Posts Tagged ‘natural gas’

Natural Gas in Kentucky and West Virginia

Wednesday, September 18th, 2013

Associated Press Reporter Bruce Schreiner has an interesting article from West Virginia about an idea that’s also been floated in eastern Kentucky.

Schreiner’s report says the president of the West Virginia Senate wants to create an oil and natural gas trust fund to support core government functions in the future. Long after oil and gas reserves are depleted, Senator Jeff Kessler believes the trust fund could “buoy an Appalachian mountain state chronically vexed by poverty, joblessness, and cycles of boom and bust.”

Sound familiar?

It’s an idea that many Kentuckians say we should consider here – a re-examination of the coal severance tax, and how counties receiving those funds use the money.

We explored gas, natural, and natural gas liquids (NGLs) on Monday’s edition of Kentucky Tonight as we discussed the proposed Bluegrass Pipeline. That project would connect oil shale drilling areas of Pennsylvania, Ohio, and West Virginia to processing and storage facilities along the Gulf Coast. Along the way, the Bluegrass Pipeline would traverse 13 north-central Kentucky counties.

The proposal has generated significant opposition. Amy Boone of Louisville emailed our show to ask a question of Bill Lawson, director of corporate development for Williams, one of two companies partnering on the project. Amy writes:

“I wonder how many landowners would be hesitant to sell access easements to their own neighbors, in part because it could impact property value. The Bluegrass Pipeline website indicates that pipeline easements have had no measurable effect on property values. However, I know of landowner along the proposed route who was told by a land agent that he would be compensated for property devaluation. Also, a recent Texas Supreme Court case awarded remainder damages to a property owner for his land being devalued by a natural gas pipeline. How do you think about the impact of NGL pipelines on property values, and how do you figure this into landowner compensation? Also, given that your easements are permanent, do you build future land appreciation into your valuation methodology?”

One of our guests, Versailles attorney Brad Slutskin, raised some additional concerns. Andrew McNeil, executive director of the Kentucky Oil and Gas Association, responded and touted the economic benefits of the pipeline if it is routed through the Commonwealth:

For those interested in more information on the pipeline project, the Williams Company offers the website One of the groups raising concerns about the proposal is

Bluegrass Pipeline Project

Wednesday, September 11th, 2013

A proposed underground pipeline that would transport flammable natural gas liquids through Kentucky has generated many questions among citizens along the planned route.

Two companies partnering on the project say the new pipeline would connect oil shale drilling areas of Pennsylvania, Ohio, and West Virginia to processing and storage facilities along the Gulf Coast. The so-called Bluegrass Pipeline would run more than 150 miles through 13 north-central Kentucky counties before joining an existing pipeline near Hardinsburg.

WEKU-FM will explore the proposal tomorrow morning at 11 on Eastern Standard with host John Hingsbergen. Eastern Standard is WEKU’s weekly public affairs program discussing topics of concern to central and southeastern Kentucky. Much like KET’s Kentucky Tonight, listeners can call with questions or comments during the show. WEKU’s number is 800-621-8890. You can also email them at, or post your questions on Facebook and Twitter.

A number of private citizens, city and county governments, and landowners are opposed to the pipeline. They’re not satisfied with answers they’ve received from the Williams Company and Boardwalk Pipeline Partners about the risk of accidents, damage to property and the environment, and injury to humans and animals. The companies have pledged to closely review the potential route as well as any safety and environmental concerns landowners have about the project.

One of the key questions in the pipeline debate is the issue of eminent domain. Last week, Kentucky Energy and Environment Cabinet Secretary Len Peters told a panel of state lawmakers that developers have no authority to use eminent domain to acquire land for the pipeline route. Others disagree and the issue remains unresolved.

The pipeline project will also be the focus of the next Kentucky Tonight. Two of our guests will be environmental lawyer Tom Fitzgerald of the Kentucky Resources Council, who is opposed to the project, and Andrew McNeil of the Kentucky Oil and Gas Association, who supports the plan. The show will air Monday at 8 p.m. on KET. You can hear a replay of the program on our broadcast partner WEKU, Tuesday at 11 a.m.

Pro and Con of UPike Joining State System

Tuesday, February 21st, 2012

President Wayne Andrews of Morehead State University doesn’t want to divide the pie and give a slice to the University of Pikeville.

President Paul Patton of Pikeville says he wants to graduate more students from eastern Kentucky who will stay and work in eastern Kentucky.

Monday night’s Kentucky Tonight program heard these views as well as those from two other guests, Rep. Leslie Combs, who supports former Governor Patton, and Bell County Judge Executive Alvey Brock, who opposes a move to make the University of Pikeville a part of the state’s system of higher education. Judge Brock opposes the move based on Patton’s idea to use the twelve-county coal severance tax fund to aid the University of Pikeville’s move into the higher education system.

Governor Beshear has asked for a study from an out-of-state consultant on the issue. The study won’t be ready until the middle of March.

