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U.S. blocks major pipeline after 18 leaks and a 2 million gallon spill of drilling mud

A video shows drilling mud discharged into a wetland area along the Tuscarawas River south of the town of Navarre. (Video: Ohio EPA)

The Federal Energy Regulatory Commission has curtailed work on a natural-gas pipeline in Ohio after the owner, Energy Transfer Partners, reported 18 leaks and spilled more than 2 million gallons of drilling materials.

The pipeline regulator blocked Energy Transfer Partners, which also built the controversial Dakota Access pipeline, from starting horizontal drilling in eight areas where drilling has not yet begun. In other areas, where the company has already begun horizontal drilling, the FERC said drilling could continue.

The FERC also ordered the company to double the number of environmental inspectors and to preserve documents the commission wants to examine as it investigates the spills.

The biggest spill, in a pristine wetland along the Tuscarawas River about 50 miles south of Akron, covered 6.5 acres, the commission said, “coating wetland soils and vegetation with bentonite clay and bore-hole cuttings.” A video provided by the Ohio Environmental Protection Agency showed drilling mud a foot or two deep.

Energy Transfer Partners has asserted that the spills of nontoxic drilling mud, used to cool and lubricate drilling equipment, were inadvertent and had been predicted in its permit application to build the Rover gas pipeline. The horizontal drilling is done to place pipelines well below ground to minimize the chances of contamination of rivers or wetlands.

However, the FERC said that its staff has “serious concerns” regarding the magnitude of the largest spill, “its environmental impacts, the lack of clarity regarding the underlying reasons for its occurrence, and the possibility of future problems.”

It said that the largest spill was “several orders of magnitude greater than other documented inadvertent returns for this project.”

The commission, which regulates all natural gas pipelines, said that “a stoppage of additional drilling is warranted to facilitate a review of Rover’s efforts to search for and locate any potential releases.”

The Ohio EPA has fined Energy Transfer Partners about $400,000 and  asked the FERC for support. Craig Butler, the Ohio EPA director, said the company’s response had been “dismissive,” “exceptionally disappointing” and unlike any other response he has seen from a company in his 27 years at the agency.

The Rover pipeline is $4.2 billion project that would link the shale-gas-rich regions of Appalachia to Michigan and Ontario.

It is just one of many pipelines whose fate lies in the hands of the FERC, a technocratic and relatively obscure agency. The five-member commission has lacked a quorum since early February, putting new permits on hold. That has placed an obstacle in the path of the White House.

The Trump administration late Monday nominated two new members for the commission, potentially clearing the way for controversial, multibillion-dollar pipeline and natural-gas export projects like Rover, which was one of the last permits issued in February.

The White House picked Neil Chatterjee, energy policy adviser to Senate Majority Leader Mitch McConnell (R-Ky.), and Robert F. Powelson, a member of the Pennsylvania Public Utility Commission since 2008.

President Trump has voiced support for new oil pipeline projects such as the Keystone XL and Dakota Access lines, and Gary Cohn, head of the White House National Economic Council, recently threw the administration’s support behind a liquefied natural gas export terminal in Oregon’s Jordan Cove that had been rejected by the FERC a few months ago.

The nominees, who must be confirmed by the Senate, would probably tilt the balance of the commission toward approving gas projects.

The Jordan Cove project was the only major LNG project the FERC has rejected. And the commission does not have jurisdiction over oil pipelines.

Nonetheless, leading Republicans and oil and gas industry groups have applauded the nominations.

Sen. James M. Inhofe (R-Okla.), a senior member of the Senate Environment Committee, said in a statement that he was “thrilled” and that the nominations would “ensure Republican leadership” of the commission and “bring a great, pro-energy perspective.”

Christopher Guith, a senior vice president at the U.S. Chamber of Commerce, called the nominations “phenomenal picks” and said, “From strained competitive markets to crucial energy infrastructure, FERC faces many challenges, and these nominees will help move America toward a more secure energy future.”

Height Securities said in a note to investors Tuesday that it would take about six weeks or more for the two nominees to be confirmed. “In the meantime, we believe FERC will continue avoiding controversial issues, even after quorum returns,” the firm said.

That could change once there is a new chairman. Height Securities said that the White House is expected to name Kevin McIntyre, co-head of the energy practice of the Cleveland-based law firm Jones Day, to serve as FERC chairman, further cementing the position of industry supporters.

Height said that the list of pipelines delayed by the lack of a FERC quorum includes the Nexus crossing Ohio, PennEast serving Pennsylvania and New Jersey, and Mountain Valley, serving West Virginia and Virginia. The stalled merger of Westar and Great Plains, two utilities, would need the FERC’s go-ahead once they finish ironing out final terms.

“For too long, FERC has merely served as a pit stop for the fossil fuel industry on its way to constructing dirty energy infrastructure,” Sierra Club global climate policy director John Coequyt said in a statement.  “This cannot continue.”

A native of Lexington, Ky., Chatterjee has played a role in the passage of major energy, highway and farm legislation. Before working for McConnell, he worked in government relations for the National Rural Electric Cooperative Association and as an aide to then-House Republican Conference Chairwoman Deborah Pryce of Ohio.

Powelson was first nominated to the Pennsylvania PUC by Gov. Edward G. Rendell (D) and appointed chairman by Gov. Tom Corbett (R) in 2011. Powelson serves as the president of National Association of Regulatory Utility Commissioners.