Pipe dreams

Anyone driving through the tiny community of Gerlach in the past few months would be hard-pressed not to notice, and marvel at, the mountains of steel pipes stacked by the railhead at the edge of town.

These green pipes are not for some grand art installation at Burning Man, but they will ultimately serve an incendiary purpose. They are destined to be part of the Ruby Pipeline, a 680-mile project that will bring natural gas from wellheads in the Rocky Mountains to energy-hungry consumers on the West Coast.

Ruby Pipeline, LLC, is a subsidiary of Houston-based energy giant El Paso Corporation, which is spending $3 billion on the project. With an inventory of 45,000 miles of pipelines, El Paso is the largest gas provider in North America. El Paso spokesman Richard Wheatley says the corporation is extremely proud of the project.

“It’s an important addition to America’s critical energy infrastructure,” Wheatley says, “and when you consider the fact that we will be delivering clean-burning and efficient natural gas to areas that are demanding more of that clean fuel, it’s an important thing for the country and our basic domestic energy security.”

When complete, the pipeline will carry one-and-a-half billion cubic feet of natural gas a day to West Coast markets, with 90-percent going to California. Its route is a nearly straight line from Opal, Wyo., to Washoe County, where it turns north to Malin, Ore., where it will tap into an existing pipeline that runs into California.

Its route through Washoe County passes just north of the Black Rock Desert and south of the Sheldon Wilderness area to the historic town site of Vya, where it heads to Oregon. The Washoe County portion of the pipeline is 56 miles long, and that’s where all the pipes in Gerlach are headed. The pipes are 42 inches in diameter and 80 feet long. Nearly 3,000 pipes will be needed to complete the Washoe section of the pipeline.

Washoe County planner Roger Pelham handled the county permits for the pipeline and knows the construction site well. He says it’s a sparsely populated area typical of Nevada’s high desert outback.

“It’s a sagebrush type of flora,” Pelham says. “There are some pronghorn antelope, coyotes and jackrabbits. Its relatively remote and generally undisturbed with the exception of isolated ranching areas.”

The whole route is also home to several endangered or threatened species, including sage grouse and the Lahontan cutthroat trout, and that has spawned numerous legal challenges from environmental groups, including the Arizona-based Center for Biological Diversity.

Construction on the pipeline began on July 31. One day before that, the Center filed a lawsuit in the U.S. Ninth Circuit Court of Appeals to stop the project. The suit challenges the Bureau of Land Management’s decision to issue rights of way on federal lands and challenges the U.S. Fish and Wildlife Service’s review of the project’s impacts on endangered species.

The Center also requested an immediate injunction to stop construction until the court ruled on the suit. However, the court denied the request without comment.

Noah Greenwald is the Center’s endangered species director. He says the pipeline will cut a 115-foot wide path of destruction through some of the most pristine wilderness in the West. He says the route crosses more than 1,000 streams, including more than 200 that serve as habitat for endangered fish.

“One of our primary concerns is impacts on streams and fish,” Greenwald says. “It’s a direct disturbance that will lead to a lot of pollution in the streams, particularly from sediment. In many cases, they have to blast, so they’re going to be blasting through streams with endangered fish in them.”

The Federal Energy Regulatory Commission is the lead agency involved in approving the Ruby Pipeline. In 2008, the Fish and Wildlife Service sent a letter to FERC concluding there would be serious impacts to fish and other resources. The Service initially proposed several mitigation measures, but most were not included in its final review of the project.

Greenwald says the Fish and Wildlife Service made a particularly glaring error when it failed to consider the potential for a pipeline rupture at stream crossings along the route. Instead, the Service concluded that a rupture in the Ruby Pipeline “would not be reasonably likely to occur,” so “the Service will not address pipeline ruptures.”

“If there’s one lesson we should have learned from the Gulf disaster, it’s that things can and do go wrong when regulatory agencies don’t do their jobs,” Greenwald says. “If the pipeline ruptures at a stream crossing, it could have devastating consequences for these endangered fish and other stream life.”

