STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
ENERGY TRANSFER CRUDE OIL COMPANY, LLC ) ) Docket No. 14-0755 ) APPLICATION PURSUANT TO SECTIONS 15-401 ) OF THE COMMON CARRIER ) BY PIPELINE LAW AND SECTION 8-503 and 8-509 ) OF THE PUBLIC UTILITIES ACT FOR A ) CERTIFICATE IN GOOD STANDING AND ) RELATED AUTHORITY TO CONSTRUCT AND ) OPERATE A PETROLEUM PIPELINE AS A ) COMMON CARRIER PIPELINE AND WHEN ) NECESSARY TO TAKE PRIVATE PROPERTY AS ) PROVIDED BY THE LAW OF EMINENT DOMAIN )
DIRECT TESTIMONY OF
ADAM BROAD
ON BEHALF OF
ENERGY TRANSFER CRUDE OIL COMPANY, LLC
ETCO EXHIBIT 2.0
JANUARY 21, 2015
TABLE OF CONTENTS
I. WITNESS INTRODUCTION 1
II. PURPOSE AND COVERAGE OF TESTIMONY 2
III. DESCRIPTION OF THE ETCO PROJECT 3
IV. DEVELOPMENT OF THE PROJECT ROUTE 8
V. CONSTRUCTION OF THE PROJECT 12
VI. ECONOMIC DEVELOPMENT BENEFITS OF THE PROJECT 22
ETCO Exhibit 2.0 Page 1 of 24
1 I. WITNESS INTRODUCTION
2 Q. Please state your name, present position and business address.
3 A. My name is Adam Broad. I am the Senior Project Manager for Energy Transfer Partners,
4 L.P. (“Energy Transfer”). Energy Transfer is one of the ultimate parent companies of
5 Energy Transfer Crude Oil, LLC (“ETCO”), owning 75 percent of the equity interest in
6 ETCO. My business address is 1300 Main Street, Houston, TX 77002.
7 Q. What are your duties and responsibilities as Senior Project Manager for Energy
8 Transfer?
9 A. I am responsible for the development and construction of the proposed ETCO Pipeline
10 Project (the “Project”) in the State of Illinois. I am also responsible for the development
11 and construction of the Dakota Access Pipeline Project in the State of Illinois.
12 Q. Please describe your educational and professional background.
13 A. I graduated from Texas A&M University in 1998 with a Bachelors of Science in
14 Mechanical Engineering. I have worked in the oil and gas industry since 1995, with an
15 emphasis on the offshore / subsea side of the business until 2006, holding a variety of
16 positions including project manager, planning / procurement supervisor, project engineer,
17 and engineering cost analyst. In 2006, I transitioned to the onshore side of the business
18 where I have been involved with the project management, engineering, and design of a
19 variety of pipelines, meter stations, and compressor stations throughout the United States.
20 I have been employed by Energy Transfer since October, 2012. Prior to joining Energy
21 Transfer, I was employed by M&H Energy Services from 2006 to 2012 with primary
22 focus as a Project Manager and Project Engineer. Prior to M&H Energy Services, I
ETCO Exhibit 2.0 Page 2 of 24
23 worked for FMC Technologies from 1995 to 2006 holding various positions with primary
24 focus as a Project Manager and Project Engineer.
25 II. PURPOSE AND COVERAGE OF TESTIMONY
26 Q. What is the purpose of your direct testimony?
27 A. I am testifying in support of ETCO’s request to be issued a Certificate in Good Standing
28 pursuant to §15-401(a) of the Common Carrier by Pipeline Law (220 ILCS 5/15-401(a))
29 and, pursuant to Section 15-401(d) of the Common Carrier by Pipeline Law and,
30 respectively, to §8-503 (220 ILCS 5/8-503) and §8-509 (220 ILCS 5/8-509) of the Public
31 Utilities Act, the entry of an order (i) authorizing ETCO to construct, install, operate, and
32 maintain approximately 31 miles of new 30-inch outside diameter crude oil pipeline
33 originating from a point at the intersection of the proposed Dakota Access Pipeline near
34 Patoka, Illinois, in Marion County, and extending southeasterly to a point approximately
35 4.0 miles north of the Trunkline Gas Company, LLC’s (“Trunkline”) existing
36 Johnsonville Compressor Station located in Wayne County, Illinois; (ii) to replace certain
37 sections of Trunkline’s existing natural gas pipeline that will be converted to crude oil
38 transportation service (1) at the Lake of Egypt water crossing, (2) south of the Trunkline
39 Joppa, Illinois, Compressor Station, and (3) at the Ohio River crossing; and (iii) to
40 acquire easements and other land rights for the construction of the new 30-inch pipeline
41 by the use of eminent domain if necessary.
