Bacon's Rebellion

Democracy Thrives in Sunlight

Pipeline Creates Opportunities in Buckingham

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by

James A. Bacon
in ,

Kyanite Mining Corp. , one of the largest employers in Buckingham County, has entered into an agreement to access a natural gas tap off a lateral line from the proposed Atlantic Coast Pipeline (ACP). And now the county is exploring the possibility of acquiring 200 acres of land along the tap line for industrial development. The line would have enough capacity to supply Kyanite Mining as well as three or four companies of comparable size, reports the Farmville Herald.

Atlantic Coast Pipeline opens up economic opportunities in Buckingham County.
Blue Kyanite crystal

Kyanite Mining, which mines and processes Kyanite ore, runs the mineral through a rotary kiln in which the temperature exceeds 1450° Centigrade. The operation can produce more than 150,000 tons of commercial grade Kyanite concentrate every year. Kyanite is used in products as diverse as dishware, porcelain plumbing fixtures, electronics, electrical insulators and abrasives.

According to County Attorney E.M. Wright Jr., the 200 acres would be available to be marketed  as a site that would have gas and other amenities. Two non-binding memorandums of understanding are needed from the county, he said, “so definitive agreements can be made.”

While the pipeline has inspired stiff opposition in the mountainous Augusta-Nelson-Bath county area, partially on the grounds that it would negatively impact views, property values and economic development, the project has garnered support in other localities along the route. The availability of natural gas puts numerous counties into the running for new categories of industrial investment.

“This is a great example of how the Atlantic Coast Pipeline can serve as an economic development tool for counties to support their local businesses and even attract new industries to help grow their economies,” said ACP spokesman Aaron Ruby.

“For more than two years, we’ve worked very hard to find opportunities across the region to expand access to natural gas in under-served communities, including Buckingham County,” he said. “We’re pleased that after more than two years of discussions with Buckingham County, Columbia Gas and Kyanite Mining Corporation, we’ve reached an agreement in principle that will help facilitate natural gas service to the county. More work remains to be done to finalize the agreement, but we’re very pleased with the progress that has been made.”

Update: Michael Martz with the Richmond Times-Dispatch delves into this story, including the local politics, here.

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4 responses to “Pipeline Creates Opportunities in Buckingham”

  1. LarrytheG Avatar
    LarrytheG

    Why isn’t this Crony Capitalism at it’s worst?

    This is a for-profit venture that will be buying market-priced gas from a pipeline that was obtained through govt taking land from other property owners and the pipeline itself paid for by ratepayers.

    If I got any or all of this wrong – please come back and correct my errors…

    otherwise, please admit the facts.

  2. TomH Avatar
    TomH

    There is a little more to this story.

    For some time the ACP has attempted to gain approval to site its 53,000 horsepower compressor station in an area zoned agricultural in Buckingham County. This facility is clearly an industrial use so it does not qualify for approval under the current zoning.

    Hundreds of residents have attended the local meetings to show their concern that the local policymakers are considering approving a use that is so out of keeping with the nature of their community.

    I have seen this scenario play out before in cases where substantial projects are proposed for rural areas. The local government is often intimidated having to deal with a large corporation and overwhelmed by the possibility that a state or federal regulator will force the project on them anyway. So the typical approach is to make the best deal they can, assuming they have no control over the situation. Even if it requires ignoring their own laws.

    This situation is complicated by the proximity of the compressor station to a world-renowned yoga training and meditation center. The constant noise from the compressors and release of volatile organic compounds will change the experience there considerably.

    But the location is important to the ACP since it is the place where the ACP can connect to the Transco corridor where the ACP can gain access to cheaper sources of gas and also use the 1800-mile Transco corridor to market gas during the 11 years when the ACP is underutilized.

    Dominion has publicly stated that the ACP is a wholesale pipeline and not designed to supply local industry. They have set the minimum tap-in price at $500,000. Previously, residents asked Columbia Gas to expand service in the county but Columbia said they were not interested. Dominion says – “For more than two years, we’ve worked very hard to find opportunities across the region to expand access to natural gas in under-served communities, including Buckingham County,” However, when several under-served areas in West Virginia asked Dominion about access to the gas, they were rebuffed.

