A FERC comment I am filing today…

PennEast recently met with representatives of Lower Saucon Township, PA in a closed door meeting about the pipeline. The representatives published the information discussed at the meeting under PA’s sunshine laws, including a presentation given by PennEast that is available at the URL below:

http://www.lowersaucontownship.org/penneast/pepipelineproject.pdf

Page 18 of the presentation quotes a study done by Allen, Williford & Seale in the Saddle Ridge subdivision in Dallas Township, Luzerne County PA. The slide indicates:

– Studied Saddle Ridge subdivision in Dallas Township, Luzerne County from 2009-2014:
– Allen, Williford & Seale Residential Study
– Subdivision developed beginning in 2005 around an existing 24-inch pipeline ROW
– Study showed undeveloped lots within the ROW sold at a 16% discount compared to lots outside the ROW
– However, existing homes within the ROW sold at a 3% premium compared to homes outside the ROW
– Conclusion: Pipeline easement has no negative impact on the sales prices of existing homes along the ROW

The full study is available here:

http://www.irwaonline.org/eweb/upload/web_mayjune_15_PipelineProx.pdf

After analyzing this study it is clear that it is entirely invalid and the data cited does not support the author’s conclusions.

First, some background:

The study includes:

– The study covers 27 houses in the subdivision: 20 houses not encumbered with a pipeline easement, and 7 that are encumbered.

– The study compares, in part, the average and median sale prices of the houses from 2009-2015, and attempts to also match up encumbered/not encumbered houses by sale date/size (although the actual data is not shared).

– The study also compares unimproved lot sales

Here are some of the many issues with this study that invalidate the author’s line of reasoning entirely:

1) Only 7 houses in the study are on the pipeline route. This is a very small sample on which to base such broad conclusions.

2) Average and median prices are compared between the two groups (encumbered and unencumbered) over a 5 year period, 2009 to 2014. This was the period during the housing crises when house prices crashed. Comparing 27 houses over this range of time is severely flawed and invalid. The author’s own data supports this information. Despite saying that the houses were largely “similar”, in fact the home prices involved varied from $284,640 to $458,872. There is a massive $174,232 (60%) spread between the prices.

3) The study does not measure time on the market or homes that were withdrawn from the market due to lack of interest. A common observation from Real Estate Professionals is that not only do properties with pipeline easements suffer in terms of price, many times the properties do not sell at all. This study did not look into this aspect of the problem at all.

4) The study did not look into important price determiners such as corner lots and adjacency to empty lots in house prices. The encumbered properties as a whole had fewer neighbors around them which adds significant value to properties.

5) A minor point – the study talks about “encumbered” land vs. “unencumbered” land. The legal definition of encumbrance is: “An encumbrance is a right to, interest in, or legal liability on real property that does not prohibit passing title to the property but THAT DIMINISHES ITS VALUE (emphasis mine)”. By using the termed “encumbered” the authors are unwittingly acknolwedging that easements decrease property value.

6) Most critically, the study failed to investigate moribund lots that remain undeveloped. The study includes parcel maps of the entire sub-division, indicating roughly 100 parcels, with the parcels split between “Phase 1” development and “Phase 2”. Phase 1 development is complete and consists of houses present in this map on Pennbrook Lane, Canter Drive, and the southern reach of Saddle Ridge Road:

http://binged.it/1S8JTbC

Phase 2 has just commenced, and includes houses along the northern portion of Saddle Ridge Road.

Note that large portions of Phase 1 is undeveloped land. Where is this undeveloped land located? Why, on the pipeline easement of course! In total there are only 7 houses in the whole subdivision that are along the pipeline easement. The other 9 lots with pipeline easements are undeveloped. And Saddle Ridge developer is now pushing Phase 2 into areas well north of the easement, and Phase 2 is much more densely packed than Phase 1. Why is the developer situatating phase 2 north of the pipeline easement? And why is phase 2 much more densely packed than phase 1? Because Phase 1 has a pipeline easement through it, of course.

7) If you zoom out on the map, you in fact see that this area of Dallas Township is characterized by many densely packed suburbs – except in the vicinity of this pipeline easement. In the vicinity of the easement houses are very sparse and development ends. This pipeline was built in the 1950’s and 60 years ensuing every development in the region has avoided it. This shows clearly how families are unwilling to buy houses that are on or close to natural gas pipelines. Developers know this and as a rule do not even bother building houses along the route.