42 My testimony will cover (i) a description of the ETCO pipeline project (the
43 “Project”) and the proposed route; (ii) the plan for development of the proposed route of
44 the Project; (iii) the construction of the Project; and (iv) the economic development
45 benefits of the construction of the Project.
ETCO Exhibit 2.0 Page 3 of 24
46 Q. In addition to your prepared testimony, which is identified as ETCO Exhibit 2.0,
47 are you sponsoring any other exhibits?
48 A. Yes, I am also sponsoring exhibits identified as ETCO Exhibits 2.1 through 2.6. These
49 exhibits were prepared by me or under my supervision and direction, or I have direct and
50 firsthand knowledge of their contents.
51 III. DESCRIPTION OF THE ETCO PIPELINE PROJECT
52 Q. What is the purpose of the ETCO Pipeline Project?
53 A. The purpose of the Project is to deliver reliable supplies of crude oil from the
54 Bakken/Three Forks production area of North Dakota to refinery markets in the Gulf
55 Coast region of the United States. The ETCO Pipeline will establish a direct link
56 between the Patoka Hub, which is a major crude oil logistics hub near Patoka,
57 Illinois, and refineries in the Gulf Coast region. A direct link to the Patoka Hub from
58 the Bakken/Three Forks production area of North Dakota will be provided by
59 transportation on the Dakota Access Pipeline, a proposed crude oil pipeline project
60 originating in northwestern North Dakota and terminating at a connection with the ETCO
61 Pipeline near Patoka, Illinois. The ETCO Pipeline together with the Dakota Access
62 Pipeline will provide these major U.S. refinery markets in and near the Gulf Coast with
63 direct access to the increasing supply of crude petroleum from the Bakken/Three Forks
64 production area.
65 Mr. Damon Rahbar-Daniels’ direct testimony describes the recent development of
66 the Bakken/Three Forks region of North Dakota as a major domestic crude oil production
67 area, the need for the development of new pipeline infrastructure to efficiently and
68 economically move crude oil from the Bakken region to refinery markets in the Gulf
ETCO Exhibit 2.0 Page 4 of 24
69 Coast region and other areas of the country, and the public need and commercial drivers
70 for the Dakota Access and ETCO pipeline projects.
71 Q. Please describe the proposed route of the ETCO Pipeline.
72 A. The starting point of the pipeline is at the existing Patoka tank farm hub near Patoka,
73 Illinois, in Marion County, Illinois. The planned ending point of the pipeline is at the
74 terminal and refinery facilities near Nederland, Texas in Jefferson County, Texas.
75 However, there is a potential for additional market laterals to be constructed
76 depending on market demand. ETCO Exhibit 2.1 is a map depicting the entire route
77 of the ETCO Pipeline from Patoka, Illinois, to Nederland, Texas.
78 The Project consists of a new 30-inch outside diameter mainline pipeline that
79 will originate near the Patoka Hub in Patoka, Illinois, in Marion County, and run
80 generally adjacent to an existing pipeline (as I will describe in greater detail later in
81 this testimony) in a right-of-way corridor that extends southeastward for
82 approximately 31 miles, passing through a portion of Clay County, to a point
83 approximately 4 miles north of the existing Trunkline Johnsonville Compressor
84 Station in Wayne County, Illinois. I will refer to this initial 31-mile new pipeline as
85 the “new build” section of the ETCO Project. From that point, this new 30-inch
86 outside diameter mainline pipeline will be connected to an existing 30-inch and 24-
87 inch outside diameter mainline pipeline, currently owned by Trunkline and in
88 natural gas transportation service. ETCO will acquire the Trunkline natural gas
89 pipeline and place it into crude oil transport service as part of the Project.
90 Q. What counties does the existing pipeline traverse in Illinois?
ETCO Exhibit 2.0 Page 5 of 24
91 A. The existing pipeline traverses Wayne, Hamilton, Franklin, Williamson, Johnson
92 and Massac Counties in Illinois, before crossing the Ohio River into Kentucky.
