Pipeline - Frequently Asked Questions
Q: What is the Kinder-Morgan Y-Grade NGL Pipeline and how does it affect Kentucky?
A: In August of 2013 Kinder Morgan announced a project to construct a natural gas liquids pipeline from the northeast to the gulf coast. The pipeline has received the nickname of the Y-Grade pipeline, however, Kinder Morgan has assigned the official name of the Utica Marcellus Texas Pipeline Project (UMTP). Kinder Morgan intends to re-purpose a currently existing pipeline that runs through Kentucky. The existing pipeline now transports natural gas.
Q: What is the route of the proposed Kinder-Morgan project through Kentucky?
A: The current Kinder Morgan pipeline running through Kentucky is part of the Tennessee Gas Pipeline system. It transports natural gas in a northeasterly direction. The Kinder Morgan proposed project includes plans to re-purpose the existing pipeline to cease the flow of natural gas in a northeasterly direction and reverse the direction and begin transporting natural gas liquids. The natural gas liquids would flow in a southwesterly direction. The UMTP pipeline is proposed to enter Kentucky in the northeast in Greenup county. The pipeline will proceed from Greenup County and continue through the counties of Lewis, Carter, Rowan, Bath, Montgomery, Powell, Clark, Madison, Garrard, Boyle, Marion, Taylor, Green, Hart, Barren, Allen, and Simpson. Any landowners in these counties who have the pipeline on their property should feel free to contact Mr. DeMarcus to discuss the project with him.
Q: What are natural gas liquids?
A: Natural gas liquids (NGL) are condensable hydrocarbons. Examples of NGLs are butane, isobutane, hexane, and pentane. NGLs are different than natural gas. The natural gas that most of us are used to is the gas that is used to heat our homes. This natural gas is mostly methane. Methane is the simplest form of a hydrocarbon. NGLs are primarily needed and used by petrochemical plants in the manufacturing of plastics. NGLs can be transported through pipelines at pressures as high as 1,440 psig. NGLs are colorless and odorless when not under pressure. Therefore if there is a leak in an NGL pipeline, the NGLs are not easily detected. However, in atmospheric conditions NGLs will become a vapor and look like a fog and remain in low lying areas.
Q: Should Kentucky landowners seek the representation of an attorney?
A: Landowners have a choice to handle the issues with the Pipeline on their own or to obtain the representation of an attorney. Kinder Morgan is represented by attorneys. If a landowner chooses to hire an attorney, the decision should be based on who knows the law and who will protect the landowner and the land. A landowner should be certain to meet the attorney face to face and ask the attorney questions directly. A landowner should feel comfortable with their attorney’s understanding of pipeline easements and their ability to advocate and negotiate zealously on the behalf of the landowner.
Q: Do companies transporting NGLs have the right of eminent domain?
A: No. A case was filed in Franklin County, Kentucky regarding the right of a company transporting NGLs to be able to exercise eminent domain. The Franklin Circuit Court entered an Opinion and Order on March 25, 2014. The court granted judgement against the NGL transporting company and stated that the company “Does not have the power to condemn under Kentucky’s statutes”. The court went on to state “The transportation of hazardous liquids interstate through Kentucky to the Gulf Coast does not justify granting a private company the right to condemn private property”. The decision of the Franklin Circuit Court was appealed to the Kentucky Court of Appeals and was affirmed by the Court of Appeals on May 22, 2015. The Bluegrass Pipeline Company has petitioned the Supreme Court of Kentucky to review the Opinion of the Court of Appeals. The Supreme Court has not determined whether or not it will review the opinion. However, currently the only courts to address the issue in Kentucky as to whether a private company has the right of eminent domain to transport natural gas liquids through the Commonwealth has decided that such right does not exist. Therefore, private energy companies do not have the power of eminent domain to transport NGLs.
Q: Does a landowner have good bargaining position against a pipeline company?
A: Yes. The landowner who owns land which is not affected by an existing easement, enjoys all rights vested to a property owner by the laws of the Commonwealth of Kentucky. The pipeline companies do not have the right to do anything on a landowner’s property without the agreement of the landowner or without an Order of a Court with competent jurisdiction. For these reasons, owners have good bargaining position. Owners of land affected by existing easements should consult with an attorney to determine their bargaining position.
Q: Can a landowner be protected?
A: Yes. Landowners do not have to agree to anything with a pipeline company so long as there is no prior easement. If a landowner ultimately agrees to receive compensation from a pipeline company and permit a pipeline company to proceed through the landowner’s property, then certain protections can be implemented in favor of the landowner. Mr. DeMarcus has been successful in implementing protections within the easement documents that are entered between the landowner and pipeline companies. Mr. DeMarcus has also been successful in obtaining increased compensation for landowners from pipeline companies.
Q: Do landowners have to pay a retainer for Mr. DeMarcus to represent them?
A: No. Landowners do not have to pay any money upfront for Mr. DeMarcus or his Firm to represent them. Mr. DeMarcus represents landowners on a contingency fee. In other words, any fee of Mr. DeMarcus is contingent upon him being successful in negotiations with pipeline companies. Specifically, the fee charged by Mr. DeMarcus is one-third of any amount Mr. DeMarcus is able to recover for the landowner.
Q: What is eminent domain?
A: Eminent domain is the power of an entity to take privately owned property and convert the property to public use. The entity must provide reasonable compensation for the property taking. The Eminent Domain Act of Kentucky was passed by the General Assembly in 1976 and is found in Kentucky statutes at KRS 416.540 to 416.680. The Kentucky General Assembly grants eminent domain powers through statutory law in KRS 278.502. By the terms of the statute, the power of eminent domain is reserved for entities engaging in the transportation of oil, gas or the products of oil or gas in public service. There has not been any declaration indicating that Kinder Morgan has any power of eminent domain.
Q: What is an easement?
A: An easement is an interest of one person or entity in the land owned by another person consisting of the right to use or control the land or an area above, below, or on the surface for a specific limited purpose. Easements do not provide the easement holder the right to possess, take from, improve or sell the land. Pipeline companies have proposed easements to landowners throughout Kentucky. Much of the language in the proposed easements relates to use existing below the land because the pipeline will be a buried line. However, a pipeline company will, of course, be completing work above ground. So long as a landowner has not signed a proposed easement, Mr. DeMarcus can represent the landowner in an effort to incorporate terms within the easement that are favorable to the landowner and protect the landowner and their land.