Pipelines constructed by El Paso have ruptured before, including one in Bushland, Tex., where three people were hurt, and another in Carlsbad, N.M., where 12 people were killed. Greenwald says neither rupture was discussed in Fish and Wildlife’s biological opinion.

More lawsuits filed

The Toiyabe chapter of the Sierra Club, together with Great Basin Resource Watch and Defenders of Wildlife, has filed another lawsuit in the Ninth circuit court against the BLM, the U.S. Army Corps of Engineers and the Fish and Wildlife Service, challenging the approval of the pipeline. It charges these agencies with failing to conduct a thorough environmental review of the project’s potential harm to water, public and tribal lands, and wildlife.

Toiyabe director David Hornbeck says FERC hastily prepared the pipeline’s environmental study, relying on incomplete and missing information in its review of the pipeline. He says the study failed to adequately consider alternate routes.

“There was only one preferred route that was really studied, and that was the route Ruby proposed,” Hornbeck says. “There were a few token route variations that were studied so that they could say they had considered alternatives, but frankly they were just as environmentally damaging as some of the others.”

According to Hornbeck, long after FERC released the pipeline’s final Environmental Impact Statement, Ruby Pipeline was still submitting important environmental and cultural documents that should have been included before even a draft study was issued.

Hornbeck says the Sierra Club is not opposed to the pipeline itself, just the route chosen. The Sierra Club has proposed an alternate route that, Hornbeck says, would follow existing energy corridors along Interstate 80 and add only 65 miles of new pipeline while minimizing destruction to the wilderness and the animals that live there.

El Paso spokesman Richard Wheatley won’t discuss that route but defends the chosen route as the best one possible. He says El Paso has gone to extraordinary lengths to address environmental concerns and that the Environmental Impact Statement is the most comprehensive he has ever seen.

Wheatley says the Ruby Pipeline is a very environmentally conscious project. Thanks to carbon offsets, he says, it’s the first carbon neutral pipeline in the world.

He says remediation of the land along the pipeline’s route will begin immediately after construction is finished. Once the pipeline is buried, the disturbed area will be reseeded and replanted with native vegetation.

Before heading to court, the Sierra Club had appealed the BLM’s record of decision in favor of the pipeline as invalid, saying it’s based on incorrect and incomplete information.

GBRW director John Hadder says in the response to the BLM appeal, El Paso’s attorney is arguing that the Sierra Club should have taken the matter to court rather than seek an administrative remedy. But in the Center for Biological Diversity suit before the Ninth, the same El Paso attorney is arguing that the issue should have been taken to the BLM rather than to court. Hadder says these are contradictory arguments.

“You can’t have it both ways,” Hadder says. “With this Sierra Club lawsuit, both arguments are covered.”

Hadder says he expects the Ninth to combine the numerous lawsuits over the pipeline into one hearing in order to expedite the process.

Controversial Settlements

El Paso headed off potential lawsuits by environmental groups—the Western Watershed Project in Idaho and the Oregon Natural Desert Foundation—by offering them a $22 million settlement.

Under the agreement, the money will go into two separate trusts administered by a representative of the given environmental group, an El Paso official and a third member drawn from elsewhere. Proceeds from the trusts would be used to restore sagebrush habitat by buying up cattle grazing permits on public land from willing sellers. In exchange, the groups would forego any legal challenges.

“We’re hopeful that this will be a new way for environmental groups and energy producers to compromise,” Wheatley says, adding that any significant legal challenge that delays construction would cost El Paso $19 million a month.

However, the settlements outraged ranchers all along the route who say they are the first step to barring their cattle from grazing on public land. The cattlemen say there is no such thing as a willing seller and that the money will ultimately be used against them.