93 Q. Please describe the remainder of the route of the ETCO Pipeline after it leaves
94 the State of Illinois.
95 A. After traversing Illinois, the existing 30-inch and 24-inch pipeline will extend from
96 near Joppa, Illinois, through Kentucky, Tennessee, Mississippi and Arkansas, to a
97 location near Buna, Texas. From the location near Buna, Texas, the Project will
98 transition to a new mainline pipeline that will run in a southerly direction to the
99 refining market in and around Nederland, Texas, which is one of the largest regional
100 refining markets in the United States.
101 Q. What is the total planned length of the ETCO Pipeline?
102 A. The total planned length of the ETCO Pipeline from Patoka, Illinois, to Nederland,
103 Texas, is 745 miles. Approximately 128 miles of the entire pipeline route will be
104 located in Illinois, with approximately 31 miles being the new build portion and 97
105 miles being the converted Trunkline pipeline.
106 Q. What are ETCO Exhibits 2.2 and 2.3?
107 A. ETCO Exhibit 2.2 is a map depicting the proposed route of the ETCO pipeline in
108 Illinois. ETCO Exhibit 2.3 is a legal description of the currently proposed
109 centerline of the route of the pipeline in Illinois.
110 Q. Has Trunkline obtained authorization from the Federal Energy Regulatory
111 Commission (“FERC”) to abandon the existing pipeline as a natural gas
112 pipeline so that it can be converted to crude oil transportation service?
ETCO Exhibit 2.0 Page 6 of 24
113 A. Yes. FERC authorized the abandonment of the Trunkline natural gas pipeline in an
114 order entered November 7, 2013 in FERC Docket No. CP12-491-000. Trunkline
115 Gas Company, LLC, 145 FERC ¶ 61,108 (2013).
116 Q. Will ETCO replace any portions of the existing pipeline?
117 A. Yes. As part of the process of converting the existing natural gas pipeline to crude
118 oil transport service, ETCO plans to replace portions of the existing pipeline. The
119 need to replace sections of the existing pipeline has been determined by engineering
120 analysis, internal inspection and hydrostatic testing along the Project route. In
121 Illinois, ETCO is planning to replace segments of the existing pipeline at the Lake
122 of Egypt crossing and at the Ohio River crossing. In addition, ETCO will replace a
123 short segment of the existing pipeline just south of the existing Trunkline Joppa
124 Compressor Station in Massac County, Illinois.
125 Q. What are the exact locations of the sections of the existing pipeline that will be
126 replaced along the pipeline route in Illinois?
127 A. The specific locations of the three new segments of the converted pipeline to be
128 constructed in Illinois are as follows: (i) at Lake of Egypt, from milepost 564.9 to
129 milepost 565.40 (i.e., approximately 1.5 miles); (ii) from a point just south of the
130 Joppa Compressor Station at milepost 538.77 to milepost 538.93 (i.e.,
131 approximately 0.16 miles); and (iii) at the Ohio River, from milepost 537.98 to
132 milepost 538.41 (i.e., approximately 0.43 miles).
133 Q. In addition to replacing the three sections of the existing pipeline in Illinois, as
134 you have described, will ETCO be replacing any other components of the
135 existing pipeline?
ETCO Exhibit 2.0 Page 7 of 24
136 A. Yes. ETCO will also be installing and/or replacing mainline valves and associated
137 pipeline facilities along the existing pipeline that is being converted.
138 Q. Will ETCO construct any new pump stations in Illinois as part of the Project?
139 A. Yes. In Illinois, ETCO currently plans to construct one new pump station and
140 metering facility at the origin of the proposed pipeline near Patoka, Illinois, in
141 Marion County. This new pump station will have two pumps. The Project will also
142 include 3 pump stations collocated within existing Trunkline Compressor Station
143 facilities sites. The required space for the pump stations will be acquired in fee or
144 leased. Any natural gas and/or electrical power needed for facilities will be
145 acquired from utilities in the area.
146 Q. What will be the diameter of the ETCO Pipeline?
147 A. The new build portion of the Project originating near the Patoka Hub will consist of
148 a 30-inch outside diameter mainline pipeline. The new 30-inch outside diameter
149 mainline will be connected to the existing 30-inch and 24-inch outside diameter
150 mainline pipeline near the Johnsonville Compressor Station in Wayne County.
