Multi-billion Bungling or Segmentation : what’s really stalling the CPV power plant in Orange County, New York ?
Friday afternoon, August 3rd, 2018, the public began to hear an unconfirmed rumor that the New York State Department of Conservation (NYSDEC) had handed down a critical permit denial to the infamous Competitive Power Ventures CPV fracked gas plant in Orange County, NY. Soon confirmed via an actual posting of the notice, the crux of the denial remains thoroughly implausible:
…CPV has not submitted an application for a Title V permit nor has a Title V permit been issued for the facility as required by the Department’s regulations… As a result of this denial and the lack of a Title V permit, CPV may not lawfully operate the facility.
How could a leading North American, multi-billion dollar company with so much capital at stake including massive lobbying expenditures; survivor of unimaginable political and permitting scandals coupled with relentless community backlash, simply fail to clear such a mundane regulatory hurdle? The list of CPV’s handlers and consultants runs past 165 pages; the company’s ability to site and develop fracked gas facilities is front and center in its original RFP for the project. This is a company that knows how to grease wheels and push paper to get fracked gas power plants done :
CPV’s management team has successfully developed over 20,000 MW of power projects that are currently in operation, and has acquired or monetized more than $10 billion of generation assets.
But what if CPV’s lack of a Title V permit and NYSDEC’s subsequent denial was not a black swan of regulatory misfire but rather a carefully crafted dodge for more time, even as CPV and its newly-attached pipeline company — Millennium — continues to manufacture crises of regional energy deprivation in order to goad The Federal Energy Regulatory Commission (FERC), state agencies and the public into acquiescence? In the following timeline of Millennium’s core projects followed by ‘shipper’ (customer) details concluding with an overview of basic Millennium engineering facts, the proposition denial by design emerges much more plausible than an ostensible denial by deficiency.
The Timeline
December 2008 the Millennium ‘mainline’, running 220 miles the length of the Southern Tier of New York, began pulling fracked gas out of the Marcellus Shale to distribute to points downstream and eastward. Two years later, CPV signed a Precedent Agreement with Millennium as a shipper of its services, long before it began construction. The language is important in the short letter to the CPV town sponsor, Town of Wawayanda:
…Millennium will provide natural gas transportation service on the Millennium Pipeline, as well as, the construction and permitting of the natural gas lateral connecting CPV Valley Energy Center to the Millennium Pipeline.
In effect, the agreement between CPV and Millennium does two different but related tasks — provide natural gas… on the [Mainline] and build a lateral now known as the Valley Lateral Connect project (VLC). The separation of tasks is critical to understanding both parts and whole of the system to provide fuel to CPV. The VLC lateral doesn’t provide natural gas, rather the mainline provides natural gas. The difference seems semantic, and it is; but its by design as it allows VLC to operate as a mere appendage, argued by the FERC , Millennium and CPV as either significant or insignificant depending which is more advantageous at any given time.
While this agreement between CPV and Millennium occurred years before the notorious VLC pipeline battle of 2016–17 in Orange County, it remained in effect as Millennium was handed its fiercely contested win, overturning the will of an enraged public and dominating an inefficacious NYSDEC. Late 2017, Millennium ramrodded construction across farmland, under rivers on its way to CPV. On paper VLC went into service July 9th, 2018 several days after Millennium badgered FERC to issue the needed in-service authorization based on the most recent manufactured energy crisis:
CPV Valley’s Valley Energy Center, which represents a nearly $1 billion investment in New York, urgently needs gas supply so that it can begin supplying the area with much-needed electric power. In response to a recent heat wave in the region, the Valley Energy Center was put on alert to operate on its back up fuel to help the New York Independent System Operator, Inc. maintain reliability. Due to the clear and immediate need for electricity, we request that the Director grant Millennium’s in-service request as soon as possible.
Given this alarm, surely CPV would be up and running immediately with the newly authorized, hydrostatic tested VLC primed to supply gas… but no… nothing happened. CPV sat idle. Millennium went on to clean up workspaces and paint fences surrounding various VLC facilities.
To the northwest, however, Millennium’s pace is anything but lackadaisical on its Eastern System Upgrade Project (ESU). Less ‘visible’ than VLC, the ESU is by extension less understood. Made public in December 2015, just a few months following the disclosure of the VLC proposal, the two projects are connected temporally, spatially and, as will be illustrated, by design.
In the map above, two ESU components are noteworthy — the compactness of new compression — 72,960 HP within 52 miles(+ markers), and the ‘Huguenot Loop’ (yellow), an eclectic mix of 24", 30" and 36" pipeline diameters. In early Fall 2017, the FERC queried Millennium in a data request to shed light on the shelving of a much less intrusive, less convoluted alternative known as the ‘Wagoner Alternative’:
Demonstrate the hydraulic deficiencies, as described in the May 16, 2017 filing, and support Millennium’s response by providing hydraulic models of its pipeline system used to reject the Wagoner alternative.
