Two companies will hit Tennessee Gas’ big interstate pipeline in rural Carter County — crossing 50 to 70 miles of east Kentucky hills with two 20-inch steel conduits so gas can flow more freely from mountain wells to the open market.

One, Atmos Energy, proposes the Straight Creek Gathering System, partnering with Prestonsburg’s Kinzer Drilling on a $75 million to $80 million line.

The other, Equitrans LP, a subsidiary of Equitable Resources Inc., expects to spend as much as $150 million on its pipeline and a compressor station.

Each hopes the work pays off in not only dollars for their bottom lines but also more, and possibly cheaper, gas for consumers.

“What we’d like to see is more gas flowing in, so prices come down,” said Jerry Hunter of Atmos, headquartered in Dallas.

“It doesn’t benefit us to see customers getting high rates spiking up and down,” he said.

In December, Kentucky Public Service Commission said wholesale gas prices had doubled in three years, citing supply concerns and market instability.

Eventually, such increases deteriorate the marketplace and create consumer issues, as well as posturing in Congress against companies, Hunter said.

“The better the supply system we can put in place, the better the nation is served in general.”

Last month, Atmos announced it would seek exemption from Federal Energy Regulatory Commission oversight to extend a pipeline 50 miles from Floyd County so it can connect near Denton with the larger Tennessee Gas line that delivers gas to the northeastern U.S., including New York and Boston.

The company is asking FERC to declare it a “gathering line” that is outside interstate transmission guidelines so there are fewer regulations and it is easier to operate, Hunter said.

Essentially, it is designed to gather gas from feeder lines that come directly from thousands of wells.

Earlier this year, Equitrans also said it would seek FERC approval to build a 70-mile, 20-inch pipeline between Floyd and Carter counties.

As with the Atmos line, it will pass through parts of Johnson and Lawrence counties, and transport gas from thousands of wells — enough to heat an additional 120,000 homes per year, the company said.

But Equitrans’ filing doesn’t seek an exemption, and requires engineering and environmental surveys of the route, among other work. Two public meetings were conducted in February, in Louisa and Paintsville, and affected landowners have been mailed.

The company anticipates that FERC will issue a certificate by September, after which construction should begin, and gas could move by next summer.

That’s the same timeline Atmos and Kinzer are working on as well, according to their federal filings.

Atmos operates a gas distribution utility in western Kentucky and has some larger intrastate lines in other states. It will partner with Kinzer, which already has much of the route secured.

Some 40 or more miles of right of way is in place and the companies are working now with the remaining landowners, Hunter said.

Both companies also will have an ownership interest in the Kentucky project.

“In this case, because of the expertise we do have in the natural gas industry, we’re able to work with Kinzer, an existing producer, and potentially build up and collect gas in an historically constrained area,” Hunter said.

“We understand at times 1,700 gas wells have been ‘shut in’ because of constraints of line capacity

Columbia Gas has the only line now that can gather gas from mountain fields and pipe it out to the interstate market, but at times there’s not enough capacity — which means Kinzer and other companies have had to “shut in” some 1,700 wells for several months at a stretch, he said.

“The Straight Creek Gathering System will help alleviate the problems by allowing this shut-in gas to flow to the market,” Hunter said.

A similar situation also prompted Equitable, Equitrans parent company that already distributes gas in eastern Kentucky, to embark on its larger pipeline project.

“Equitrans identified a need for the Big Sandy Pipeline through discussions with eastern Kentucky natural gas producers who were frustrated by the inability to deliver their natural gas to market,” the company said on its Web site. “Once the Big Sandy Pipeline is complete, natural gas that had been trapped in Kentucky now will have a way to get to market.”

That’s good news for local lawmakers, who’ve had hearings and drafted legislation in the past couple of years to spur such action.

“I think the more the merrier,” said Rep. Tanya Pullin, D-South Shore, who chairs the House energy subcommittee.

“We have a lot of natural gas under the ground in Kentucky, and it can be part of the nation’s answer to energy, but we have been having trouble getting it out of the ground because of not enough pipelines,” she said.

Pullin’s committee has worked hard on the issue, she said, meeting several times with gas companies and drillers. At a December meeting, Equitable announced its project, she said.

“These natural gas pipelines are good for three or four obvious reasons,” Pullin said, citing not only the infrastructure itself but also the construction jobs, maintenance jobs, landowner royalties as well as state and local severance tax dollars created when more gas flows.

“And the most obvious one is where we have a very tight supply and Kentucky has the gas ... if we can just get those pipelines built, Kentucky can participate,” she said, adding that there is a hope for decreasing prices.

“I don’t know if any one pipeline would be enough to ease prices, but to get it out of the ground to find out, you have to start with one.”

The concern of oil and gas producers having all this gas shut in and not able get it out in the marketplace was a big concern for the legislature, agreed House Majority Floor Leader Rocky Adkins, D-Sandy Hook.

From the subcommittee’s hearings to recent legislation that set up enticements, there seems to have developed “a lot of interest in hopefully a major line or lines laid to relieve this concern,” Adkins said.

“It will increase the supply and help alleviate a serious energy crisis we seem to get ourselves in during really hot times of the year and really cold times of the year,” he said. “It will get gas out and initiate new drilling if the capacity is there.”

For the suppliers and distributors, more pipelines make sense for a lot of reasons, too.

By opening up more routes, the natural gas can be used, of course, Hunter said.

But the biggest reasons seem to be from huge demand and resulting high prices.

“When gas prices spike, we’re ones they call, even though we’re not allowed in any state to make any profit on the cost of the commodity of itself,” he said. Companies like Atmos make money on service charges to get the gas to you.

Then there are collection issues, cutoff issues, the increased costs with increased prices.

“It does not benefit us one bit for gas prices to zoom up to astronomical levels.”

ALLEN BLAIR can be reached at ablair@dailyindependent.com or (606) 326-2657.

Recommended for you