For Investors


Milford PA Mayor Bo Fean says "Dump Your Kinder Morgan Stock"
For Kinder Morgan and El Paso staff, now has over 27,000 hits in less than a month. You should seriously consider mothballing the Northeast Upgrade, packing up, and heading back to Houston as we notify your shareholders of their volatile investment.


Questions for Kinder Morgan?
KMI Investor Relations
(713) 369-9490

Kinder Morgan's Tennessee Gas Pipeline Northeast Upgrade (NEUP) is far behind schedule due to permitting delays, legal appeals, archaeological finds, and civil disobedience actions.  It is a project of Tennessee Gas Pipeline Co. which is a subsidiary of El Paso (EPB), which was acquired with much controversy in 2012 by Kinder Morgan (KMP), the third largest energy company in the United States.

Kinder Morgan representatives recently testified that it is highly unlikely that Kinder Morgan will meet the contracted November 1 in-service date for the project if delays continue. This could void their contract obligation to their gas shippers, costing $9.1 million dollars per month.

If your stock portfolio, retirement fund, college endowment, or church capital fund is invested in Kinder Morgan (KMP), their other listings (KMI, KMR), their subsidiary, El Paso (EPB), which owns Tennessee Gas Pipeline Co., or any Master Limited Partnerships (MLPs) that contain Kinder Morgan or El Paso assets, you should ask your broker or mutual fund manager to divest your shares immediately.  Consider Socially Responsible Investing alternatives.

The Tennessee Gas Pipeline Northeast Upgrade (NEUP) Project will cost $341 million and includes 30" pipeline loops, adding extra capacity to the aging Tennessee Pipeline system. The existing system transports methane gas and was constructed in the 1950s. When finished, the Tennessee Pipeline will be the the primary artery for transporting methane from the Marcellus Shale to proposed natural gas power plants and export terminals on the East Coast.

Shale gas is obtained using the controversial method of hydraulic fracturing, or "fracking". Methane's commodity price dropped in price from above $10 per thousand cubic feet in 2008 to hovering around $3 per thousand cubic feet in 2012 due to overproduction in recent years. As a result, northeast Pennsylvania counties with active Marcellus drilling operations along the upgraded route have seen a decline in overall wells drilled according to the Pennsylvania Department of Environmental Protection. In 2010 and 2011, 777  and 728 wells were drilled in Potter, Tioga, Bradford, and Susquehanna counties, respectively. In 2012, only 479 Marcellus wells were drilled, a 33 percent drop in production.

From El Paso (EPB)'s Form 12/31/12 SEC 10-K Filing under "Risk Factors":
Future business development of our pipelines is dependent on the supply of and demand for the commodities transported by our pipelines.

Our pipelines depend on production of natural gas in the areas served by our pipelines. Without reserve additions, production will decline over time as reserves are depleted and production costs may rise. Producers may shut down production at lower product prices or higher production costs, especially where the existing cost of production exceeds other extraction methodologies. Producers in areas served by us may not be successful in exploring for and developing additional reserves, and our gas plants and pipelines may not be able to maintain existing volumes of throughput. Commodity prices and tax incentives may not remain at a level that encourages producers to explore for and develop additional reserves, produce existing marginal reserves or renew transportation contracts as they expire.

Changes in the business environment, such as a decline in natural gas prices, an increase in production costs from higher feedstock prices, supply disruptions, or higher development costs, could result in a slowing of supply from natural gas producing areas. In addition, changes in the regulatory environment or governmental policies may have an impact on the supply of natural gas. Each of these factors impact our customers shipping through our pipelines, which in turn could impact the prospects of new transportation contracts or renewals of existing contracts.
(Click Map to Enlarge)

The NEUP Loops 317, 319, 321, 323, and 325 are currently under construction. They are located in Bradford and Pike County, Pennsylvania and Sussex, Passaic, and Bergen Counties in northern New Jersey. Construction of even numbered loops concluded in 2011 as part of the 300 Line Upgrade.

The environmental footprint, which did not receive an Environmental Impact Study, includes 450 acres to be cleared, 90 streams, and 136 wetlands. The project is designed to add capacity to the aged 24" Tennessee Pipeline that currently cuts a much smaller right of way through.

The project follows the old right of way with the exception of Loop 323, which includes a 7.2-mile detour apart from the existing right of way, crossing the Delaware River.

The two companies who have contracted to ship gas through the pipeline are Chesapeake Marketing (CHK), who have been embroiled in a corporate governance scandal, and Statoil, a Norwegian firm interested in liquefied natural gas exports.

The permits from the Federal Energy Regulatory Commission and Army Corps of Engineers for the NEUP project were delayed for over a year. In anticipation of the permit in spring 2012, El Paso (EPB) contracted Henkels and McCoy to build it, rented heavy equipment, stored it in their pipe yards, and were forced to return it costing themselves untold amounts of money in contract obligations, rentals, and insurance fees. (See "Deere herd", February 24, 2012 Pike County Courier ).