Conclusion

It is abundantly clear from these points that not only is the Allen, Williford & Seale study deeply flawed and invalid, it is highly deceptive and the underlying data supports the exact opposite conclusion that the authors posit.

While they claim that pipeline easements have no impact on housing prices, in reality what the data shows is that pipeline easements make it extremely difficult to sell a house on such encumbered land at all, and that developers avoid land with such easements and leave them unimproved.  Look at maps of PA and you’ll see housing developments invariably stop at the edge of pipeline easements, and that housing density drops off dramatically around such easements.  The Saddle Ridge sub-division provides a text-book example of this and demonstrates how pipelines negatively impact the ability to sell land.

The web site Energy And Capital put up a research article this week that predicts that LNG exports is poised to take off into the stratosphere in the next few years, and that now is the time for investors to get in on the ground floor while natural gas prices are at historic lows and fossil fuel companies’ stock prices are slumping. The article predicts that now is the time to strike in the market, because shortly a full 1/8th of all U.S. natural gas production is going to be shipped over seas, and energy stocks will therefore skyrocket.

The full article is here:

http://www.energyandcapital.com/articles/lng-investing-guide-2015/4904

From the article:

“The fuel sits at typical summertime lows, but as the U.S. develops new electricity generating infrastructure, we’ll see demand rise gradually over the next few years. And the end of this year will mark the beginning of a new wave of natural gas demand that’ll boost the gains for investors who are keyed in now….

Once the current LNG projects under construction start liquefying and exporting natural gas abroad, they’ll soak up about 9 billion cubic feet of gas each and every day.

Right now, that number would be one-eighth of all U.S. gas production.

Sure, some of these projects won’t be finished for a few years, and natural gas production will increase in the meantime, but it would be foolish to think it’ll increase enough to make 9 billion cubic feet per day a negligible amount.

One-eighth of U.S. gas production gone would set up a huge spike in both demand and prices for natural gas in the U.S.

Add to this the industrial uses and the new natural gas power plant additions (which are many), and it’s inevitable that gas prices will rise.

When they do, so too will the value of companies that drill, harvest, ship, and produce the fuel for consumption.

So in relation to PennEast – do you still believe they’re here to bring affordable gas to businesses and consumers in PA and NJ? Or do you think they hear that giant LNG KER-CHING and are rushing to cash in on the export gold mine?

Caroline Katmann, the Executive Director of the Sourland Conservancy, has posted a comment to the FERC docket today that completely exposes PennEast’s incompetence in planning the pipeline route.

She opens her comments with:

As you have already been made aware, PennEast’s DRAFT Wildlife Resource Report of April 21, 2015, is error-ridden. I am writing to make you aware of one particular error that exposes the lack of intelligence, integrity and care that PennEast Pipeline Company, LLC has applied to its research related to this project.

In the Resource Report, Pages 3-24 – 3-25 | 3.4.1.1 Significant or Sensitive Habitats, the following is stated:

“The project is located within the Highlands Planning area in parts of Holland and Alexandria Townships, NJ; this is discussed further in Resource Report 8. The project corridor does not cross the primary portion of Sourland Mountain, but a section known as Baldpate Mountain is within the project area. Baldpate Mountain is discussed further in the Migratory Birds section of Resource Report 3.”

Caroline than explains just how terribly wrong PennEast’s comments are about this:

This is not true. Although it is correct that Baldpate Mountain is a portion of the Sourland Region that is within the project area, hundreds of additional acres of forest, wetlands, agricultural lands and built up land within West Amwell and Hopewell Townships are also within the project area. Every one of the proposed
routes for the PennEast Pipeline have been well within the Sourland Region, including the latest “preferred” route. It is simply a blatant lie to state otherwise.

She goes onto explain the true extent of the Sourland Mountain region and the impact PennEast could have on it:

The Natural Resources Inventory and the maps are based on a study area that encompasses the forest area, the Jurassic Diabase formation that comprises the Sourland Ridge, water recharge areas for the Sourlands, important habitat types on the ridge and on the flanks of the ridge, and areas that would be affected by
water flowing out of the Sourland Region. Any land uses in these areas would have impacts on the resources of Sourland Mountain. As the PennEast pipeline would be a significant and intrusive land use by anyone’s definition, a smart, ethical and thorough approach to research of potential impacts would consider the entire 87 square mile Sourland Mountain Region described above.