151 Q. What will be the capacity of the ETCO Pipeline?
152 A. The Project has an initial planned transport capacity of approximately 400,000
153 barrels per day (“bpd”). ETCO anticipates expansion of the Project up to
154 approximately 570,000 bpd as a result of on-going discussions with market
155 participants. Any expansion of the Project’s capacity from 400,000 bpd to 570,000
156 bpd will not affect the facilities in Illinois.
157 Q. What is the anticipated in-service date of the Project?
158 A. Assuming the receipt of necessary approvals, construction of the Project is anticipated to
ETCO Exhibit 2.0 Page 8 of 24
159 commence in the fourth quarter of 2015, with an in-service date in the fourth quarter of
160 2016.
161 IV. DEVELOPMENT OF THE PROJECT ROUTE
162 Q. What were ETCO’s objectives in determining the route of the new build portion of
163 the pipeline?
164 A. For the new build portion of the Project in Illinois from Patoka to the Johnsonville
165 Compressor Station, the route determination is predicated upon paralleling the
166 existing Marathon Pipeline Patoka–Owensboro 20-inch pipeline, in order to
167 minimize environmental and land use impacts. The vast majority of the 31-mile
168 new build portion will closely parallel the existing Marathon Pipeline right of way.
169 Any deviations from the existing Marathon Pipeline right-of-way are due to the
170 presence of residences, environmental concerns and/or constructability issues.
171 Q. Will there be any changes to the route of the existing Trunkline pipeline in
172 Illinois that is being converted to crude oil transportation service as part of the
173 Project?
174 A. With the exception of potentially small deviations in the sections of the existing
175 pipeline that are being replaced at the Lake of Egypt and Ohio River water crossings
176 and areas immediately adjacent to those crossings, including the short segment
177 south of the Joppa Compressor Station in Massac County, the existing, converted
178 Trunkline pipeline will remain in its current location and right of way.
179 Q. Is ETCO requesting approval of a 500-foot wide project width, as allowed by the
180 Common Carrier by Pipeline Law?
ETCO Exhibit 2.0 Page 9 of 24
181 A. Yes. ETCO is requesting authority for a 500-foot wide project width for the new build
182 portion of the pipeline to be constructed from Patoka to north of Johnsonville,
183 Illinois, as allowed pursuant to §15-401(c) of the Common Carrier by Pipeline Law.
184 The 500-foot project width will be comprised of 250 feet on either side of the final
185 proposed centerline of the route.
186 Q. Referring to paragraph 4 of ETCO’s Application, please explain the 3,960 foot
187 wide notification corridor.
188 A. The notification corridor is 1,980 feet on either side of the preliminary proposed
189 route of the new build portion of the Project described in ETCO Exhibit 2.3. Thus,
190 the total width of the notification corridor is 3,960 feet. All landowners located
191 within the notification corridor are listed on the landowner list that is Exhibit G to
192 the Application and is provided as ETCO Exhibit 2.4 to my testimony. This list,
193 which consists of the landowners of record within the notification corridor as shown
194 by the records of the tax collectors of Marion, Clay and Wayne Counties, within 30
195 days prior to the filing of the Application in this case, was provided to the Chief
196 Clerk’s Office for the purpose of giving notice of this proceeding to the landowners.
197 The purpose of the notification corridor is to provide additional flexibility in
198 determining the ideal route for the new build portion of the pipeline based on the
199 results of surveying activities and information obtained from the landowners within
200 the notification corridor. ETCO is currently engaged in civil, environmental and
201 archeological surveys within the notification corridor. Based on the results of its
202 surveying activities and landowner contacts, ETCO will, during the course of this
203 proceeding, submit, if and as necessary, a revised proposed centerline for the new
ETCO Exhibit 2.0 Page 10 of 24
204 build portion of the Project, for approval by the Commission. The project width for
205 which ETCO will seek approval will be 250 feet on either side of the final proposed
206 centerline.
207 Q. In addition to the landowners located within the notification corridor
208 surrounding the preliminary proposed route of the new build portion of the
209 pipeline, are other landowners listed on ETCO Exhibit 2.4?
210 A. Yes, the landowner list on ETCO Exhibit 2.4 also includes landowners (i) located
211 along the three segments of the existing Trunkline pipeline in Illinois that will be
212 replaced, and (ii) at locations where new main line valve sites will need to be
213 installed.
