Suddenly, It’s Raining Gas Projects and Tax Breaks

Anti-Pipeline By Peter Galuszka

Suddenly it seems to be raining natural gas pipelines and snowing millions of dollars in tax breaks and incentives for rich electric utilities.

Dominion Resources, the powerful and politically well-connected Richmond-based utility, apparently is getting $30 million in public money from the Virginia Tobacco Indemnification and Revitalization Commission without apparently asking for it to help build a new natural gas-fired generating plant in Brunswick County. The information was broken by the Associated Press.

Largesse for Dominion stretches to the other side of the Potomac River as well. The Washington Post reported Sunday that Calvert County Md., where Dominion has approval to convert a liquefied natural gas facility to handle natural gas exports, is going to give the utility about $560 million in tax credits.

And, back in Virginia, controversial is growing over the $5 billion natural pipeline that Virginia and three other southern utilities are planning to take natural gas drilled by hydraulic fracking methods from West Virginia to Virginia and North Carolina.

The Atlantic Coast Pipeline has drawn criticism from environmentalists who fear that gas is not the cleaner panacea to coal that many think. Landowners complain that Dominion and its powerful Richmond law firm, McGuireWoods, are using strong arm methods to force their way on their land to survey possible routes.

mountain valley pipelineYet another pipeline – this one doesn’t involve Dominion – is drawing concern in southwestern Virginia. The $3.5 billion Mountain Valley Pipeline that would likewise begin in the fracked gaslands of northern West Virginia and head south west of Roanoke and then cut to the small town of Chatham.

The complaints are the same as the Atlantic Coast Pipeline – green concerns about leaking methane and the threat of bulldozing bucolic private land by companies using eminent domain.

The Mountain Valley project is being spearheaded by EQT Corp. of Pittsburgh and NextEra Energy of Florida.

So what gives? Utilities like Dominion are using more gas, namely at its new Brunswick County natural gas plant and at an older coal-fired station that’s been converted at Bremo Bluffs on the James River. But how much gas does it actually need?

In the case of Cove Point, Dominion notes that the plant has been importing LNG from places like Northern Africa and Scandinavia for decades although imports have come to a spot given the glut of cheap, domestic gas.

Dominion, which bought the facility about a decade ago, can get gas from an older pipeline that for years has linked the Chesapeake Bay area with gasfields in Pennsylvania where some of the fracking for new product is occurring. Dominion can also tap gas from the venerable Transco Pipeline that for decades has transported gas the traditional way – from the Gulf State processing stations to the northeast.

Dominion says it already has contracts to export gas – from where it comes domestically – to utilities in Japan and India. But when one looks at the spaghetti-like twirl of all of the proposed new pipelines, one wonders what the game really is.

The Atlantic Coast Pipeline has a leg that bounds over to Hampton Roads from near the North Carolina border. Dominion says that this one will help supply one of its pipeline partners with gas because it serves South Hampton Roads. Ok, fine, but it might also serve another new LNG export facility in that area that has perfect deep water conditions for such a facility.

And, as some environmentalists and property owners wonder, why couldn’t the energy companies tap rights of way near existing pipelines? Why can’t existing pipelines be expanded? Go back to the utilities and they say they don’t know exactly where the pipelines will go.

That is very curious. While they don’t know where mega-billion project projects are going to go, they seem to be getting tens, if not hundreds, of billions of dollars in public funds and tax breaks to help them proceed with the Brave New World of natural gas.

 

There are currently no comments highlighted.

14 responses to “Suddenly, It’s Raining Gas Projects and Tax Breaks

  1. nothing THAT curious. There’s opportunity and potential profits to those who would transport gas as well as those who might use it or sell it overseas.

    but again – with any of these pipelines – what would justify a private company given the power of Eminent Domain to take property from private landowners?

    that’s the curious thing to me.

    All this Tea Party talk about KELO and the govt coercing people and everyone is out back waiting in line for the outhouse – on this aspect.

    All of us should be asking what justifies taking land.. no matter whether it is for moving gas or blight removal or a highway.

    there is no higher level of Government Welfare – corporate cronyism, rent seeking – than to tell a private private owner that Dominion is going to put a pipeline that they intend to make a profit on – on his property -whether he likes it or not.

    and for the record – if you don’t like coal and you don’t like Nukes and you don’t like gas – then answer this – do you like $500 a month electricity bills?

    choose your poison – but you do have to choose.

    • I guess the Bacon’s Rebellion computer system only allows so many replies, so I moved up to here.

      Re: Eminent Domain – Being an engineer not a lawyer, I do not know how the concept of eminent domain works, or should work. You are suggesting a “domestic consumption only” test should be considered for eminent domain. We’d have to ask the legal precedent for this position. The only analogy I can think of is the case of mineral rights, such as long wall coal mining under houses, there is no such test. One could argue LNG sales must be approved by the Feds, which they are currently slowly approving just a few facilities. One could argue our allies in Europe are in need of LNG supplies, so therefore in the larger sense there is a public interest. Do you know for a fact the Dominion has been pre-approved for LNG exports, or is that simply a requirement that Dominion should not be able to sell overseas?

      • @Tbill – google natural resource eminent domain and you’ll get it.

        Also look up common carrier pipelines..

        I’m not advocating a domestic only law – I’m asking what justifies Eminent Domain verses willing seller/willing buyer rules.

  2. Re: “Why couldn’t the energy companies tap rights of way near existing pipelines? Why can’t existing pipelines be expanded?”

    Of course they could; of course they could be. That completely misses the reason why utilities think it’s worth building a new pipeline anyway: it’s not about getting gas to the power plant, it’s about getting gas there AT THE LOWEST RATE.