An ad hoc coalition of a dozen county governments along the route has sided with the cattlemen. They are threatening to cancel their permits for the pipeline unless El Paso terminates the agreements with the environmental groups. But El Paso officials say it’s too late to back out of the agreements, which are legally binding.

Wheatley says El Paso was surprised by the uproar because they have always considered cattlemen to be natural allies. To counter the effects of the settlements, El Paso has offered $15 million to the Public Lands Council—a cattleman’s association under the American Beef Council—for a variety of uses intended to promote grazing.

At the annual meeting of the Public Lands Council last month, board members agreed to observe the agreement in principle until El Paso presents them with a formal proposal.

The offer hasn’t done much to appease the cattle industry. The Coalition of Local Governments—four counties in southern Wyoming—filed its own lawsuit in the Ninth, essentially using the same arguments as the environmental groups are using. They expect more counties to join them.

Native American concerns

The pipeline has also sparked controversy among Native American tribes all along the route, creating dissent between two tribal factions: those who produce energy and those who do not.

Colorado’s resource-rich Ute tribal nations and the Council of Energy Resource Tribes have nothing but praise for the project, but residents of at least four reservations say it will disturb precious cultural resources.

Two local tribes have filed lawsuits in the Ninth to block construction of the pipeline. The Fort Bidwell Tribe in California and the Summit Lake Tribe in Nevada say they have not been consulted about the pipeline’s route, which they say will destroy hundreds of cultural sites that are thousands of years old.

Aaron Townsend, vice-chairman of the Fort Bidwell Tribe, says the pipeline will go through Barrel Springs, which is being considered as a traditional cultural property.

“We have lived there for thousands of years,” Townsend says. “This area is part of our ancestral lands. We still go there for ceremonies, and we’re very concerned about the plants and animal life that compose it, as well.”

Townsend says the pipeline will disturb house rings, burial and prayer sites, obsidian quarries and petroglyphs. He also expects looting of cultural sites as word about archaeological resources along the pipeline corridor gets out.

Wheatley says it’s the federal government’s responsibility, not the company’s, to consult with the tribes. He says Ruby has mounted an unprecedented campaign to reach out to the tribes, even hiring a Native American to head the effort.

But Townsend scoffs at Ruby’s outreach efforts, saying they are all for show. He says his father was paid by Ruby for about three weeks’ work to go out and bless cultural sites along the route, when in fact he only went out for one day.

Although the route chosen for the pipeline will go through hundreds of tribal cultural sites, it won’t cross any tribal boundaries, so neither the tribes nor the Bureau of Indian Affairs were considered cooperating agencies in the run-up to the project’s approval. And tribal approval was not required.

The tribes say they want work on the project stopped and for a different route to be chosen. They have also filed appeals for administrative review with the Department of the Interior.

Wild Horses

According to the Cloud Foundation, a wild horse advocacy group based in Colorado Springs where Ruby Pipeline is headquartered, the controversial BLM roundups in the Calico Mountains earlier this year were at the behest of El Paso.

The foundation cites documents from Ruby Pipeline to FERC as proof of a link between the pipeline and the removal of the federally protected wild horses, which resulted in 100 wild horse deaths.

The documents contain a statement that Ruby will work with the BLM to minimize wild horse and burro grazing along the restored right-of-way for three years and suggest reducing wild horse populations prior to construction.

In July, a contract between El Paso and British Petroleum was uncovered, revealing that BP is a major investor in the Ruby Pipeline and stands to gain millions of dollars from its investment.

The foundation contends there is a revolving door between the BLM and BP citing current Department of the Interior deputy assistant secretary of lands and minerals management, Sylvia Baca as a case in point.

Baca was hired away from BP by the Interior Department in 2009. Before that she was an Assistant Secretary of the Interior from 1995 to 2001 with duties that included management of the BLM, and was the Acting Director of the BLM before that.

In 2001, Baca took a senior management position with BP until her departure in 2009. During that time, permits were issued that granted an environmental waiver for offshore drilling given to the Deepwater Horizon rig that later exploded.