    Kyanite is owned by a very influential family in Buckingham County and presumably this arrangement would lower their operating costs by gaining access to a lower cost source of natural gas. Columbia Gas would be the provider of the gas since the ACP is not a natural gas distribution company.

    Some details are not clear. It is unlikely that Columbia will have to pay the $500,000+ to make the connection to the ACP nor will they pass it through to Kyanite since that would probably make this arrangement uneconomic. The ACP will probably consider it a necessary cost to obtain the permit.

    The new natural gas service would be available on just the 200 acres that Kyanite (or someone) is making available ( at $2500 per acre) for future development of a few industrial parcels. There is no expansion of natural gas service into other areas of the county proposed. The memoranda of understanding are non-binding (presumably on Columbia and Dominion too?) so once the special use permit is issued it might not be guaranteed that the County will get what it wants.

    This is an example of modern capitalism and politics at work. Special interests prevail. There could be the prospect of a more employment or a larger tax base for the County sometime in the future but it is by no means guaranteed. Many residents are stunned by the developments and some feel betrayed by their representatives. Most feel helpless under the onslaught of larger powers. Today, individual citizens seem to have little influence on what happens in their community. Money and influence win the day.

    There is one possible complication. Buckingham is calling the compressor station a “utility booster facility”, which has a specific definition, in order to shoehorn this project into an agricultural district. If someone were so inclined, a legal challenge could be mounted to this special use permit, since it clearly does not meet the zoning ordinances.

    This appears to be on its way to approval. Dominion will advise the media that they have secured the permit and that it is evidence that the pipeline has widespread support. But I doubt the stories will contain any mention of the leverage that was applied to make it possible.

  3. LarrytheG Avatar
    LarrytheG

    I don’t have a problem at all with a for-profit venture doing whatever it can do and get permission to do – to maximize it’s investment.

    That’s capitalism and a core American value to reward entrepreneurship, risk , and initiative.

    The problem is when you use the govt to keep the price of land low and force people to sell it who may not want to -and then have ratepayers provide the capital instead of investors.

    This probably should be A pipeline not several competing ones – all claiming public necessity.

    If they want to use ED – it should be a regulated project.

    I can go – either way – but watching a for-profit venture using govt to reduce the price of land – to, in effect, increase their profits – and transfer risk to ratepayers instead of investors is not right. It’s really arrogant.

    A regulated monopoly – consortium -WOULD in all likelihood provide other communities access… which would be appropriate and would likely gain support… and tamp down opposition a bit, win more folks over.

    I think they are doing this in the exact way that riles people up and they’re trying to paper it over with feel-good PR…

    they can’t just respect people, their properties and their communities and AT LEAST TRY do right?

    It sometimes feels like they purposely go out of their way to poke people in the eye… I just shake my head…

  4. TomH Avatar
    TomH

    Historically, pipeline developers have been for-profit companies. Recently, for-profit utility holding companies have moved into this sector because rates of return are 50% higher for pipelines compared to power plants and transmission lines. Unfortunately, this high rate of return is also encouraging an overbuilding of pipeline capacity (40% higher than maximum gas production).

    The pipeline developers are regulated in the sense that FERC approves construction and sets the rates.

    But the application of eminent domain is still a contentious issue. In our region, there is substantial information that shows that existing pipelines have the capacity to serve the additional demand for natural gas at a significantly lower price. That calls into question whether the pipeline project is truly in the public interest or it exists for private gain. That would disqualify it to use eminent domain in Virginia. However, the federal threshold is lower for using eminent domain even though the Natural Gas Act says that FERC’s application of eminent domain should follow the “principle and practice” in the states through which the pipeline passes, although this is now largely ignored.

    Another consequence is that these pipelines will affect local communities for over 100 years. Recent indications are that the gas-fired power plants that are justifying the construction of these pipelines might be economic only for the next 10 years or so, as is being seen now in California. We might be causing great disruption and investing billions for a short-term benefit. Both ratepayers and shareholders could pay a price for our short-sighted energy planning.

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