Click Map to Enlarge
The original route for NEUP Loop 323 through the existing right of way in the Delaware Water Gap National Recreation Area was denied by the National Park Service. In response, El Paso surveyed and was permitted a detoured right of way that is now 7.2 miles longer and millions of dollars more expensive. The detour's terrain includes near-vertical slopes, few approved access roads, and an additional horizontal directional drilling (HDD) operation to bore twice across the Delaware River and Mashipacong Island. (See: Pike: gas detour based on bad info)

The existing right of way would have only required a single HDD operation which is a very expensive operation. HDD carries the risk of water contamination and required clean up if bedrock does not contain the high pressure drilling muds used. So far, no bedrock core samples have been provided to the public for either the Delaware or Susquehanna River crossings to exhibit the safety of HDD construction. (See: Third spill at pipeline site sullies SusquehannaCounty creek (August 10, 2011) and Drilling blowout in Back Mountain (May8, 2012)

Additionally, the final Notice to Proceed was delayed from December 2012 through February 14, 2013 as FERC considered a Supplemental Cultural Resources report regarding archeology present in the right of way. (See: Archaeological concerns slow gas pipeline; route comes near 21 N.J. historic sites)

Since construction has begun, a major "unanticipated discovery" by onsite archaeologists has halted work on a portion Loop 325. Archaeological finds are kept confidential from the public to protect historic preservation. Artifacts must be removed and graves exhumed for construction to proceed. (See: )

As of April 1, archaeological surveying is still being performed on Mashipacong Island in the Delaware River where the pipeline right of way was recently adjusted. A vast documentation of Lenni Lenape nation habitations, burials, and artifacts has been reported by New Jersey state surveyors and there is a high likelihood that finds will yield construction delays. (See: )

2011 TGP Crossing the Lackawaxen River, Pike County
The Tennessee Pipeline upgrade projects from 2011 until present have accrued between 500 and 600 violations in Pennsylvania, many of which were fined, according to PA DEP. (See: DEP, Tennessee Gas continue talks about fines)

From the Delaware Riverkeeper Network:
In Pike County alone, numerous Notices of Violations were reported, including: 17 instances of dirt and sediment being discharged into water bodies, 7 violations for worksite conditions, and 21 instances of failure to properly institute Best Management Practices for erosion and sediment control.  This high frequency of violations demonstrates that there were systemic and continued failures in TGP’s compliance with regulatory controls, which suggests improper oversight, and or, inadequate enforcement.  In Wayne County, out of 16 inspections conducted by the County Conservation District during the 300 Line Extension Project, 15 violations were found.  This startling 93% failure rate provides further evidence of systemic compliance failures.

Furthermore, at the federal level, during the 300 Line Extension Project, in 28 out of 38 “Environmental Compliance Monitoring Program Weekly Summary Report[s]” that were provided on Federal Energy Regulatory Commission’s [FERC] website there was at least one recorded incident where construction activity did not come into “compliance with Project specifications, mitigation measures, and applicable FERC-approved Project plans.”  Additionally, there were also at least 10 separate instances where an inspector in their “Environmental Compliance Monitoring Program Weekly Summary Report” indicated that a noncompliance report would be filed at a later date, but where the inspector failed to file a noncompliance report with FERC (and no reason was provided for the failure to issue that report in the following week’s report).  These 10 separate instances indicate that either FERC has maintained incomplete records for the project, or that there were multiple failures to follow-up on potentially enforceable noncompliance matters by FERC sanctioned environmental inspectors. 
Continuous citizen monitoring of the Northeast Upgrade construction on behalf of the Delaware Riverkeeper Network has yielded almost daily reports from the Loop 323 section during the clearcutting phase. (See: 2013 Field Observations)

Past PA DEP violation notices cited in Pike County can be found here.

Every federal and state permit issued thus far has been appealed to relevant federal court and regulatory appeal boards. Without including an exhaustive chronicling of the proceedings here, all environmental appeals have been unsuccessful in favor the pipeline construction. However, cumulative costs as appeals move forward will be accrued. In addition, landowners impacted by eminent domain condemnation are pursuing just compensation for lost of property value, timber, and access. (See: Pipeline Takes Long Way Around)

Saul Ewing, an expensive oil and gas law firm with over 200 lawyers on staff, has been retained as legal counsel. (See: District court enjoins Pennsylvania Environmental Hearing Board permit appeals)

In addition, acts of civil disobedience have already cost Kinder Morgan upwards of $50,000 during the one month tree clearing phase in Pike County, PA alone. In addition $10,000 per week will be spent on site security to monitor further civil disobedience. If civil disobedience is successful in stalling the November 1 in-service date, upwards of $330,000 per day in contract obligations will be lost.

Saul Ewing, an expensive oil and gas law firm with over 200 lawyers on staff, has been retained as legal counsel. Saul Ewing prepared 586 pages of documents in preparation for an injunctive lawsuit against protesters filed by Kinder Morgan. The target of the suit was a preliminary injunction to limit speech in favor of civil disobedience and to add a penalty of Kinder Morgan's court fees against five defendants and up to one hundred "John Does" and "Jane Does".  (See: Court Breaks Up Blockade)

The Pike County judge issued a weaker special injunction, limited in scope, that does not establish a penalty for speech and only adds Kinder Morgan's court fees as a penalty for further civil disobedience in Pike County. The injunction only applies to individuals served with the court's decision and does not apply to Bradford, Sussex, Passaic, or Bergen counties. (See: Court Breaks Up Blockade)

Kinder Morgan, through Saul Ewing's representation, continues to pursue a permanent injunction against both speech in favor of and acts of civil disobedience. Defendants have retained representation and will be responding to the initial complaint the week of April 1. The total costs for Kinder Morgan are unknown and unlikely to be recouped.


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