The FERC must have been concerned — as was the pubic at the time — that ESU appeared overbuilt for its stated purpose which was purposefully severed from VLC and CPV.
December 2017, Millennium posted its significantly revised implementation plan for the ESU, stretching into Spring 2019 for the completion of the Highland Compressor Station in the Town of Highland, NY. Importantly, however, all other facilities — including the critical ‘Huguenot Loop’ and Hancock Compressor Station would be completed by September 30th, 2018, ensuring the new compression capacity and pipeline configuration wherein the ‘old’ Millennium 24" ‘bottleneck’ at the Neversink River just north of Port Jervis, NY would be ‘unburdened’ by 30"/36" newly installed ‘looped’ pipeline.
Concurrent with the release of the revised ESU implementation plan, apparently CPV was at work preparing its air permit application to NYSDEC:
[NYSDEC] conducted a review of the Competitive Power Ventures Valley Energy Center’s (CPV) January 2018 application…
Given this early application submission date, two facts are evident:
- NYSDEC and CPV had 7 months to flag the missing Federal Title V paperwork and resolve the deficiency.
- CPV would be have been fully aware of the newly revised ESU implementation plan, able to anticipate with exactitude the in-service date of critical ESU components necessary for the operation of CPV.
The Shippers
The purpose of the VLC project is self-evident: the CPV power plant is the project’s sole shipper, consuming 40+ years of Millennium mainline Marcellus Shale fracked gas. Untangling ESU’s purpose and shippers is an altogether different matter. During the original installation of the Millennium mainline in 2008, the certificate was relatively straightforward — 525,400 Dth/d to the following publicly listed shippers:
Millennium states that it conducted an open season for its amended project from June 13 to June 30, 2005. Millennium asserts that it entered into precedent agreements with Consolidated Edison, KeySpan, Columbia, and Central Hudson. Specifically, Millennium states that it will transport (1) 150,000 Dth of gas per day on a firm basis for Consolidated Edison, increasing to 180,000 Dth per day after the first year of service; (2) 150,000 Dth of gas per day on a firm basis for KeySpan, increasing to 175,000 Dth per day after the first year of service and to 200,000 Dth per day after the second year of service; (3) 5,000 Dth of gas per day on a firm basis for Central Hudson, increasing to 10,000 Dth per day after the third year of service; and (4) 24,600 Dth per day on a firm basis for Columbia. The precedent agreements with Consolidated Edison, KeySpan, Central Hudson, and Columbia are for 10 years.
In the intervening years, the Hancock Compressor Station was added in Delaware County, as well as the Minisink Compressor Station in Orange County — an addition of 107,500 and 225,000 Dth/d, respectively. However, with the release of the ESU public certificate, there was no breakout of individual shipper allotments, only the disclosure of 9 total shippers, aggregated to 202,500 Dth/d:
Millennium executed Precedent Agreements with nine shippers for 202,500 Dth per day of capacity on the ESU Project (“Project Shippers”). The Project Shippers are all local distribution companies and municipalities delivering gas to their communities.
Further, the total certificate amount for the ESU project is 223,000 Dth/d, resulting in approximately 20,000 Dth/d floating on the market — odd given the constant drumbeat of energy deprivation across the northeast. Adding to this anomaly, the VLC itself is designed to ‘provide capacity for 130,000 Dth/d of firm natural gas [to CPV]’; but as previously discussed, while the VLC may be ‘providing capacity’ it is not ‘providing transportation’ per se— that is the job of the Millennium mainline. Nowhere, however, is the VLC 130,000 Dth/d disaggregated in a meaningful way from other allotments on the ESU. In effect, the VLC 130,000 Dth/d seems to appear out of thin air as CPV is distinctly segregated from ESU, at least on paper.
To underscore the vagueness of the ESU certificate coupled with both a floating 20K Dth/d and VLC’s 130,000 Dth/d that must materialize from somewhere, somehow, the FERC itself is uninterested is specific downstream uses as long as it is assured there are shipper agreements in place. As part of the FERC Commissioner LaFleur’s recent campaign to dissent ‘partially’ on pipeline projects that induce GHG emissions (news flash: fracked gas is always a GHG), the commissioner stated in specific regard to the ESU project:
However, I believe we have an affirmative duty to seek more information in the record regarding the identified end uses, before simply concluding that
we do not know where the gas [is] going…
The Pipelines
Beyond the temporal connections and tenuous capacity disclosures surrounding the ESU project, a synopsis of the engineering features of the ESU related to VLC and CPV is warranted.
