Kinder Morgan begins work on pipeline
Controversial project affects Hill Country
Houston pipeline operator Kinder Morgan has started construction on a controversial natural gas pipeline that would run through areas of the Texas Hill Country that opponents say are environmentally sensitive and home to eight threatened or endangered species.
During a call with investors Wednesday, Kinder Morgan CEO Steve Kean said the company has acquired 85 percent of the rightof-way needed for the $2 billion Permian Highway Pipeline, which was designed to move 2 billion cubic feet of natural gas per day from the Permian Basin to the Katy Hub near Houston. Although the project still needs permits from the U.S. Army Corps of Engineers and U.S. Fish & Wildlife Service on the eastern end of its 430-mile route, Kean said construction for the 42inch pipeline has already started on the western end.
Kean said obtaining regulatory approvals has slowed the project a bit, pushing back the expected completion to early 2021, from the end of 2020.
But the company still has a fight on its hands. Routed through the picturesque Texas Hill Country, the Permian Highway Pipeline faces stiff opposition from landowners, cities, counties and water districts working with the Texas Real Estate Advocacy and Defense Coalition, or TREAD Coalition, to get the project rerouted.
Citing safety and environmental concerns, the coalition wants the pipeline routed either south of San Antonio or north of Austin to avoid the habitat of the endangered golden-cheeked warbler and the Edwards Aquifer, which is home to several species of endangered salamanders, fish and beetles.
On Wednesday, the cities of Austin, San Marcos and Kyle joined two groups in filing a notice of their intent to sue — the first step in the process to file a lawsuit against the Army Corps of Engineers and the Fish and Wildlife Service — to protect the Texas
blind salamander, Barton Springs salamander, the Austin blind salamander, the San Marcos salamander, the Fountain darter, the Comal Springs dry-opid beetle and the Comal Springs riffle beetle.
Just three months earlier, Hays County, Travis Audubon Society and three others filed a separate notice of intent to sue the agencies as part of their efforts to protect the golden cheeked-warbler, an endangered songbird native to the Hill Country.
The TREAD Coalition lost a lawsuit filed in state court to stop the project in June. But the organization has vowed to keep fighting to get the route changed, said spokeswoman Elyse Yates.
“The fragile nature of the land where they want to go through is why we are fighting so hard,” Yates said.
Kinder Morgan officials have maintained that the pipeline route was carefully chosen to affect the fewest number of landowners. The company said it held several public meetings before moving forward with the project.
Under Texas state law, pipelines require an easement that must be kept clear. Kinder Morgan designed the proposed pipeline route to include a 600foot-wide corridor that allows for some flexibility and adjustments. The company contends that the pipeline would generate nearly $1 billion annually to state and county governments and unlock production bottlenecks in the Permian Basin — allowing leaseholders to earn more than $2 billion in annual royalties.
Kinder Morgan reported earning a profit of $506 million in the third quarter, down from the $693 million in the third quarter of 2018. Its revenues jumped to $3.2 billion from $2 billion in the third quarter of 2018.
The company recently placed its Gulf Coast Express Pipeline project into service in September, moving 2 billion cubic feet of natural gas per day from the Permian Basin to Corpus Christi. Plans to build a third natural gas pipeline named the Permian Pass Pipeline are being delayed amid weaker activity from producers but Kean remains optimistic that demand will return.
“These projects in the Permian demonstrate very important opportunities for our business,” Kean said. “There is a strong production in Texas and there is strong demand growth in Texas. We can bridge the two.”
Kinder Morgan co-founder and board chairman Rich Kinder defended the natural gas industry during the investors call. Addressing growing concerns by environmentalists about methane emissions from the oil and gas industry, Kinder said the company and others have dramatically reduced leaks of methane, the main component of natural gas and a potent greenhouse gas.
Kinder believes that the switch taking place by power plants around the world from coal to natural gas will benefit the environment by reducing overall emissions.
“Our view is that the methane emissions issue is solvable and will continue to improve and that the environmental positives of natural gas far outweigh the negatives,” Kinder said.