214 Q. Has ETCO begun to contact landowners along the preliminary proposed route
215 of the new build portion of the route in Illinois for the purpose of negotiation
216 of acquisition of easements?
217 A. Yes. Ms. McDaneld, in her direct testimony, describes ETCO’s public outreach
218 efforts and progress to date in contacting landowners for the purpose of negotiating
219 easement agreements. As she states, ETCO began contacting landowners for the
220 purpose of negotiating easement agreements several weeks prior to the filing date
221 of this testimony.
222 Q. Prior to beginning to contact landowners for the purpose of negotiating the
223 acquisition of easements, did ETCO file an information packet with the
224 Commission as specified in 83 Illinois Administrative Code §300.20?
225 A. Yes, ETCO filed its information packet with the Commission on October 10, 2014.
ETCO Exhibit 2.0 Page 11 of 24
226 Q. In addition to seeking permanent and temporary construction easements for
227 the construction and installation of the new build portion of the ETCO
228 Pipeline, is ETCO seeking easements for any portion of the converted natural
229 gas pipeline?
230 A. ETCO anticipates that it will be able to locate the three replacement sections of the
231 existing Trunkline Pipeline, and to do the construction and installation work for the
232 replacements, within the existing right of way for the easements for the Trunkline
233 pipeline. However, in case it is necessary to deviate the location of any of the
234 replacement sections from the current location of the pipeline segment being
235 replaced, or in case additional workspace is needed for the construction and
236 installation of the replacement sections, ETCO is seeking 50 foot wide permanent
237 easements and temporary construction easements of up to an additional 100 feet, at
238 the locations of the replacement sections of the existing pipelines. Similarly,
239 ETCO anticipates that it will be able to do the work to install the new mainline
240 valves in the existing right of way provided by the existing easements at those
241 locations; however, as a precaution, ETCO is seeking temporary construction
242 easements of up to 100 feet in width at the locations where it will be replacing or
243 installing mainline valves on the existing Trunkline pipeline.
244 Q. Has ETCO retained a right-of-way service company to contact landowners and
245 to negotiate for the acquisition of the easements you described at locations
246 along the route of the existing Trunkline pipeline in Illinois?
247 A. Yes, ETCO has retained King Pipeline Services LLC to contact landowners and to
248 negotiate for the acquisition of the easements at the applicable locations along the
ETCO Exhibit 2.0 Page 12 of 24
249 route of the existing pipeline.
250 Q. In contacting landowners to negotiate for the acquisition of the easements at
251 locations along the route of the existing Trunkline pipeline, are ETCO and
252 King Pipeline Services LLC complying with Commission regulations and
253 employing the same or similar processes to those described by Ms. McDaneld
254 in Sections V and VI of her direct testimony?
255 A. Yes.
256 Q. What permits and authorizations must ETCO obtain from other governmental
257 bodies in order to construct the pipeline along the proposed route in Illinois?
258 A. ETCO Exhibit 2.5, which is identical to Exhibit H to the Application, is a
259 preliminary list of environmental authorities and other governmental entities, and
260 their permitting, approval and consultation requirements that must be obtained or
261 satisfied in connection with the routing and construction of the pipeline in Illinois.
262 V. CONSTRUCTION OF THE PROJECT
263 Q. Who will manage the construction of the Project?
264 A. DAPL-ETCO Construction Management, LLC (“DECM”), an Energy Transfer
265 subsidiary, will manage and oversee the construction of the ETCO Pipeline.
266 Q. Why is ETCO contracting with DECM to provide construction management
267 services for the ETCO Pipeline?
