Spectra Energy Watch

Time to Level Playing Field for Property Owners

Wake Up:  Legislators & Regulators

Property owners are key stakeholders in any mineral rights leasing transaction, whether for recovery, storage, transmission or generation of power.  Property owners possess the fundamental asset – the land and property rights – without which, there is no energy project for recovery, storage, transmission or generation.

The power of eminent domain in the hands of government — which is usually transferred to a business — creates a sense of entitlement; and it creates an atmosphere ripe for abuse.  It is not a level playing field legally, economically or ethically for private property owners.

Therefore, landowner property rights need to be protected under law.  In a constructive effort to guide legislators and regulators, here are five principles.

5 Principles to Guide Lawmakers & Regulators:

1) Transparency on Lease Agreements: Property owner lease agreements shall not be less than lease agreements for government entities including local, state, and federal government (e.g., state game lands, federal forest lands, etc.).

a) Energy companies usually have very different lease agreements with state governments than with private property owners.  These lease agreements with the state are much better than the lease agreements with private property owners. It has nothing to do with the size of state lands.  It has everything to do with industry politics.

b) Since public lands are owned by taxpayers, citizens have a right to know what energy companies have stipulated in their lease agreements with government entities.  For example, in the case of underground natural gas storage leases, private property owners usually receive a “one-time payment.”  In contrast, lease agreements with state governments often include a bonus payment, plus a “withdrawal royalty payment.”  In other words, every time an energy company withdraws gas from the underground storage cavity it has seized through eminent domain, the state gets paid.  This is often calculated in the form of a 25-year annuity stream back to the state.

c. In some contracts, a royalty is also paid on the volume of gas injected in addition to the volume of gas withdrawn for transmission through pipelines.

2) Property Owners to be Treated as Key Stakeholders: Informational meetings such as “open houses” and “community meetings” that are hosted by energy companies and/or government entities must include property owner advocates on the agenda.  These are readily available from academic institutions or public interest groups, or from landowner organizations.

3) Transparency on Eminent Domain: Where a government body (local, state, federal) holds the power of eminent domain, landowners will be permitted to attend the same meetings with energy companies regularly held by government entities on specific projects involving landowners’ property.  Meeting schedules and agendas will be communicated in a timely manner to all landowners involved in project reviews that affect or potentially affect their property so that they may attend at their own expense.

4) Energy Priorities: If geological data indicate that there is an opportunity to recover new gas or minerals in the area of a proposed storage field (e.g., Marcellus Shale next to Oriskany Sandstone formation), exploration and recovery efforts will precede storage field development.

5) Accountability on Royalty: Reports from meters for any leasing transaction, whether for recovery or storage of minerals, or generation of power must be made public (i.e., available to landowners and others) on a quarterly basis.  An independent party, agreed to by landowners and paid for by the energy company, will provide an assessment of the quarterly meter reports.  In the case of underground natural gas storage wells, every injection well must be metered (i.e., one meter per storage field is not acceptable; there must be a meter on every injection well).

Energy company lease agreements with states are much better than the lease agreements with private property owners.  It has nothing to do with the size of state lands.  It has everything to do with industry politics.  This is particularly troubling when private property rights have been seized via eminent domain — a form of “taking” that can only occur under the badge of government.

Independent Duke Employee Website Responds to Blog;

Property Owners Have Posted on the Employee Site

We previously wrote about the troublesome “family tree” connection between Duke Energy and Spectra Energy.  See link:  http://www.spectraenergywatch.com/blog?p=243

In that blog, we noted:

• Spectra Energy was spun off from Duke energy in 2007.
• Before that, in 1999 (we recently learned), an employee-controlled website rose to challenge the integrity of Duke management and its treatment of employees.
• At least 7 former Duke Energy execs are running the show at Spectra Energy.

This corporate gene pool raises an important issue for property owners and other stakeholders:  If a company cannot persuade its own employees that it is ethical and acting in their best interests – how can it possibly be credible with external stakeholders, including property owners?

Recently, I received a cordial response from the “webmaster” at: http://www.dukeemployees.com/

In addition to explaining that the website started in 1999, the webmaster noted that “Duke Energy has encountered its own difficulties over property rights, and yes, pipelines were involved.”

Four links were offered to illustrate the point (see below).  The first two are reprints of news coverage; and the last two are from a property owner who contacted the Duke employee website.