“El Paso wants to perpetrate an environmental disaster in the Nevada wilderness comparable to what BP did in the Gulf,” GBRW’s Hadder says, adding that the BLM should be looking out for the public’s interest, not the interests of big oil.

According to the BLM, the roundups in the Calico Mountains were necessitated by the lack of food on the range for the wild horses and by the damage the animals were doing to the fragile ecosystem there. The Sierra Club supported the Calico roundups despite criticism from many of its members.

The Cloud Foundation is calling for an immediate moratorium on roundups in the West and for Congressional hearings into the BLM’s Wild Horse and Burro Program, but is not involved with any litigation surrounding the Ruby Pipeline.

El Paso deconstructed

Critics say approval of the Ruby Pipeline was fast-tracked under the Bush administration and that the environmental study was consequently rushed to completion in an astonishingly short time.

When plans for the project were being developed, there were seven different proposals to build natural gas pipelines in Oregon, including one from Coos Bay to the same pipeline in Malin to which the Ruby project will eventually hook up.

However, a natural gas glut in North America, coupled with the recession and approval hassles, have scuttled every project except for El Paso’s.

Wheatley explains that El Paso operates essentially like a trucking company. Although it conducts natural gas exploration, the corporation’s main job is to create the infrastructure that moves other companies’ gas from point A to point B while taking a fee for the service.

According to a Thomson Reuters analysis, El Paso had become over-leveraged in recent years and was facing an Enron-like collapse due to lack of capital when it began selling off parts of its pipeline network and using the proceeds to build new pipelines and cut debt.

Wall Street has reacted favorably, and El Paso is now considered a smart bet. Thomson Reuters projects a growth rate of nearly 20 percent over the next five years. That steady growth despite a sluggish economy and a surplus of cheap natural gas has impressed many investors.

Although El Paso shares are currently trading around $13.00, they are down nearly 80 percent from their all-time high of $54.07, hit in early 2008. Still, traders believe El Paso has proved it can make a profit even with natural gas prices hovering at just under $4 per 1,000 cubic feet. Prices averaged $6.23 during the past five years and hit an all-time high above $11 in 2008.

In 2003, El Paso reached a settlement with California over charges of natural gas price manipulation during the Enron-spawned energy crisis. Regulators claimed California was overcharged as much as $3.3 billion for natural gas. Without admitting guilt, El Paso agreed to pay the state $1.7 billion in cash and stock over the next 20 years.

Construction Begins

Despite all the legal maneuvering, work has begun at several locations on private land. El Paso is still waiting for the BLM to allow work on public land, largely because of incomplete documentation and the need to consult with the tribes. Wheatley says El Paso believes it will prevail over all legal challenges, which he says are without merit.

Construction is underway on a 600-worker camp at Vya, and hiring is in full swing. Sub-contractors are advertising for everything from heavy equipment operators who will lay the pipe to janitors who will keep the camp clean.

“The economic benefit of this project is tremendous,” Wheatley says, “The average welder will earn $75,000 during the eight months of construction. El Paso will spend up to $3 million to $4 million a day on construction and will pay about $70 million to local government in sales and use taxes.”

Critics say the project would be of more benefit to local communities if it were to be built in the energy corridor along Interstate 80. Instead of staying in a remote worker camp, employees and their families would be staying in communities such as Elko and Carlin.

Regardless, trucks are now starting to move the pipes out of Gerlach to the work site 85 miles north, but not up State Route 34 as expected. Rather, they are going through the tiny California town of Cedarville.

Wheatley says the original route proved to be much dustier than expected, and that would have cost $20,000 a day to control. He says all the pipe should be onsite in about a month. The entire project should be completed in March.

Meanwhile, the residents of Cedarville will experience as many as 2,800 truck trips, or about 100 a day, through downtown while the Vya leg is being built.