It goes without saying that what Caroline is talking about is common sense, and PennEast should not be defining terms and areas so narrowly. But she saves the best for last. Her closing comments are:

The Sourland Conservancy is the only organization solely dedicated to the protection of the Sourlands. Our mission is protect the ecological integrity, historic resources and special character of the Sourland Mountain region. As the Executive Director of the Sourland Conservancy, I have given my contact information to several PennEast representatives at various public meetings and over the telephone. No one has ever contacted me to discuss the Sourland Region – what it is, where it is, how it would be impacted, and so on.

Unfortunately, at one PennEast Open House I asked a dozen PennEast representatives if they could tell me about the Sourlands and none of them had ever heard of the region, including the representatives at the “Environment” table.

I implore FERC, on behalf of the Sourland Conservancy, not to accept the sloppy and dangerously inaccurate research of PennEast regarding the Sourland Mountain Region or any of the other impacted lands along the proposed routes. Please consider carefully all of the research that has been diligently collected and submitted by those of us who have the facts and know the truth about the regions in which we study, research, work, play and live every day!

And the above is the real crux of the matter. PennEast reps really don’t know anything about the area. They’ve done next to no research and nearly a year after they’ve started they still seem to be steeped largely in ignorance about New Jersey. And they show no interest in changing that situation by engaging local residents and organizations and learning more about our state. Countless organizations and individuals have reached out to PennEast to engage in a dialogue with them – and in every case I’ve heard of PennEast has never returned the call. The only time PennEast people will call you is to beg for survey access.

We should thank our lucky stars that we have organizations like the Sourland Conservancy to stand up to the government and PennEast and force them to consider their actions carefully and not go about destroying our land like a bull in a china shop. Join your voice to theirs and keep commenting to the FERC and curing PennEast of their ignorance of our lovely corner of the garden state! And PA residents, keep supporting your local conservation groups like the Cooks Creek Watershed Association and others who are doing the same West of the Delaware.

Her full comments are available here:

Caroline Katmann – FERC Generated PDF
Caroline Katmann – FERC Generated PDF Alternate Site

I attended the NJSpot Roundtable Natural Gas Pipeline Expansion in New Jersey: Good or bad? yesterday in Mercerville, NJ. I’m working on a full report of the meeting but I wanted to share a quick summary of important points that came up during the discussion. For those interested the unedited complete live stream is available here:

http://www.njspotlight.com/stories/15/05/28/streaming-live-natural-gas-pipeline-expansion-in-nj-good-or-bad/

The forum was essentially two anti-pipeline speakers spitted against three prop-pipeline speakers, with a wild card extra person thrown into the mix. The anti-pipeline speakers were Maya van Rossum, Delaware RiverKeeper and Doug O’Malley of Environment New Jersey. On the pro side of the equation were Phil Beachem of NJ Alliance for Action, Thomas Bracken of the NJ Chamber of Commerce, and Greg Lalevee of the Operating Engineers Local 825 union. The wild card was Matthew Tomich of Energy Vision, a company that engages in research in renewable natural gas (RNG) culled from waste sources such as landfills.

At a very broad level Doug and Maya did a very credible job of defending their positions. They had hard number and statistics to back up their positions and cited numerous papers and research programs to support their view.

With the exception of Greg Lalevee, the pro-pipeline speakers Phil and Thomas appeared to be lacking in concrete information and basing their decisions mostly on hearsay and scare tactics being thrown at them. Greg spoke more from a numbers and detail perspective and made some good points, but I think he was missing some critical details that taken together undermined his view.

Maya was, in my opinion, the most passionate and informative speaker, with Doug bringing up a close second. She spoke at length about the dangers of fracking, threats to our water safety, threats to the Delaware River, the cost of building all this infrastructure is extracting from residents and businesses in the region. She spoke of the total lack of justification for the PennEast pipeline and others, stating for the record that the PennEast Pipeline alone would put NJ over capacity by 53% (she’s right – NJ averages 1.88 billion cubic feet of natural gas usage per day, and the PennEast pipeline by itself carries 1 billion). She cited studies showing the horrific impact fracking has had on residents in PA, and how that threat is just as real here in NJ as it is in PA. We too have shale formations in our state (Utica shale), we simply do not allow for its exploitation. But that could change.

Doug O’Malley gave a very broad argument against pipelines, and included a wide range of arguments for renewables and against fossil fuels. He also had statistics and studies to back up his opinions. Along with Maya he pointed out to the union representative that renewable jobs are much more plentiful and lucrative than fossil fuel ones, and that union members should really be pushing renewable energy as a rich source of jobs in the region.