In September 2017, The Delaware River Network attempted to Intervene out-of-time on the VLC project directly due to the recent disclosure of pertinent analysis conducted by Accufacts for the ESU project, with particular bearing on the VLC project:
It was not until March 26, 2017, when DRN received a report by Richard B. Kuprewicz of Accufacts Inc. titled “Observations Concerning the Millennium Pipeline Eastern System Upgrade Project Proposal, FERC Docket No. CP-16-486”, that DRN had direct knowledge of Millennium’s illegal segmentation of the Valley Lateral Project, the Eastern System Upgrade Project, and the CPV Valley Energy Center, as well as likely or already planned future expansions of the Millennium Pipeline.
Specifically at issue in the assertion of illegal segmentation of the VLC and ESU projects is the atypical upstream compression and loop section of the ESU project, resulting in the following highlights:
- The proposed MAOP of 1,350 psig for the new pipe looping (i.e., Huguenot Loop) cannot be supported nor justified by this Project.
- The 36-inch diameter pipe [Huguenot Loop] is larger than that needed for the Project.
- Delivery pressures to the Algonquin Pipeline [downstream of the ESU/VLC interconnect]are not justified.
- The Neversink 24-inch pipeline segment appears destined for a different service.
- The Project proposal signals that Millennium Pipeline is anticipating further pipeline expansions.
Of particular concern here is the relationship of the ESU project to the VLC project (#4 above). The report continues to underscore this point further:
Once the Neversink is looped with a 30-inch 1,200 psig MAOP pipeline, the smaller diameter weaker MAOP Neversink pipeline segment is of little value to the mainline Millennium Pipeline system except to serve as a delivery supply line to customers on that segment, essentially the proposed CPV power plant.
While year after year the current 24" Millennium mainline at the Neversink River has been the pipeline’s ‘bottleneck’, with the miraculous addition of VLC and its sole shipper CPV, this aggravation miraculously becomes a 40+ year opportunity to lock in an anchor shipper for the pipeline company.
Even while independent engineering analysis has given credence to questions surrounding the purpose of the ‘Huguenot Loop’ generally, as late as Fall 2017, the FERC continued to bury its head and refuse to acknowledge the obvious — that the VLC and the ESU are connected temporally, spatially and by design:
…there is no indication that the [ESU] and the [VLC] are connected actions. The November 9 Order explained that the [ESU] , which was proposed after Commission staff completed the [VLC] EA, would include construction of a pipeline loop along Millennium’s existing mainline pipeline. The [ESU] would also include an alternative interconnect to supply gas to the [VLC] in the event that Millennium’s 24-inch-diameter mainline pipeline is taken out of service. This interconnect is not a basis for finding that the [ESU] and the [VLC]are connected actions.
To clarify, proposed after = less than several months, i.e. Millennium had concurrent, detailed knowledge of both projects. Further related to the issue of the ‘alternative interconnect’, the purpose of the 24" mainline pipe is now inextricably connected in purpose and by design to VLC, and by extension CPV.
The obfuscation of the real design purposes of the ‘Huguenot Loop’ continues as a Millennium talking point. When VzPi (Visualizing Pipeline Impacts | @PipelineImpacts) posted an image of Millennium’s contractor Precision Pipeline removing ‘abandoned in place” 16" Columbia pipeline according to the ESU scope of work at the Neversink River, the Millennium spokesperson resorted to typifying the current 24" mainline pipeline’s future use simply as follows:
We plan to keep the pipe [mainline 24"]under the Neversink for reliability purposes and plan to maintain it as we always have.
Further downstream and eastward of the Neversink crossing, the temporal, spatial and design connections of the ‘Huguenot Loop’ to the VLC project are clearly evident. In the imagery to follow, the ‘Huguenot Loop’ runs westward to the horizon in the direction of the Neversink river where 30" and 36" pipe segments are staged. To the immediate north is the start point of the VLC project, recently connected to the Millennium mainline. Also featured eastward for context is the Westtown M&R station and a Millennium temporary storage yard.
Denial by Design
Through the proceeding summation of technical details and project timelines, there is more than a plausible case to be made that the recent NYSDEC permit denial is a denial by design not denial by deficiency. CPV and Millennium may simply have made the bet that a Trump EPA review is perfectly acceptable, maybe even welcomed; and the ‘opportunity for public input’ little more than yet another ‘community outreach event’ — easily managed, costing both companies little more than extra time- an actual asset while details surrounding the segmentation of the ESU and VLC projects remain quiet.
Against this bet, two grassroots groups — Protect Orange County and SCRAM (Sullivan County Residents Against Millennium) — are leading opposition to the CPV/VLC/ESU debacle, and have issued a joint press release, putting increasingly sensitive politicians and handlers on notice. Front and center is a call to begin a formal investigation by the acting NYAG Barbara Underwood:
There are still many unanswered questions about how these projects received their permits and we encourage AG Barbara Underwood to conduct a vigorous
investigation. Until that time, we will continue to raise awareness around these unwanted and unlawful projects, as well as shine a spotlight on the politicians and lobbyists who, despite widespread community opposition, facilitated their building in the first place.
A first line of inquiry should indeed be the improper and illegal segmentation of these projects.
