Can a Dead Cat Bounce? Inside thinking of Kinder Morgan on its gas pipeline proposal
By Sam Smith
[Sam Smith, Williamstown resident, has been preparing a report of the more than two-year battle between Kinder Morgan and local New England residents about KM’s proposal to build a pipeline carrying natural gas through New York and Massachusetts communities, including parts of Berkshire County. Although the latest news is that KM has pulled the plug on this particular plan, Sam argues that the battle between local communities and large energy companies is far from over and that we are continually learning both how a local community can oppose this kind of proposal and how the corporation itself may view such opposition. Below is his imaginary summary of the inside thinking of Kinder Morgan. Dates, names, and quotes are actual.]
TO: The Kinder Morgan Board of Directors and Executive Colleagues,
Let me begin by reaffirming the strategic charges the Board of Directors gave me when, in the late Fall of 2013, we conceived a plan to construct the NED (Northeast Energy Direct) pipeline to transport the immense reserves of natural gas in the Marcellus Shale Basin in Pennsylvania across New York and Massachusetts to the hub of the North American natural gas pipeline grid in Dracut, MA. Though never to be mentioned in our public statements and press releases, the beauty of Dracut hub for our future profits is that the Maritimes and Northeast Pipeline also terminates in Dracut. This serendipitous connection will affect the realization of a dream of the U.S.fossil fuel industry: the creation of a pioneering corridor—via Canadian pipelines—for the export of Marcellus sourced “fracked” natural gas to global markets.
The Directors’ strategic charges to me included:
- Be unwavering in promoting the façade that the pipeline proposal is only intended for the energy needs of the people and businesses in New England. Said differently, you must do everything possible to disguise the underlying intent of the whole NED proposal.
- Continuously nurture informal contact with FERC and, especially, the US Department of Energy/Fossil Energy Office (DOE/FE), which has the power to authorize the export of US-sourced fossil fuels. But be careful that these two relationships do not leave a paper trail.
- Until the NED proposal is approved by FERC—most likely in the late fall of 2016—practice creative obfuscation.
- Lastly, your overarching task is to sustain the “legal” concept that the pipeline is for the greater good—a “public necessity.”
Remaining faithful to the Board’s charges has not been easy for a number of reasons. A study undertaken by the Attorney General’s Office demonstrates that Massachusetts does not need increased gas capacity to meet electric reliability. Contrary to the assumption—one nurtured by Gov. Baker, the Massachusetts Department of Public Utilities and KM—that gas and electricity customers would pay for the $5-8 billion pipeline construction cost, the state legislature has asked “Why should the financial risks associated with overbuild, cost overruns and stranded assets—as well as the environmental and health risks—fall on the ratepayers shoulders?” Note Sen. Elizabeth Warren’s published letter that “Kinder Morgan is seeking under the umbrella of FERC to seize conservation land protected by Article 97 of the Massachusetts Constitution.” But what most of all leads to the potential suspicion that NED is an unprecedented scam—rather than a “public necessity”—is the opinion of technical and legal experts that KM doesn’t have enough contracts to cover even half of the capacity of the proposed pipeline.
Nonetheless, my conviction that we’ll win rests on KM’s repeated experience that FERC’s approval, along with its coveted Certificate of Public Convenience and Necessity, is a foregone conclusion now that our application is in hands of the FERC commissioners.
Now let me briefly sketch the history of NED from the day it went public in February 2014 to now. NED’s debut featured glowing press releases detailing how a 36” pipeline was necessary to meet the energy needs of Massachusetts. Throughout the first year of informational town meetings, it appeared to us that any hostile response to the pipeline would be rooted in “nimbyism.” Consequently, on December 6, 2014 we moved the pipeline path to a more northerly route—one that cut through rural and less affluent towns where, we felt, the people would be easier to mollify. But the opponents did not tire. Rather they grew stronger and spread their passionate arguments to local communities across the state in a spirit of solidarity with the global struggle against ‘fracking’ and climate chaos. By this time I recognized and accepted that KM was facing a persistent statewide community of opposition. But its influence still hadn’t spread to the part of the population that is rarely inclined to question everyday structures.
Therefore, on July 22, 2015 we decided to downscale NED to 30” (or 1.3 Billion cubic feet per day) from 36” (or 2.2 Bcf/d). This change in the pipeline’s capacity was meant to maintain the impression that the project was carefully tailored to the energy needs of the state.
The reduction in the size of the pipeline followed a seemingly unrelated event that took place just two months earlier. On May 22, 2015, Pieridae Energy (Canada) announced that its US subsidiary, Pieridae Energy (USA), “filed an application with the Department of Energy/Office of Fossil Energy for authorization to export natural gas from the U.S. to Canada in the amount of 0.8 Bcf per day.” The import of Pieridae Energy’s application remained opaque until February 8, 2016 when Pieridae released the news that it had received authorization from the DOE to export up to 0.8 Bcf/d U.S.-sourced natural gas to Canada for liquefaction and re-export as LNG to overseas markets. Citing the existing Maritimes and Northeast Pipeline between Dracut and the Canadian border at Woodland, ME, Pieridae made known that it “will [eventually] have the ability to source natural gas from the Marcellus basin to almost any point on the U.S. natural gas pipeline grid.”
Still—thank our stars—there is no paper trail to connect the dots between KM, the DOE/FE, and Pieridae. One could say that it was “purely serendipitous” that Pieridae’s 0.8 Billion cubic feet per day export authorization was roughly equal to the inadequate capacity commitments from prospective customers for our proposed 1.3 Billion cubic feet per day . Said differently, I believe our cover will hold.
I predict by the beginning of 2017 we will have begun construction on the pipeline and demonstrated that KM—and by extension the whole fossil fuel industry—can make a “dead cat bounce”.
Co-Founder and Executive Chairman of Kinder Morgan Inc.
April 19, 2016
I am so profoundly grateful—and stunned—that just one day after completing my imaginary summary of the way KM strategizes, KM stated that it has “suspended further work and expenditures on the Northeast Energy Direct (NED) project.” The operative word is “suspended.” The fossil fuel industry and governments around the world still plan to build new pipelines and open new oil and gas fields. “But everywhere they do,” as Bill McKibben has exclaimed, “something remarkable is happening: resistance.” Nonetheless, does earth’s vast community of life still balance on the brink of extinction? This burning question hangs in the air as it does in this Denise Levertov poem.
But we have only begun to love the earth. We have only begun to imagine the fullness of life.
How could we tire of hope?—so much is in bud.
How can desire fail?—we have only begun to imagine justice and mercy,
Only begun to envision how it might be to live as siblings with beast and flower, not as oppressors.
Surely our river cannot already be hastening into the sea of nonbeing?
Surely it cannot drag, in the silt, all that is innocent?
Not yet, not yet—there is too much broken that must be mended,
Too much hurt we have done to each other that cannot yet be forgiven.
We have only begun to know the power that is in us if we would join our solitudes in the communion of struggle.
So much is unfolding that must complete its gesture, so much is in bud.