The four postings offer lessons for landowners who are fighting energy companies to protect their property rights.  Following are excerpts that highlight those lessons:

• “Opponents say that the pipeline would make money for Duke at the expense of local landowners, the environment and public safety. It would transmit natural gas from Tennessee to markets in North Carolina, they say, with little benefit to those along the way.”  [From “Pipeline Battle,” an article from the Winston-Salem Journal by Michael Biesecker, November 17, 2002.]

• Virginia Property Owner Olen Gallimore, quoted in the same article (emphasis added): “There’s nothing patriotic about stealing people’s land,” says Gallimore, who owns about 170 acres near Poplar Camp, land that surrounds the rustic home built with timber he cut himself. “I’ve worked 30 years to get what I’ve got. When somebody tries to take what’s yours, you have to fight.“  [From “Pipeline Battle,” an article from the Winston-Salem Journal by Michael Biesecker, November 17, 2002.]

• New Mexico Property Owners Roy & Louise Dearing who contacted the Duke employee website:  “I don’t know if you remember about the 12 people who were killed by a pipeline explosion (El Paso Natural Gas). It was only 20 miles from our home; we could see the fire ball from it. Duke Energy never slowed down with their plans to put this Compressor Station in.” [From “Peaceful Home Becomes A Nightmare,” a property owner message posted with permission, August 6, 2002.]

When someone wants to know whether you are trustworthy, they can always look at demonstrated performance, your track record.  Energy companies like Spectra Energy have a track record that communities and property owners can evaluate. 

In addition, they often have “family trees” that let you look at the corporate gene pool to better understand the company’s value system – whether it has one, and whether it actually practices those values consistently.

Remember, Duke Energy and Spectra Energy are branches from the same tree.

Pipeline Battle

http://www.dukeemployees.com/duke1-03.shtml#pipeline

 Duke Energy Steam-rolls Pipeline

http://dukeemployees.com/duke202.shtml#pipeline

 Peaceful Home Becomes a Nightmare

http://www.dukeemployees.com/duke902.shtml#nightmare

 Citizen Victorious Over Duke

http://www.dukeemployees.com/duke1402.shtml#citizen

Spectra Spew:

Reuters Looks at Water Quality Issues Tied to Spectra Energy in Clearville, PA

Spectra Energy continues to pick up more press coverage, but not the kind it wants to share with its Board of Directors.  Reuters’ Reporter Jon Hurdle, published an article earlier this month titled, “Gas drillers battle Pennsylvania pollution concerns.”

Here is the Reuters news link:
http://www.reuters.com/article/internal_ReutersNewsRoom_BehindTheScenesMOLT/idUSTRE5422TG20090503?pageNumber=1&virtualBrandChannel=0

Reporter Hurdle visited Clearville, among other Pennsylvania communities, and interviewed property owners Angel and Wayne Smith and Sandra McDaniel.

Noting that “Spectra Energy Corp is drilling to establish an underground gas storage facility,” the reporter visited one of the nearby injection well sites and his description isn’t pretty:

“… three pipes spewed metallic gray water into plastic-lined pits, one of which was partially covered in a gray crust.  As a sulfurous smell wafted from the rig, two tanker trucks marked ‘residual waste’ drove from the site.”

One surprising revelation is that companies apparently are not required to disclose which chemicals are used in so-called fracking fluids.  Fracking fluids are a stew of chemicals – some said to be carcinogenic – that are used in well drilling operations.

According to the Reuters news report:
“The composition of fracking fluid has been unregulated since the oil and gas industry won exemptions in 2005 from federal environmental laws including the Clean Water Act and the Safe Drinking Water Act.”

The Reuters report goes on to note, however, that:

“Fracking chemicals include benzene, a carcinogen, plus toluene, methanol, and 2-butoxyethylene, a substance that can reduce human fertility and kill embryos, according to Damascus Citizens for Sustainability, a group that opposes drilling.”

Reuters Reporter Jon Hurdle walked portions of the properties of Sandra McDaniel and Angel and Wayne Smith.  Hurdle writes that Wayne Smith:

“… wonders whether tainted water is responsible for the recent deaths of four of his beef cattle, and his own elevated blood-iron level.

“Smith would like to get his water tested for the full range of fracking chemicals but he can’t do that without specifics on the fluid’s composition.

“‘We don’t know what’s in it,’ he said.  ‘They won’t tell us.’”

They won’t tell us.

On the other hand, if the gas industry doesn’t tell, it can’t lie.  Refer to the “Pious Mouse Wash 1” blog post to see how the definition of lying is a defense for gas companies:

http://www.spectraenergywatch.com/blog/?p=213