The EnergySure Coalition
Standing Up for Reliable Energy

Atlantic Coast Pipeline in N.C.: Boon for some, burden for others

Atlantic Coast Pipeline in N.C.: Boon for some, burden for others

Triangle Business Journal
by Lauren K. Ohnesorge

Today, it’s sweeping fields dotted with soybean sprouts and green forests sloping over century-old homesteads. To a cluster of rural residents over an eight-county swath of North Carolina, the landscape translates to one word: home.

But in a matter of months, crews could be trenching through stretches of their farmland, part of the $5 billion Atlantic Coast Pipeline’s 600-mile trek through the Southeast. The natural gas pipeline will pump fracked natural gas from West Virginia across one of North Carolina’s most economically depressed corridors.

David Fountain, head of Duke Energy’s North Carolina operation, has equated it to an “economic stimulus package” for the region.

Economic developers say it could save the community by lowering utility costs and attracting job-heavy manufacturers to a region plagued by factory closures.

But a group of residents along Wilson County’s Exum Road say they don’t need saving.

They’re fine, they say.

They’ve got “nowhere to go” – and they’re not alone.

Of the 2,900 landowners impacted by the project, 1,000 are in North Carolina.

In the rural parts of western Wilson County where the pipeline would go, new homes sell for around $100 per square foot and older homes can sell for around $80 per square foot. Land values vary based on road access and timber, but one Wilson County lot in the vicinity is seeking to sell at about $5,000 per acre.

Impacted homeowners have cited several opening offers for easements, from $3,000 per acre to nearly $5,000.

A similar story repeats itself across eight rural counties from Northampton to Robeson, where economic developers are hungry for the opportunity the pipeline provides and many rural residents are desperate to save what, in many cases, is the only home they’ve ever known.

Track of the pipeline

“It’s critical,” says Carolinas Gateway Partnership CEO Norris Tolson of the pipeline. It’s a statement echoed by Patrick Woodie, president of the North Carolina Rural Economic Development Center.

“For us, the overriding factor is the long-term economic development potential,” Woodie says, adding it “outweighs” homeowner impact.

It’s a statement echoed by local economic developers across the region.

Chris Johnson, economic development director for Johnston County, calls the project “very important.”

They point to demographics.

Of the eight counties tapped for the Atlantic Coast Pipeline, only Johnston County is not among the most economically distressed counties in the state. Five counties rank among the 20 worst, including Halifax County, 94th among the state’s 100 counties, with an 8.5 percent unemployment rate. All but Johnston are high on the state’s poverty level percentages. And all but Johnston fall below the state’s median income. Along the route, 25 city, town and county governments have endorsed the project.

But those who oppose the pipeline point to another demographic.

Other than Johnston, the counties at play have a greater minority makeup than the state average. That includes Robeson County, which is unique because of its Lumbee Indian population.

Those along Exum Road in Wilson County say that’s no accident.

“What are we all? Black folks who are retired,” says Alice Freeman, who expects to see the pipeline construction from her bedroom window. “They’re going to these communities because we are the people who have the least clout. We don’t have the money to fight them. We’re easy prey. And nobody is going to come to our defense.”

It’s a claim the pipeline flatly denies.

“Socioeconomics and demographics have nothing to do with infrastructure,” says Aaron Ruby, spokesman for Dominion Energy. Dominion simply responded to a request for proposals put out by Duke Energy, and developed plan specifics based on the needs stated by the utilities, he says.

But residents along Exum Road accuse the power giants behind the project – Dominion, Duke Energy, Piedmont Natural Gas and Southern Company – of taking advantage of an impoverished population.

Ruby says Atlantic Coast Pipeline is offering fair-market-value-or-better easement rates along the pipeline’s proposed route.

The landowners along Exum Road don’t plan to make it easy for Duke. But just as the state does when cutting routes for a new interstate, utilities can acquire land through eminent domain – property owner permission not required.

Dominion’s Ruby says 65 percent of the landowners whose parcels are crossed by the pipeline have signed – and that the majority of sentiment is positive. The company feels it meets the criteria of eminent domain when it comes to holdouts.

“Public use” is a constitutional requirement in eminent domain cases – and it’s an easy case to make for a highway.

But it’s tricky with ACP.

The pipeline is set to deliver large quantities of gas, to be sold wholesale to public utilities. Buyers include Duke Energy, Piedmont Natural Gas and Public Service Company of North Carolina, not – at least directly – homeowners.

Jeremy Hopkins, a Cranfill Sumner & Hartzog attorney who has represented landowners in past pipeline cases in Virginia, points to a case in Kentucky where courts ruled that if a gas company brings a line through – but doesn’t connect to – a state, then “that’s not a public use.”

“If that project does not deliver gas to residents of North Carolina, then there is a question about public use,” he explains.

The feds have yet to authorize the pipeline and just closed the public comments for a required environmental draft. Once a certificate has been issued by FERC, expected in June, the question could hit the courtroom, he says.

The utilities behind the pipeline say it’s a needed infrastructure project.

“There’s currently only one transmission pipeline that serves the entire state of North Carolina and it’s geographically located in the western part of the state,” Ruby says. “It’s inaccessible to a lot of areas in eastern North Carolina because the distance is too far.”

Duke’s Fountain says the addition of the pipeline means greater flexibility and resiliency to eastern North Carolina’s natural gas network.

Duke now pays Transco to transport gas to the state via North Carolina’s current pipeline. Officials insist the project would eventually save consumers $377 million every year.

“By bringing a greater supply of natural gas into North Carolina, that will increase the volumes available for all users, business users, public users and potentially others,” Fountain says.

