Strained relations

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Is Kinder Morgan a good neighbor? Locals say yes — and no

First of a two-part series
Part 2: Friends and foes

KINDER MORGAN FACILITY

Construction has been continuing at a rapid pace on Kinder Morgan facilities in the Cow Canyon area. The carbon-dioxide company is planning to spend $344 million on development to increase production of CO2 by 200 million cubic feet per day to meet the growing demand for the gas, which is used to force more oil out of wells. Photo by David Long.

During a break in the September meeting of the Montezuma County Planning and Zoning Commission, Phil Kennedy, a local representative of Kinder Morgan, approached board member Gala Pock, who had just provided the sole “no” vote on a permit application by the carbon-dioxide company. He held out his hand.

“Go to hell,” she told him.

Her off-the-cuff remark got her kicked off P&Z, but it was a sign of the sometimes strained relations between Kinder Morgan – the third-largest energy company in North America – and the residents of Montezuma and Dolores counties who occupy the land around and above the vast underground reserves of CO2 that KM siphons.

“They were putting in a pipeline,” Pock explained about the Sept. 25 P&Z meeting. “We had heard they were putting in electric lines and the citizens were upset, and now they’re doing a pipeline along the same route, but they’re hitting as many or more landowners, and those people are upset. I’m upset because this is impacting me now. There are three or four road cuts I will have to negotiate just to come and go from my house.

“We have been asking about this pipeline since they started, and they kept saying, ‘We’ll do that later.’

“I voted no to the pipeline. Everybody else said yes. We needed a break. I stood up. Phil Kennedy came up to me with his hand out and never said a word. I was in no mood to shake hands. I didn’t want to say anything positive because at that point I wasn’t feeling real positive. My old mouth spoke before the brain kicked in.

“He blew up. He turned and said loudly, ‘What a thing to say, and I’m a preacher! I’ll pray for your soul.’ I turned and got some more coffee. Then all the Kinder Morgan people were gone and the planning people were just standing there. Nobody said anything.”

Following an executive session on Sept. 29, the county commissioners voted to remove Pock from P&Z. Pock was not present. She had been on the planning board for three years and had a year to go, but she was philosophical about her dismissal.

“I knew I wasn’t going to get reappointed anyway,” she said. “I’m a big girl and I can take it. I’m just embarrassed I wasn’t able to control myself better.”

KINDER MORGAN WARNING SIGNS

Signs such as these near Kinder Morgan drilling sites have caused concerns among neighbors, but company spokespersons emphasize there is no danger to nearby residents.

She will continue to go to meetings, she said, because she remains concerned about all the development taking place in the area where she lives.

“There’s an awful lot going on out here,” she said. “They’re impacting an awful lot of people. Kinder Morgan is not this warm fuzzy company they want everybody to think they are.”

Biggest taxpayer

KM’s application for high-impact permit and special-use permits for the pipeline, which is to connect an existing compressor station and two other facilities, went to the county commissioners with P&Z’s positive recommendation, and the commissioners gave their approval on Oct. 20.

Permit applications from Kinder Morgan have been coming at the county fast and thick for the past year or more. Eleven separate applications were on the county commissioners’ agenda in September and October alone, with two more slated to be heard at their Nov. 3 meeting.

And there are plenty more in the works. Although the county planning department could not provide an exact count of the number of applications KM has submitted in 2014, it was dozens and dozens for individual well pads, separate stretches of pipeline, electric transmission lines, buildings such as compressor stations, and more.

Most of the applications have been for development in the Pleasant View/Cow Canyon areas northwest of Cortez.

The importance of Kinder Morgan to the area economy would be difficult to overstate. For decades, KM (the locally operating company, Kinder Morgan CO2, is a subsidiary of a larger company in the KM group) has been the largest taxpayer in both Montezuma and Dolores counties, contributing 40 to 50 percent of the counties’ property taxes.

In 2013 KM paid $20 million to the two counties’ taxing authorities, according to company officials. It has about 60 employees based in its Cortez office, with a direct payroll of $7.3 million.