I’ll have a lot more on Doug’s speaking points in the full roundtable report.

Greg Lalevee spoke well and had some numbers to back up his claims, but I think he is slightly misinformed or lets his union bias lead him a little too strongly. He spoke of the fact that 2/3 of NJ residents are served by natural gas and that it’s a critical part of the energy infrastructure that keeps us all going as a whole. I agree with that entirely – but this alone does not serve as an argument for PennEast or any other pipelines. We are already sufficiently served by the existing pipeline infrastructure and don’t need anymore. His argument also lacked punch given the large number of Hunterdon County residents in attendance at the meeting who do not have natural gas and most likely never will. He spoke at length about safety as well and the impressive track record overall of safety in pipeline construction, but he didn’t address the fact that eminent domain means you’re forced to take a risk against your will. Many of us would prefer 0 risk to a possible one, no matter how small it may be statistically. Residents of Edison NJ and Ewing may agree.

I think his argument was also weakened a bit when he stated that his union included just over a hundred members in NJ. A hundred jobs here or there isn’t going to materially impact anyone.

Thomas Bracken of the NJ Chamber of Commerce and Phil Beachem of the NJ Alliance for Action were a disappointment. Their fundamental argument is that energy is one of the three pillars that drives business in the state, and we should do everything we can to support energy companies so that we can fuel job growth in NJ. That’s all well and good, but both speakers fell terribly short on details. You can’t generalize about topics like this, you must dive into the details to see the true shape of what you’re dealing with, but unfortunately both gentlemen stuck primarily with exactly generalizations and some obvious scare tactics that have been thrown at them by industry.

Phil spoke repeatedly about his time as a mayor in NJ many years ago. He spoke about the pipelines coming through his town and how they never had any issues with them. He also said he had never heard anyone say that coal could be cleaner than natural gas, with a strong implication that anti-fracking activists were a bit nuts (without quite saying so).

He lacked specifics to back any of his claims up, and relied on anecdotes instead of statistics and citations. He seemed confident that his experience as a mayor 30 years ago was still relevant today when talking about pipeline infrastructure, which I take as odd given his position today.

Finally we had Thomas Bracken, President and CEO of the NJ Chamber of Commerce. Thomas spoke repeatedly about the answer to pipeline issues to simply be bringing everyone involved into a room together and hash it all out in a compromise. He said that the process was basically what it was, and we should shut up and accept it, and if we didn’t want to accept it we should get the laws changed (but in the meanwhile, touch luck). There were loud murmurs in the audience from this.

He said that high energy costs in NJ are driving the need for more infrastructure, which is why he supported it. I didn’t have a chance to ask questions at the end (time was very limited), but if I did I would have asked him if he knew that NJ and the 4th lowest natural gas prices in the country. And if he also knew that our electric prices were higher than some states only because we lack significant hydro and wind power. States out west have ridiculously low power rates because they are located next to sustainable and renewable supplies. Our electric is higher because we’re stuck here in NJ on fossil fuels.

He also stated at many points throughout the roundtable that he didn’t actually know any of the details of what was being discussed (and didn’t seem interested in finding out). He said he didn’t know what the FERC process was or how it worked. He said he didn’t know any of the particulars of any of the pipelines. He said maybe they could just “turn the fracking off” and gas would still flow to NJ (the answer to this is a resounding “no, that won’t work”).

He also stated forcefully that he was vehemently against any export of natural gas, doubly so for gas going through pipelines in NJ. Phil shook his head in support of this. Unfortunately no one was able to follow up on this and show him the export scenarios playing out.

Thomas indicated that energy companies were perhaps the most powerful companies in NJ driving our economies, and stated that since they were so powerful we should more or less be quiet and let them do what they want to do. They bring us tons of money so why should we oppose them in any way?

Needless to say this did not sit well with most audience members.

I’ll be sending Phil and Thomas white papers showing the economics of the pipelines and exactly how much is projected to be exported overseas in the coming years. I hope they read them, but fear they will not.

In all I was highly disappointed that people in such positions of power were so misinformed about pipeline issues, and seemed content to more or less parrot pipeline company’s PR people. With this situation it is clear why we need people like Maya and Doug to counter pipeline company’s propaganda – we need strong voices that will give our leaders detailed, informed, and nuanced information about pipelines backed up by research and numbers, not hyperbole and anecdotes.