Louisiana Mid-Continent Oil and Gas Association

Proposed Valero pipeline would stretch from Norco into Mississippi

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Plans to construct a $220 million pipeline that will transport gasoline and diesel from the Valero St. Charles Refinery in Norco to a pipeline hub 139 miles away in Mississippi are on track to begin this summer, company officials said last week. Kinder Morgan Energy Partners, a Houston pipeline transportation and energy storage company that has about 550 employees in Louisiana, announced last September that it would build and operate the pipeline in a joint venture with Valero Energy Corp.

The proposed pipeline, which is still pending approval from the state Department of Natural Resources, is slated to travel northeast from Norco, crossing Lake Pontchartrain and continuing northward into Walthall County, Miss.

The companies are seeking to build a 16-inch pipeline that will transport the fuel to a pipeline transportation hub in Collins, Miss., which Kinder Morgan operates and owns a majority stake in. From there, refined petroleum products will be transported by pipeline systems that serve major markets in the southern United States.

The pipeline, expected to be in service by 2013, will have an initial capacity of 110,000 barrels per day, with the ability to expand to more than 200,000 barrels per day. The anticipated impact in the Louisiana coastal zone, a 5.3 million-acre area that includes 40 percent of the nation's coastal wetlands, involves the excavation of about 24 acres of wetlands and uplands and 38 acres of water bottoms.

Construction costs for the pipeline are expected to reach $140 million in Louisiana, which could boost local sales tax revenue by about $3.3 million, according to estimates from Kinder Morgan. About $80 million in additional construction costs are slated for Mississippi. Overall, the project is expected to generate 1,200 temporary jobs at its peak.

"When it's all said and done, there's quite a lot of economic activity going on over there," said Corey Faucheux, director of the Department of Economic Development and Tourism for St. Charles Parish, where the Valero facility is located.

Property owners along the proposed route will be paid for the construction and operations that take place on their land, and Kinder Morgan plans to notify affected property owners before conducting site surveys.

If an agreement between both sides cannot be reached, the company could seek an easement of the land using eminent domain. Some industry observers, like Eric Smith, associate director of the Tulane Energy Institute, don't expect many property owners to balk.

"We're pretty much crisscrossed with pipelines everywhere you want to look, and we've never really had any serious problems with them," Smith said.

Since December, Kinder Morgan has operated a headquarters for its Parkway Pipeline project in Mandeville, staffed with about 25 people, said Allen Fore, director of public affairs for Kinder Morgan.

Fore said officials are working on acquiring land for the pipeline, with land agents reaching out to property owners about locating the pipeline on their property.

Details of the project were listed in a public notice printed Feb. 21 with the Department of Natural Resources, opening a 25-day window for public comment in anticipation of the permit being issued in the coming months.

For his part, Fore is not anticipating any setbacks on the state level.

"Louisiana is a state where Kinder Morgan has done a lot of business over the years, major pipelines in the last few years, and significant operations currently in the state," Fore said. "We're familiar with the state and the regulating agencies. It's a very positive relationship with those folks. We're not introducing ourselves. We've been here."

Mandeville Mayor Donald Villere has met with Kinder Morgan executives to discuss the proposal, and he said he hopes the company has a continued presence in the city once construction has wrapped up. For residents, Villere said he wants to make sure that the project "doesn't infringe upon the quality of life, as far as in Mandeville," and added that he hopes it will steer some mitigation money toward rebuilding the coastline.

"I think that would be a project that if we could get mitigation money directed toward that area, it would benefit the entire part of St. Tammany Parish," Villere said.

Despite increasing attention toward companies announcing plans to begin handling natural gas exports, Bill Day, a Valero spokesman, said the pipeline project bucks that trend.

"This sort of illustrates that the vast majority of what is made at refineries here in the United States stays for domestic use, and this is one more way that we can do that," Day said.

At this point, Villere said, he hasn't heard much feedback from local residents but expects that the project will draw more of a buzz once construction looms.

"Some people are going to have a greater concern than others in reference to the environment, and I think certainly we need to do everything we can to protect our environment," he said.

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