In a press release last spring, Kinder Morgan announced that it would be spending approximately $344 million to develop in the Cow Canyon area.

Plans include ongoing 3-D seismic work to test for underground carbon dioxide, 16 new wells, activation of one production well and one produced-water [wastewater] disposal well, water-separation facilities, a central compressor station, and associated gathering and produced-water disposal pipelines, according to the release.

In addition, KM will spend about $327 million to expand its Cortez Pipeline from Cortez to Texas, adding a 64-mile loop in New Mexico and three new pump stations along the line to handle the increased supply from Colorado and a field in Arizona. One pump station will be along County Road BB, to feed production in the Cow Canyon and Hovenweep areas. KM owns a 50 percent interest in the pipeline.

World’s largest

Despite the press release, one of the biggest complaints many local landowners have about all the development is that the piecemeal nature of applications to the county makes it difficult to grasp the scope of the company’s overall plans.

To address such concerns, Val Brock, Kinder Morgan’s vice president for CO2 source and transportation issues, traveled from the company’s headquarters in Houston to give a presentation to the county commissioners on Oct. 27.

“We have increased our activity, as you all have seen over the last year or so,” he told the board and a packed room.

He explained that the need for CO2 is driven by the demand for oil, since CO2 is pumped into partially depleted oil wells, acting as a solvent that helps bring up more of the precious fossil fuel.

“We are supply-short,” Brock said. “There is greater demand for CO2 for enhanced recovery than the industry is able to supply.”

Montezuma County is home to the McElmo Dome, a formation of sedimentary rock that is “the largest accumulation of naturally occurring CO2 in the world,” Brock said. The CO2 in the 200,000-acre area, which stretches into Dolores County, is primarily owned by Kinder Morgan and ExxonMobil, according to KM’s web site, and contains more than 60 wells. The CO2 they produce is piped to the Permian Basin in west Texas.

CO2 production has gone on in the McElmo Dome for 30 years, and for the last 15, KM has been the operator, having purchased the previous company, Shell Western E&P.

KM also operates in three other fields – Doe Canyon in Dolores County, the Bravo Dome in northeastern New Mexico, and the St. Johns Dome in Arizona. The Doe Canyon unit, at 50,000 acres, is “smaller [than McElmo] but significant,” Brock said, and has been in production since 2008.

He said production in the McElmo Dome is at a plateau, at around 1.3 billion cubic feet per day, but KM hopes to increase that by 200 million cf/day from the Cow Canyon site. The company anticipates that 100 million cf/day will come online by July 2015, with the remaining 100 million cf/d expected by the end of 2015.

Profit before people?

PLEASANT VIEW YARD SIGN

One landowner in the Pleasant View area voiced unhappiness with Kinder Morgan by posting a sign in the front yard. Photo by Gail Binkly.

It’s this “additional development” that is causing headaches for some local citizens. While the majority of the McElmo Dome and Doe Canyon lies on federal land, much of that acreage has already been plumbed for its CO2, or is located in rugged canyons.

About a year ago, KM conducted seismic testing for CO2 in the Cow Canyon area and was encouraged by the results, so it is hastening to construct the facilities and infrastructure needed to bring the site to fruition.

But Cow Canyon is a largely agricultural region that – until recently – was characterized by peace and tranquility. The area is mostly in private hands – a case of “split estate” where the surface owner doesn’t own the minerals under the land. By law, the mineral-rights owner must have the ability to get at those resources, a situation that can lead to conflicts.

Jimbo Buickerood of the nonprofit, Durango-based San Juan Citizens Alliance, told the Free Press he and two other alliance members talked with KM representatives about a month ago.

“We expressed concerns, especially having to do with the reality of them moving off public to private lands,” he said. “They want to go across private lands with their infrastructure because the permitting process is faster and easier [than on federal lands].

“We said, ‘We understand you’re a profitmaking corporation, but is it going to be profit before people or profit along with people?’, because we need to know that they’re going to respect private-property rights along with health and safety while they’re making massive profits.

