According to Loudoun County staff members, the fracking boom has hit Loudoun in an unexpected way—by driving up the cost to the county government of a gas pipeline project by an order of magnitude.
So said Joe Kroboth, director of the Loudoun Department of Transportation and Capital Infrastructure, in a meeting of the county Finance/Government Operations and Economic Development Committee last week. Two Columbia Pipeline Group gas pipelines must be relocated before the county can move ahead with its $6.3 million plan to extend Mooreview Parkway to connect Croson Lane and Old Ryan Road in Ashburn. The county took over a private developer project in October 2013, using the developer’s funds as reimbursement in a proffer agreement and bringing the parkway into the public sphere. The link would provide access to Moorefield Station Elementary School, Moorefield Community Park, and the future Ashburn Metro station.
In August 2014, CPG notified the county that it had cancelled plans to upgrade the two gas lines crossing the area. CPG said it had found the gas lines, which were installed in the 1950s, in like-new condition.
“Pipeline age is a smaller factor than how it is maintained during its life,” wrote CPG spokesman Scott Castleman in an emailed statement. The pipeline, he said, is regularly inspected with aerial and foot-patrols, in-line inspections, 24/7 remote monitoring, and has never had an incident.
Without CPG’s upgrade, the county will have to bear the cost of relocating the gas lines, paid up front.
“In our first initial discussion, when they first told us in August of 2014 that we would now have to pay for it, they had quoted a price to us for Mooreview Parkway, both crossings, $180,000,” Kroboth said.
Since then, he reported, CPG’s price has increased to $1.44 million. With contingency funding, the relocation will cost $1.8 million.
Why the increase? County staff say they were told the fracking boom has driven up demand for qualified contractors. They said these contractors only take on smaller projects like this pipeline relocation when they fit in between much larger jobs.
But CPG says that price quote never happened. Kroboth said it was a verbal quote. Castleman said that Tony Redd, the Columbia Gas representative who supposedly gave that quote, has no memory of doing that, and Castleman said the $180,000 quote was “so low it didn’t make sense.”
“It really wouldn’t even make sense to share numbers, because they wouldn’t have anything to go off at that point,” Castleman said. “Before we can give a quote or an estimate on a project like this, there has to be an assessment done, and the assessment was not kicked off until February or March of 2015.”
He added that he’s not aware of any significant price increase for this kind of work in the last few years.
And as far as the price goes, what CPG says, goes.
“We are at their mercy,” Kroboth told the finance committee. “They will not allow any other contractor to perform the work. They control the contractor. They certify the contractor, and they control the prices.”
To cover the cost, the county staff recommended supervisors to use revenue from Loudoun’s 2 percent gasoline sales tax.
Supervisors in the finance committee balked at the supposed price jump.
“Figures lie, and liars figure,” said Supervisor Ralph M. Buona (R-Ashburn). “I can make my costs be whatever I want my costs to be.” Buona said even if CPG gave a detailed cost explanation, the county would have no way to know if it was accurate.
“We’re being extorted,” Buona said. “It’s that simple.”
“It almost feels like we’re kind of being blackmailed, to some degree, to get this done, and I don’t like the feel of this,” agreed Chairwoman Phyllis J. Randall (D-At Large).
Finance committee Chairman Supervisor Matthew F. Letourneau (R-Dulles) said CPG should contribute at least part of the cost, since CPG will benefit from the work.
“We know at some point in time they’re going to have to upgrade this because of the development that’s occurring,” Letourneau said.
The committee tabled the issue while County Attorney Leo Rogers and his staff negotiate payment terms and explore the county’s options.
“We’re looking into all options of regulatory authority when it comes to CPG, but our first effort is to work with them,” Rogers said, declining to elaborate.
But the county is under the gun. CPG has promised to schedule the work for April if an agreement is reached by Feb. 1. If the work is delayed, however, the Moorefield Parkway project will be put on hold. The parkway project has already encountered delays and cost overruns.
“My greatest concern is that if we delay the pipeline work, which must be done in advance of the roadway construction, we potentially could miss this construction season again and delay the project a year,” Kroboth said.
And the gas tax won’t always be around to absorb surprise bills like this—starting in FY2019, all gas tax funding is slated to go to Metro operations.
“In the future, if we encounter a situation like this, I don’t know what we’re going to do,” Buona said.
Meanwhile, the Board of Supervisors has put off conveying an easement to Columbia Gas of Virginia, Inc. at Broad Run Stream Valley Park nearby. Although Columbia Gas is a separate entity to CPG, Letourneau said the county is “still exploring that relationship.”
According to press releases from Columbia Gas’s parent company, Indiana-based NiSource, Inc., CPG was spun off from NiSource in July 2015. NiSource stockholders received shares in CPG, and many top NiSource officers joined CPG. According to CPG’s website, all of its senior management came to CPG from NiSource or worked at CPG before the companies separated, and six of the seven members of CPG’s board of directors were previously on NiSource’s board. This includes CPG CEO Robert C. Skaggs, Jr., who serves as CPG Chairman of the Board after serving as CEO and president at NiSource.
Letourneau said Columbia Gas has had problems with the county lately, too. He said his office has been working with the Loudoun Valley Estates Homeowners’ Association since June to resolve problems with another easement. After work was complete on that easement, Letourneau said, the area was not restored to the HOA’s satisfaction, and the damage is now causing trouble for the county’s storm drainage.
“When an entity, a utility, is granted an easement and doesn’t adequately make it right, word gets out, and we have good reason to be concerned about moving forward with another easement,” Letourneau said. He moved to defer the easement question to March to give the county attorney “a chance to have more in-depth discussions, not just on this issue, but on a number of easement issues that exist with Columbia Gas.”