Natural gas transportation costs are determined by a complex formula that translates to less than 10 percent of a customer’s utility bill, says Chris Stockton, spokesman for Transco parent Williams. The bigger benefit for Duke is likely the access. Natural gas prices vary depending on the source, whether it’s from the Gulf of Mexico, Ohio or West Virginia. And the pipeline gives Duke the ability to tap into to a supply area it previously couldn’t directly access, West Virginia. That means flexibility. If West Virginia prices are cheaper, Duke can direct its supply accordingly.

The utilities are expected to argue that, with Duke and Piedmont set to purchase the fuel, the public use will follow.

And Fountain points out that there are opportunities for companies to apply to tap directly into the line.

Hopkins calls it all a “fair” argument, and one that’s likely to prevail in court, “but that’s an open-ended argument” ­ –and one only made if the case reaches a courtroom. In most eminent domain cases, it never makes it that far.

The issue of safety

The biggest concern lawyers are hearing is safety – residents worried their properties are in a “blast radius.”

“It’s a fact – if you don’t have a pipeline on your property, the risk of having an explosion is zero,” says Hopkins.

Ruby says safety is ACP’s “top concern.”

“It guides every decision we make,” he says, pointing to statistics from the U.S. Department of Energy that show natural gas pipelines are the safest way to transport natural gas – beating trucks and trains. The Interstate Natural Gas Association of America published a 99.999997 safety rating for natural gas transported through the nation’s natural gas pipelines. And Ruby says that, once the project is up and running, ACP is required to conduct annual training with local emergency responders for the duration of the pipeline’s operation.

Ruby says “multiple overlapping layers of protection” stand between the pipe and catastrophe.

The steel that makes up the pipeline is at least a half inch thick and coated with epoxy, features that protect it against corrosion, he says. Where the 40-foot sections are welded together, extensive inspections are conducted, including thorough X-ray analysis and ultrasound, he says. Pipes are pressure tested at up to 1.5 times the maximum operating pressure they’ll see. And they’re monitored through remote sensors that can detect “even the slightest variation” in temperature, pressure and gas flow, alerting gas- control operators. If issues are detected, remote controls can shut off the valves, stopping the flow of gas completely in a specific area. Depending on how many homes are in the vicinity, each inch of the pipeline is within 2.5 to 10 miles of a valve site, he says.

But those varying requirements could impact the property’s future, says Hopkins. He points to a case in Loudon County, Virginia, where an easement was signed for a pipeline along a tract of farmland. At the time, it was a rural area, so the pipeline was built to rural standards. The feds require thicker pipes and more valves when it’s implemented in a more urban area.

Raleigh’s Jim Hardee, who owns land in Halifax County, raises a concern about the rural nature of the pipeline’s path.

“When you farm natural gas, a high pressure pipeline, you never know what’s going to happen with a tractor and heavy equipment,” he says. “That part, I don’t care for it. The farmers I lease it to aren’t that happy.”

Dissenting homeowners are also fighting precedent.

“In my experience, and I’ve done hundreds of these cases, rarely, if ever, does the political pressure work,” Hopkins says. “FERC almost always grants the power company either what they’re asking for, or something very close.”

Landowners can battle on price.

Forcibly acquiring through eminent domain requires the utility to provide just compensation. But Hopkins notes that a landowner isn’t just signing away the width required for the pipeline.

“That owner will still be able to be taxed on that land … but the [utilities] will have the right to use it for their purposes,” he says.

The easement remains in place after any sale. Hopkins says an easement on a few feet of property could impact the value of the entire parcel.

“When was the last time you saw a realtor advertise a home as having a beautiful, natural gas pipeline running through it?” Hopkins says.

In need of jobs

The competing narrative – and one being showcased by most business leaders in the state – is one of an economically-depressed rural North Carolina, an area in need of the jobs economic developers hope such a project would attract.

Ruby says pipeline construction is expected to support more than 4,400 jobs in North Carolina. The partners behind the pipeline also will pay taxes on equipment and infrastructure to the counties involved, ranging from an estimated $290,000 to Sampson County to $1.6 million to Northampton County.

“Once the pipeline is operating, we’ve projected close to 1,000 new jobs as a result of energy cost savings and expanded access to natural gas in areas that currently have limited or no access today,” he says.

The N.C. Rural Economic Development Center’s Woodie says “there’s no question” utility prices will drop, providing “significant consumer savings.”

But it’s the potential draw of manufacturers and the jobs they could bring that’s his biggest selling point.

“A lot of rural communities are under-served by natural gas infrastructure and natural gas is really an essential ingredient to these manufacturers,” he says, calling increased natural gas access “really essential” to growing that industry in the state. It’s a point Tolson echoes.

“The pipeline gives that reassurance that there will be a steady, uninterruptable source of natural gas coming down through our area, and that gives great confidence to manufacturers, people who need natural gas,” Tolson says. “There is no question in our minds. You either have natural gas, or you don’t get jobs. It’s that cut and dry.”

Harrison Fell, an energy economist and associate professor at N.C. State University, doesn’t see energy prices making a major drop as a result of ACP. Electricity prices are already low, he notes, adding that the project could decrease the region’s dependence on coal power. And he notes that the bulk of jobs will be temporary construction positions.

Pearl Finch, whose land is in the pipleine’s path, says, “My real gut feeling is that Duke Power and Old Dominion and whoever else is involved are powerful companies, and they are literally gobbling us up because we don’t know what to do and paying us peanuts for their long-term business and profit – and it’s not right.

“It’s just not right.”

Lauren Ohnesorge covers information technology and entrepreneurship.

Read the full article in the Triangle Business Journal


Construction | DEIS | Economy | Energy | FERC | Jobs | Johnston County | Natural Gas | North Carolina | Project Need | Route | Safety | Wilson County