“What we’ve seen so far hasn’t been so great.” Buickerood said at times “there were definitely health issues that they weren’t ahead of. They had to wait until the complaints came in.”

Gas attacks?

One of those health concerns came to a head in June of this year, when a family in the vicinity of the Cow Canyon development fled their home and were put up in Cortez at KM’s expense because of odors associated with the venting of gases from a nearby exploratory CO2 well. Another family close to the well stayed put, but had an air-quality monitor installed by KM. (See “Gas-venting causes worries but no danger” in the July 2014 Free Press and “Too close for comfort?” in the August 2014 issue.)

The company said no one was endangered by the gas-venting and the odor was likely caused by naturally occurring mercaptans, organic sulfur-containing compounds associated with underground carbon dioxide. CO2 itself can be deadly at very high levels because it drives out the lighter air, but a KM spokesperson said in this instance the concentration was not nearly that high.

Buickerood said he went to the area shortly after the families complained. “I was out in the road downwind and I could smell that site,” he said.

During the discussion with the citizens alliance, Kinder Morgan “went to extensive lengths to explain all their new monitoring for private-lands drilling, how they’re going to contact the neighbors, and it all sounds great and very complete,” Buickerood said. “My comment is, will they follow through with all those articles? That’s the question at hand.”

At the Oct. 23 P&Z meeting, Pock – present as an interested citizen – said the gasventing concerns show that Kinder Morgan’s claims on its applications that odors will not be perceptible beyond property boundaries are untrue.

“There have to be CO2 releases in order to bring a well on-line and these releases can contain all kinds of gases,” she said a KM employee had told her.

A few years ago, she said, when KM was refurbishing an old well, enough natural gas was released that workers asked a nearby farmer to leave the area with his tractor because of the danger of an explosion.

Pock told P&Z about a flag that the company placed near a drilling site in the vicinity of County Road 8 that indicates whether conditions could produce toxic gases such as hydrogen sulfide. When the flag is green, conditions are good; an orange or red flag indicates problems.

In fact, she told the Free Press, the flag was red for more than a week this summer. “One time, they had a roadblock stopping traffic going west, but not east, and they put that red flag up. One of my neighbors was stopped there about 15 minutes and said you could smell something in the air.

“The red flag stayed up for 10 days. I finally called their drilling supervisor and he said the guys must have forgotten to take it down. The next day it was green, but the day after it was orange and it was for about a week.”

“So,” she told P&Z on Oct. 23, “the notations on their permit [that odors won’t cross boundary lines] are patently incorrect.”

Mitigation measures

As unnerving as such incidents can be, there seem to be no cases where neighbors were actually harmed by drilling and associated releases of gas.

Getting answers from Kinder Morgan involves a circuitous process. Calls from the Free Press to personnel at the Cortez office were returned by spokesperson Sara Loeffelholz in Houston, who requested that questions be emailed to her. She sent a reply the next day.

Asked about the red flags, she emailed: “There are certain non-objective geological formations above the McElmo Dome unit interval that contain small amounts of hydrogen sulfide. All of our well drilling programs are designed to isolate these intervals behind steel casing and cement prior to drilling into and completing the unit zone. During the drilling process, procedures are in place to ensure safety. The red flags are a precautionary, visual reminder for all personnel that enter the location to fully understand and comply with these procedures.”

Buickerood said the alliance representatives asked specifically about hydrogen sulfide and received assurances that “the likelihood is like zero to nothing of it being in their wells.”

He said he was told there might be some as the drill goes through some formations on the way down to the CO2, “but they’re going through and encasing those fairly quickly, and once they’re into the limestone down deep, there’s none whatsoever.

“When they get to their target formation and they’re venting to check, there shouldn’t be any H2S,” he said.