    You’re forgetting a basic difference between a pipeline and a highway: highways have the same owner and generally charge the same (zero) to get anywhere; but pipelines have to compete, not only with each other but also with other forms of energy/modes of transport (mainly coal/oil/railroads/barges), so of course they charge more if the customer is “captive,” i.e. has no other choice.

    That also explains why the utility doesn’t know exactly where the pipeline will go. “Exactly” misses the point entirely; it’s not about the exact point of discharge but getting the gas into the general area where it’s wanted, bypassing miles and miles of a competitor’s higher-priced delivery system.

    If there’s one thing utilities understand, it’s how to use monopoly power when you have it, and how to use competition to fight it.

    • Oh I do “get” all of that and I totally support commerce (and roads are not “free”) and I support free enterprise and competition but I do ask what justifies giving the power of Eminent Domain to a company seeking private business interests for it’s stockholders.. ???

      want to give that a shot?

    • re: ” it’s not about getting gas to the power plant, it’s about getting gas there AT THE LOWEST RATE.”

      I’m not sure it follows but at any rate why does that require eminent domain and why should a profit-seeking company trying to lower it’s costs – do so by taking land from other property owners?

      what justifies a private company – benefiting from the use of eminent domain to take property from others?

      what justifies that? Do we believe that it is the inherent right of private companies to take land when they need it?

      this is a serious question.. I think many folks take this issue for granted and never think twice about it – including folks who call themselves Conservatives and who say they believe in property rights.

      what justifies a private company taking land from another private property owner?

      serious question.

  3. To me, the big picture is that the U.S. had under-utilized natural gas (and renewables) and over-utilized coal. Now we are experiencing a monumental shift to both natural gas and renewables (locally VA not stressing the latter of course).

    While I welcome the overall trends, the devil is in the details. We should not endorse potentially bad projects just because it makes use of a non-coal fuel source that we personally champion (be it off-shore wind or natural gas). The hard part is parsing a project to assess if it’s a good proposal or just pork barrel politics pushing a project for jobs etc.

    Somehow we need an impartial review from an “aecopolitical” perspective. Coining a new word “aecopolitical”, meaning someone not pushing a particular fuel source.

    I am not too interested in tax credit politics. Technically we need to know if the project is good quality and works to keep VA competitive, which I presume means low energy costs.

    • Tbill – would you support Dominion getting approval for the pipeline and then exporting it?

      • I think the answer is YES because. Decades before “fracking” became a household word, I advocated for natural gas over coal. I knew about the defunct Cove Point LNG import terminal (from visiting the Calvert Cliffs fossil beds at the shoreline). I felt the U.S. should be importing LNG natural gas and building up distribution infrastructure, instead of building more coal plants in my back-yard. I even felt long ago that nat gas was cheaper than coal, but coal was King and that’s all elected officials wanted. So what I see is a nat gas transport line that I can reverse to import gas if we need to someday. I see natural gas as a strategically important clean energy source, that we tend to under-utilize because, well, it’s a gas: you can’t truck it or send via rails.

        • fair enough. so you’re okay with using eminent domain and exporting it even if in exporting it – the price becomes whatever world price is, right?

          I have to admit – I’m not in favor of granting eminent domain to any business seeking private operation and profits.

          I would accord that ability only to businesses that directly serve the people of Virginia and the US.

          If they want to market their product on a worldwide basis then the folks whose land it goes over need to be essentially WILLING, voluntary stockholders and/or partners with direct interests.

          I don’t think the govt should give private companies the right to force property owners to sell – if the private company is basically seeking profits for stockholders and the property owners are unwilling to become “partners”.

          • Larry I am sensitive to eminent domain. A few years ago Verizon plopped a FIOS cable junction access in the smack dab middle of my front yard. I complained but was not treated well by Verizon. I was also not treated well by my homeowners association. They both said I have no rights…end of discussion. What Verizon did “wrong” was not advise me in advance to see if there was a better option. Of course, legally, they did not need an OK from me.

          • Tbill – well you probably DID sign a contract with the HOA – right?

            but my question really related to the right of a company to take your land – for a Private purpose – as opposed to a junction box to serve other users.

            Should companies have the right to put a pipeline through your property if it does not serve you and your neighbors but instead takes product overseas?

  4. Holy Cow:

    “Energy Firms in Secretive Alliance With Attorneys General

    SCOTT PRUITT The Oklahoma attorney general, second from right, in Dallas in July, and his Republican counterparts have formed alliances to oppose federal regulations.

    The letter to the Environmental Protection Agency from Attorney General Scott Pruitt of Oklahoma carried a blunt accusation: Federal regulators were grossly overestimating the amount of air pollution caused by energy companies drilling new natural gas wells in his state.

    But Mr. Pruitt left out one critical point. The three-page letter was written by lawyers for Devon Energy, one of Oklahoma’s biggest oil and gas companies, and was delivered to him by Devon’s chief of lobbying.”

    http://www.nytimes.com/2014/12/07/us/politics/energy-firms-in-secretive-alliance-with-attorneys-general.html

    I wonder if the above has anything to do with the Virginia SCC sending out a similar letter to the EPA?

  5. Peter Galuszka wrote (with emphasis added):

    Calvert County Md., where Dominion has approval to convert a liquefied natural gas facility to handle natural gas exports, is going to give the utility about $560 million in tax credits.

    $560 million in tax credits from Calvert County? Not sure what your source of that number is, and I do not know with certainty if it is correct or incorrect.

    But consider this: Calvert is a relatively small county (estimated 2013 population 90,484), and many of its residents commute north and west to the Washington, D.C. metropolitan area (sound familiar?), and its 2013 budget was only about $225,000,000. That sounds like an awful lot of tax credits in a relatively fiscally conservative jurisdiction (and unlike Virginia, Maryland counties must maintain their own secondary roads).

Leave a Reply