268 A. DECM has been formed as a single purpose entity to provide construction management
269 services for the ETCO Pipeline (and the Dakota Access Pipeline) so that all of the
270 construction management services for these pipelines can be captured and managed as a
271 single entity. To provide construction management services for the ETCO Pipeline,
ETCO Exhibit 2.0 Page 13 of 24
272 DECM will draw on the extensive resources, experience and expertise within the Energy
273 Transfer companies. The Energy Transfer family of companies has a well-established
274 and proven track record of safely and reliably designing and constructing some of the
275 largest logistical infrastructure projects in the United States to serve producers, refiners,
276 marketers, end users, and other customers in the oil and gas industry. Recent examples of
277 such projects include Lone Star NGL LLC’s 570-mile West Texas Gateway Natural Gas
278 Liquids (“NGL”) Pipeline from west Texas to Mont Belvieu, Texas (Lone Star NGL LLC
279 is a joint venture between Energy Transfer Partners, L.P. and its affiliate Regency Energy
280 Partners. L.P.); Florida Gas Transmission Company’s 483-mile Phase VIII Expansion
281 Project from near Mobile, Alabama, to south Florida (Florida Gas Transmission
282 Company is owned 50 percent by Energy Transfer and 50 percent by Kinder Morgan
283 Inc.); and the recently completed SXL Mariner East NGL pipeline of Sunoco Logistics,
284 L.P. extending approximately 350 miles from the Marcellus Shale area in western
285 Pennsylvania to the Marcus Hook Facility in Marcus Hook, Pennsylvania (Energy
286 Transfer owns the general partner of, and certain limited partnership interests in, Sunoco
287 Logistics, L.P.).
288 Q. Has ETCO entered into a contract with DECM for DECM to manage the
289 construction of the pipeline?
290 A. Yes. ETCO Exhibit 2.6 is a copy of the Construction Management Agreement
291 between ETCO and DECM, dated as of October 15, 2014.
292 Q. What engineering and construction firms will be used to construct the Project, and
293 what are their resources, experience, and capabilities?
ETCO Exhibit 2.0 Page 14 of 24
294 A. Engineering design work for the new build pipeline in Illinois is being performed by
295 Woodgroup-Mustang and the conversion of the existing pipeline is being performed
296 by Willbros Professional Services. Both of these firms are highly regarded,
297 Houston-based engineering firms that have extensive experience in the pipeline
298 industry. Engineering work for the pump stations is being performed by Project
299 Consulting Services, Inc., a Metairie, Louisiana, engineering and consulting firm that
300 also has extensive experience in the pipeline industry.
301 ETCO has not yet selected the construction contractors for the Project. It is
302 likely that ETCO will contract with different construction contractors to do the
303 construction and conversion work for different segments of the Project. However, it
304 is Energy Transfer’s practice to hire only experienced, highly-qualified contractors
305 for its pipeline and other infrastructure projects. ETCO will provide information
306 during the course of this proceeding on the selection of construction contractors as it
307 occurs.
308 Q. What criteria will ETCO take into consideration in evaluating potential
309 construction contractors for the Project?
310 A. ETCO will perform "pre-qualification" evaluations of each proposed contractor for the
311 Project. This evaluation is mandated by Energy Transfer policy and ensures that only
312 qualified third party service providers work on the Project. The prequalification
313 evaluation addresses three broad categories including financial ability and capacity,
314 capability, and performance. These three categories are then broken down into
315 subcategories for assessment, including factors such as, without limitation, safety scores,
316 3 year work history, cash flow, size of the company, lawsuits and liens, OSHA violations,
ETCO Exhibit 2.0 Page 15 of 24
317 and qualified labor. This prequalification evaluation is performed by an independent team
318 of professionals, managed by the legal department, and is an integral part of Dakota
319 Access’s contractor selection process.
320 Q. Will union construction trades be used in the construction and conversion of the
321 Project in Illinois?
322 A. ETCO will utilize a union contractor to perform construction of the 31 miles of new build
323 pipeline in Illinois. For the conversion work on the existing pipeline, approximately 13
324 percent of the entire project is in Illinois with the remaining 87 percent in Kentucky,
325 Tennessee, Mississippi, Louisiana and Texas. The work is sporadic and minor at the
326 locations in Illinois and ETCO’s current plan is to use one contractor for the conversion
327 project from Illinois to Texas. It will be suggested in the bid meetings that the
328 contractors go to the union halls for any labor needed in Illinois and that the contractor
329 consider utilizing a union horizontal directional drilling subcontractor at the Ohio River
330 crossing, but ETCO will not make this mandatory.
331 Q. Will a project labor agreement be used for the construction and conversion of the
332 Project in Illinois?
333 A. A project labor agreement will not be used for the construction of the new build segment
334 or the conversion, however, as I described in my previous answer, ETCO plans to utilize
335 union labor on the new build portion of the line to be consistent with the project labor
336 agreement in place for the Dakota Access Pipeline.