KM’s Kennedy told P&Z on Oct. 23 that some CO2 is released in the process of testing a well, but that Kinder Morgan realized it had “made some errors in the past” and had worked with state regulators to develop a mitigation plan for future testing. Under the plan, he said, CO2 is to be in a vaporized rather than a heavy state and the perimeter of the well will be monitored. Furthermore, all neighbors within a certain radius of exposure will be notified of testing and offered alternative sites where they can stay if they wish. If they don’t leave, KM will assign someone to do monitoring, he said.

And if monitoring shows that levels are too high, the venting will stop until it can be mitigated, Kennedy said.

Loss of ag land

However, concerns aren’t limited to health. All the construction has meant an enormous increase in traffic, with giant trucks rumbling over narrow gravel roads every couple of minutes in places and “backup beeps” audible from as far as a mile away.

Some of those disruptions to the bucolic atmosphere have been discussed at meetings of P&Z and of the county commission. On Oct. 23, for instance, citizens aired a number of objections concerning applications that were being reviewed for three CO2 wells along County Road BB.

Karl Looff, owner of property where one well is to be drilled, said he had never been notified of the P&Z meeting. He complained that although he and an adjoining landowner who owns part of the well site had not yet reached surface agreements with Kinder Morgan, “everything is proceeding as if this is a done deal.”

He said, as a geologist, he believes Kinder Morgan’s process for reclaiming sites as outlined in its agreements is “very valid,” but he worried that 20 or 30 years from now, “their agreement to restore [the site] has about as much substance as smoke.” He said the company could be sold or could declare bankruptcy, and sites could be left unreclaimed, meaning the landowner would ultimately bear responsibility for cleanup. Some depleted oil fields are full of abandoned wells and equipment, he said.

“Take the long-term view on what it’s going to do to the people out there,” Looff urged.

Ken Curtis, an engineer with the Dolores Water Conservancy District, presented a letter and spoke about the district’s concerns. “We’re still trying to catch up on some of these impacts,” he said.

One of the district’s issues, he said, is loss of irrigated acreage through KM’s purchase of one 580-acre agricultural parcel with Dolores Project water rights, as well as the smaller amounts of irrigable acres that will be whittled out of farms for wells, pump stations, and so on. Also, Curtis said, the district is concerned that KM pipelines have been planned and construction is going on that will cross DWCD water lines and canals, but KM had not yet contacted the district about that, he said.

“Kinder Morgan has not sought nor received any authorization to cross DP [Dolores Project] facilities for any of these applications,” Curtis wrote in the Oct. 23 letter, referring to the three wells plus a pipeline and a pump station also under review.

Curtis wrote that KM’s “current applications follow and precede many other requests, the full impacts of which remain unknown to DWCD, local land owners and the community at large.”

He said the district would like Kinder Morgan to “disclose the full plan of development for the Cow Canyon project in conjunction with the completion of an Independent Impact Analysis for release to the local community.”

Curtis told P&Z, “We’re just seeing impacts all over the system and we’re trying to get a handle on them.”

‘Getting hammered’

Pock complained to P&Z about “humongous trucks” being parked on county roads or sometimes driving people off the road, and about the noise they create.

“Bessie White’s getting hammered with jake brakes,” she said, referring to one longtime farmer. “Some of the trucks going east stopped using their jake brakes and I appreciate that, but the ones going south on Road 9 still are. I talked to Bessie yesterday and she said 40 or 50 pickups go west in the morning and east in the evening by her house, in addition to the 200 loads of gravel for the well pad, plus more for the road. Bessie is just getting hammered. It’s like a highway by her house.”

Jo Shane, another area resident, echoed concerns that the planning “has been piecemeal” for the giant project. “People were not collectively told but had to learn from their neighbors,” she said.

A group of the residents had a meeting recently, she said, and learned that they’d been offered differing sums of money to have well pads on their property. Some were pressured by being told they had five days to sign an agreement, Shane said.

“Kinder Morgan says they want to be a good neighbor, but their actions are not showing this,” she said.

