Expansion of Georgia pipeline will test state laws

20 10 2008

When the McIvers moved into their Powder Springs home 12 years ago, they had some reservations about one of their new neighbors.

Behind the split-level house, about a meter below the grass, two steel pipelines carried gasoline, diesel, jet fuel and home heating oil from Gulf Coast refineries to metro Atlanta and other markets between Houston and the New York harbor.

“We’ve always known that gas line was going to be trouble,” said Phillip McIver, 32.

It just wasn’t the type of trouble they were expecting.

The pipelines’ owner, Alpharetta-based Colonial Pipeline, wants to lay down a third line to unclog the choke point between Baton Rouge, La., and Atlanta. To do that, the company needs another 25 feet of right-of-way, adding to the 75 feet it already has.

“Now it’s a matter of trying to educate ourselves and be knowledgeable about it so we don’t get shafted in the end,” McIver said.

In Georgia, where the expansion is expected to cross the northwest counties of Cobb, Paulding, Carroll and Haralson, Colonial’s job is to convince environmental regulators and about 500 landowners that the advantages of being able to deliver more fuel faster is worth the disadvantages —- the potential for fuel leaks, polluted water and decreased property values.

A new pipeline is a high-risk enterprise from Colonial’s perspective as well, and not just because it carries a $3 billion price tag in a shaky credit market.

“Any one permit, any one piece of property that we couldn’t get stops the whole project,” said Norm Szydlowski, Colonial’s president and chief executive officer who knows something about risk. In 2005, he was the senior consultant to the Iraqi Ministry of Oil, appointed by the Pentagon to rebuild that country’s oil industry.

In an interview earlier this month, Szydlowski said the biggest hurdle to expanding Colonial’s pipeline is the Georgia Environmental Protection Division. Colonial, owned by international oil companies and energy investors, is the first to test a 1995 law that requires EPD approval before a petroleum pipeline company can exercise the power of eminent domain. The other states affected by the 500-mile pipeline expansion —- Louisiana, Mississippi and Alabama —- do not require state-level oversight, Szydlowski said.

The Georgia Department of Transportation has already signed off, as has the Federal Energy Regulatory Commission. EPD plans to hold at least three public meetings on Colonial’s request in December. The targeted completion date is late 2012.

Most metro Atlantans would be hard-pressed to name the company that delivers about 70 percent of the fuel they pump into their cars and trucks, and Colonial likes it that way.

When the pipeline company grabs headlines, it’s usually not good:

*In 2003, Colonial agreed to pay a record fine to the U.S. Environmental Protection Agency for spilling 1.45 million gallons of oil in five states. By far the largest spill, and one that still motivates the company today, was caused when a pipe ruptured and 960,000 gallons of diesel fuel contaminated a 34-mile stretch of the Reedy River near Greenville, S.C. About 35,000 fish died.

*In 2005, Hurricane Katrina wiped out power to the pipelines for several days, creating a 1970s-style gas crisis as metro Atlantans faced long lines and soaring prices. The company did not have a backup plan.

*Last month, metro Atlantans again waited in long lines after Hurricanes Gustav and Ike knocked out Gulf Coast refineries. But this time, Colonial was ready, mobilizing eight of the 12 massive power generators it purchased after Katrina for $5 million. The pipelines moved all the available product.

Colonial, established in Buckhead in 1962, also made an unfortunate name for itself around the state Capitol in the mid-1990s when it tried to extend its pipeline through some quail plantations in south Georgia. Their well-connected owners are the reason Colonial, and the Plantation Pipeline, which carries about 30 percent of metro Atlanta’s fuel, now have to get special permission from the state before condemning land for expansion.

Joe Tanner, who at the time was the state Department of Natural Resources commissioner, said, “I think the company just failed to understand who the landowners were they were dealing with.”

Read on here.

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