Pipeline Filings of August 2014 Coincidence or Connection?

Looking back, 2014 may go down as the summer that spawned 2,000 miles of pipelines.

Of 10 new natural gas pipelines being constructed on the East Coast, at least half of them filed for incorporation in Delaware within a three-month period during 2014, according to records in the searchable database at the state’s Division of Corporations.

Rover Pipeline LLC incorporated on June 26. The other four incorporated in August: PennEast Pipeline Company LLC on Monday, Aug. 11.; Mountain Valley Pipeline LLC on Friday, Aug. 22; the Nexus pipeline on Monday, Aug., 25, using the name Nexus Gas Transmission LLC; and the Atlantic Coast Pipeline on Wednesday, Aug. 27. The last three filed within a week of one another.

Is the timing of these pipeline filings simply a coincidence, or is there some connection?

The 713-mile Rover Pipeline is being developed by Energy Transfer Partners, the company behind the Dakota Access pipeline. The 120-mile PennEast is being developed by five partners, including Southern Company Gas and Spectra Energy Partners, an Enbridge company. The 303-mile Mountain Valley Pipeline is being developed by Pittsburgh-based EQT Corp. The 255-mile Nexus Pipeline is being developed by Enbridge. The 600-mile Atlantic Coast Pipeline is being developed by Dominion Resources Inc., Duke Energy Corp., Piedmont Natural Gas Co. Inc. and Southern Company Gas.

The Atlantic Coast Pipeline and the Mountain Valley Pipeline are considered to be competing pipelines because they run along the same general route to shuttle gas from the Marcellus and Utica formations to the southeast, according to the Marcellus Drilling News. But in an article it published on Aug. 27, the headline declares that “Dominion is Buying a Piece of Competitive Mountain Valley Pipeline.”   

“Here’s some dots we’ve not seen anyone else connect,” says the lead of the article, which explains that Dominion is buying a 30 percent stake in the Mountain Valley Pipeline. Dominion is in the process of buying South Carolina-based SCANA Corp., and PSCN Energy is a subsidiary of SCANA. PSCN is the one buying the 30 percent interest in, not the main 303-mile pipeline, but a 70-mile spur that will extend the line from Virginia to North Carolina.

The fact that all four pipelines incorporated in Delaware is no coincidence. The state is known as the Cayman Islands of the United States because of its domestic tax loopholes, according to the article, “How Delaware Thrives as a Corporate Tax Haven” published June 30, 2012, in The New York Times.

Global energy and mining companies flock to Delaware to set up their subsidiaries, and more than 400 corporate subsidiaries linked to Marcellus Shale gas exploration had registered in Delaware between 2008 and 2012. The Pennsylvania Budget and Policy Center estimated in 2004 that the Delaware loophole had cost the state $400 million in lost revenue – long before the energy boom, according to The New York Times article.

It is also no coincidence that both the Atlantic Coast Pipeline and the Mountain Valley Pipeline used the Corporation Trust Company as their registered agent. The company is the largest registered agent in Delaware, and more than two-thirds of the companies in the Marcellus Shale Coalition are registered to its address: 1209 North Orange Street, according to The New York Times. Registered agents serve as a middle man to pass legal papers on to the companies since they don’t actually have an office in the state.

Both the PennEast and Rover pipelines are registered at the address of another agent: Corporation Service Company, 251 Little Falls Drive, Wilmington.

In addition, a wildcard search of the Delaware database using the term “pipeline” turned up dozens and dozens of results, including four during the summer of 2014. They are Pipeline Oil & Gas Partnerships Series I LP, Pipeline Oil & Gas Partnerships Series II LP, Pipeline Oil & Gas Partnerships Series III LP and Pipeline Oil & Gas Partnerships Series IV LP.  All four were incorporated on June 5, 2014, using the address 251 Little Falls Drive, Wilmington.

The Mountain Valley Pipeline’s open season, when companies can sign up to use the pipeline, began June 12, 2014, according to footnote 71 in Oil Change International’s report
“Art of the Self-Deal: How Regulatory Failure Lets Gas Pipeline Companies Fabricate Need and Fleece Ratepayers.”