Many of you weighed in with your opinions. Here’s a sample of audience responses:

Steven A. Hicks
We must stop HB 260 now while it is in committee in the Kentucky General Assembly. I am a fifth-generation native eastern Kentuckian and the first generation in our extended family to achieve a college education. MSU graduates have created the middle class in eastern Kentucky.  I have no bias in my decision to oppose the formation of the University of Pikeville. It is simply a matter of economic reality. The proposed budget and agenda for UPike now in front of the education committee is grossly underfunded and can only survive by cannibalizing the limited educational resources of MSU.  

The idea that coal severance taxes will cover the additional costs of UPike is at best a dream. As we all know, eastern Kentucky’s economy has for almost 100 years been tied to the coal industry. Coal has seen numerous boom and bust cycles that have brought almost instant prosperity as well as created ghost towns with equal swiftness. I have spent over 30 years in the coal, electric power and energy industry. I deal daily with energy price analysis that impact coal. I look at forecasts for demand, supply, production, and consumption in both domestic markets as well as international markets. The sad news is that coal has just started its latest down cycle. Eastern Kentucky coal prices have dropped from about $80 per ton as traded on the NYMEX in June of 2011 to less than $60 per ton now. Plus, lay-offs and production cuts are common headlines in local newspapers. At least 1,000 miners will lose their jobs and over 10 million tons of production cuts will be made in 2012 for eastern Kentucky. The estimates for direct coal revenue loss for eastern Kentucky will easily exceed $1 billion. When coupled with the losses from the service and supply industries supporting coal, the loss can be multiplied to $6 to $8 billion in 2012—a staggering blow to the economy of eastern Kentucky. This trend is expected to continue for the next three years. NYMEX futures prices remain under $70 per ton through 2013 and under $75 per ton through 2014.

According to the EIA, in 2011 eastern Kentucky produced about 68 million tons of coal at a value of $5.1 billion. The Kentucky severance tax rate is 4.5 percent of the sales price. The effective rate is somewhat less, but based on initial data, the estimate is about $230 million in severance tax revenues from eastern Kentucky, the highest tax revenues in history. However, 2012 projections for severance taxes from eastern Kentucky are scheduled to drop by 25 to 28 percent. This is a loss of $58 to $60 million and, when combined with the loss from severance tax revenues generated by western Kentucky, the estimated loss will reach $70 to $75 million in 2012.

The primary drivers for the bust cycle in coal are: cheap natural gas due to overproduction, over-regulation by the Obama administration to stop coal mining and prevent its use as a fuel for generation of electricity, the loss of an energy intensive manufacturing base from the economy, and the government subsidy of alternative electric energy such as windmills, solar panels, and biofuels although they are 10 to 100 times more expensive than coal-based energy. Plus, the overproduction of natural gas in Ohio, Pennsylvania, and New York has another negative economic impact on the eastern Kentucky economy: the closure of practically all natural gas drilling activity.  

In summary, eastern Kentucky has provided the Commonwealth with over $1.8 billion in coal severance tax over the past ten years. The University of Kentucky sits on a natural resource base in eastern Kentucky valued at about $1 billion from the gifts designated by the Robinson Land Trust for the students of eastern Kentucky. Yet, the University, because of its environmental loyalties, refuses to develop the resource for its intended use. The socioeconomic divide between eastern Kentucky and the Bluegrass is enormous. Eastern Kentuckians cannot help but champion our programs, and our leadership attempts to return a part, if only in a small portion, of that which has been severed from our region. But, in reality, we are faced with Kentucky politics and its regional economic budgeting bias, existing educational cuts, and the projected decline in coal severance tax revenues. Therefore, the funding of UPike at the expense of our existing MSU facilities and programs simply cannot at this time be justified. Shame on the Commonwealth of Kentucky for pitting two education programs with common goals and the best interest of its students at heart against each other in this upside-down battle for shrinking education funds.   

If the University of Pikeville were to become a state-supported institution, would there be an incentive to draw students from southwest Virginia and West Virginia?

Joshua L. Ball
Paintsville, Ky.
What programs would UPike offer at extended campuses? Would it be education, social work, and nursing? If this is the case, isn’t it a duplication of effort already in place by MSU and EKU at their extended campuses? What are MSU and UPike going to do to bring more programs to eastern Kentucky and keep our educated adults at home working in their desired field of study and not going off to school to come back home and being underemployed?

Levi Castle
As an MSU alumnus and current KCTCS faculty I feel this point is important to discuss. Why is there such an emphasis on rushing the inclusion of UPIKE to the state system? History shows that analysis of data is key to making correct decisions. Why is the time spent considering the addition of UPike so dissimilar to that which was spent considering the addition of Louisville?

Ken Wilson
I think adding the University of Pikeville to the state system is a great idea. It will make it more affordable for the young men and women of the area to go to college and stay in the area, making the area more attractive to new industry. Thanks for your attention. Ken

Thanks to everyone who wrote or called. If you missed the program live or on the radio Tuesday, watch  Kentucky Tonight.

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