeline companies lobbied heavily in Frankfort and said the developers have already made investments in the project through payments to landowners who have agreed to easements.

“I’m not sure that that’s anything that any business would walk away from,” Floyd said. “And so while Williams said they are stepping back for now, I think that the emphasis would be -- for now.”

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