Bob Clayton, a member of P&Z and a long-time Kinder Morgan employee who only recently stopped working for the company, spoke up to answer some of the concerns at the Oct. 23 meeting.

He said Kinder Morgan did hold a community meeting in Cahone in Dolores County, prior to launching the latest project, and “hundreds of invitations were sent out.” He said the Cahone Community Center was packed.

“I do find fault with Kinder Morgan for not continuing with public relations and having more meetings,” he said.

In response to Looff ’s concerns about restoration of sites, Clayton said KM carries reclamation bonds. However, Looff retorted that in his experience, after 20 years the bonds are gone and cleanup may fall back on the landowner. Clayton said he believes the laws are stricter in Colorado than in Texas.

Jamie Conway, a production manager for KM and a recent arrival in Cortez, said people’s concerns our valid. “It’s our obligation to make sure [citizens] are educated and understand what we’re doing in McElmo,” he said.

He said the noise from the jake brakes is “unacceptable.”

“Our intent here is not to make everyone as angry as we possibly can. . . I don’t enjoy sitting here [in the front of the meeting room] feeling like I have eyes at the back of my neck. We will make sure this is addressed and taken care of.”

Conway said there had been a big turnover in the company and “we’re attempting to rebuild the trust. “I’m sorry that our operations have made everyone feel the way they do in Cow Canyon.”

He promised Curtis that KM would work on better communications with the Dolores Water Conservancy District, and Curtis seemed encouraged.

Powering up

Concerns about the loss of ag land remain, however. The idea of a chunk of land being purchased by Kinder Morgan in the heart of a farming community has raised some eyebrows.

Asked about KM’s purchase of the 580- acre parcel, Loeffelholz emailed, “Pending regulatory approvals, and outcome of the discussions with TriState, Kinder Morgan is evaluating various sites on this property for the possible location of a power generation facility.”

So far, the CO2 giant has been unable to reach an agreement with the local electric cooperative, Empire Electric, and its supplier, Tri-State Generation and Transmission, for them to provide power to the Cow Canyon facilities at a rate that Kinder Morgan finds reasonable.

“Kinder Morgan CO2 expects its electrical power requirements in southwestern Colorado to quadruple over the next ten years, and we are currently involved in discussions with TriState regarding the need for a long-term power supply contract to affordably meet these needs,” Loeffelholz said in her email. “We expect to make a decision in 2015 whether to build a power facility to meet all or part of these electrical power requirements, or to reach an agreement with TriState and Empire.”

Whether KM builds the facility or not, it will need electric-transmission lines, and a proposal to build 10 miles of such lines has raised hackles.

At August’s P&Z meeting, planners had a far-ranging discussion that started with comments about the power-line proposal.

Area resident Sue Dusenberry voiced dismay about having the power lines in her view and begged the planners to make KM put the line underground, something the economy says is not economically feasible.

Pock said some landowners had given permission for power lines to cross their land on the mistaken impression that this would provide an opportunity for people who still don’t have power to hook up to the grid.

In fact, KM’s Phil Kennedy said at that meeting, the company is not licensed under the Public Utilities Commission to distribute power in that manner, so it would not have the option of letting landowners hook up.

Several other landowners also asked for the lines to be placed underground, but ultimately the proposal was sent on to the county commissioners, who approved it but placed a condition on it that prompted Kinder Morgan to sue the county.

But some of the P&Z board members defended Kinder Morgan and its relations with the area.

“Kinder Morgan is a great neighbor,” said Mike Gaddy. “They take real good care of us and we sure don’t want to take what they contribute out of the economy.”

Chair Dennis Atwater said he had four wells drilled on his property, but after construction, the wells were quiet.

“It does get better,” he said.

Clayton, the former KM employee, agreed. “There’s hundreds and hundreds of people being employed and that’s what this country needs and it’s happening right here in our own back yard.”

“It sure is!” piped up Pock with a wry smile.

In the second part of the series next month, the Free Press will examine relations between Kinder Morgan and Montezuma County, legal issues, and more concerns expressed by neighbors.

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