337 Q. Will the new build and replacement sections of the ETCO Pipeline be designed and
338 constructed in accordance with applicable governmental requirements and industry
339 codes and standards?
ETCO Exhibit 2.0 Page 16 of 24
340 A. Yes. Energy Transfer's pipelines are designed, built and maintained in accordance
341 with governmental requirements and industry codes and standards, and often exceed
342 applicable requirements and standards. The principal government regulations
343 applicable to the design and construction of the ETCO Pipeline are those promulgated
344 by the U.S. Department of Transportation, Pipeline and Hazardous Materials Safety
345 Administration (“PHMSA”), Office of Pipeline Safety, at 49 C.F.R Parts 194 and 195.
346 As are all Energy Transfer pipelines, the ETCO Pipeline will be designed to withstand
347 pressures over and above its normal operating pressure.
348 The construction, installation and conversion of the Project will also meet all
349 applicable Federal and state environmental protection statutes and regulations along
350 the Project’s route. Agencies with jurisdiction over applicable environmental
351 protection considerations include the U.S. Army Corps of Engineers, the Illinois
352 Department of Natural Resources, and the Illinois Environmental Protection
353 Agency.
354 Q. At what operating pressure will the new build portion of the pipeline be designed
355 and constructed to operate?
356 A. The new build portion of the pipeline will operate at 1,440 pounds psig, with a 0.72
357 safety design factor for the mainline portions and a 0.5 safety design factor at road
358 and waterbody crossings. These safety design factors meet or exceed federal
359 regulatory requirements.
360 Q. Please explain what is meant by safety design factors of 0.72 and 0.5.
361 A. Safety design factors are part of the standard pipe sizing engineering calculations
362 required to be performed per PHMSA regulations at 49 C.F.R. Part 195 to ensure the
ETCO Exhibit 2.0 Page 17 of 24
363 correct wall thickness and grade of pipe are selected based on the maximum
364 operating pressure for the pipeline.
365 Q. Will the pipeline have a cathodic protection system?
366 A. Yes. The pipeline will be equipped with cathodic protection systems to prevent
367 external corrosion. The cathodic protection system is in addition to the fusion
368 bonded epoxy coating that will be applied to the exterior of the pipe.
369 Q. What material will be used for the pipeline?
370 The pipe material for the new build portion and replacement sections of the ETCO
371 Pipeline will be manufactured of high strength carbon steel which is appropriate for a
372 crude oil pipeline, nominally 0.429 inch wall for the majority of the new pipe in non-
373 sensitive areas and up to 0.625 inch wall in unusually sensitive areas, road crossings
374 and waterbody crossings.
375 Q. Please explain what is meant by “unusually sensitive areas” and “non-sensitive
376 areas” and why the pipeline wall thickness is different for “unusually sensitive”
377 and “non-sensitive” areas.
378 A. An unusually sensitive area is defined by 49 C.F.R. Part 195 as a drinking water or
379 ecological resource area that is unusually sensitive to environmental damage from a
380 hazardous liquid pipeline release. The PHMSA regulations at 49 C.F.R. Part 195 do
381 not require increased wall thicknesses in unusually sensitive areas, at road crossings,
382 or at waterbody crossings, but ETCO will exceed minimum federal requirements and
383 install thicker wall pipe in these areas as a proactive approach to help address
384 potential environmental concerns and to address any dynamic loading condition
385 concerns at roadways.
ETCO Exhibit 2.0 Page 18 of 24
386 Q. At what depth will the pipeline be buried?
387 A. The minimum installation depth of the new build portion of the pipeline will be a
388 minimum of three feet in soil and two feet in consolidated rock. However, in
389 agricultural areas, the new pipeline will be installed at a minimum depth of four feet
390 (or 48 inches) below grade (thus exceeding the federal requirement of three feet), or
391 up to five feet, as specified by the Illinois Department of Agriculture, where
392 landowner consent to bury the pipe at 48 inches has not been obtained. The new
393 pipeline will be installed at minimum depths of five feet under roads and water bodies
394 and at greater depth where required for other specific conditions. Additionally, there
395 will be a separation of at least two feet between the new pipeline and existing
396 infrastructure such as drainage tiles.
397 The existing natural gas pipeline which will be converted to crude oil
398 transportation is generally buried at a depth of approximately 3 to 4 feet.
399 Q. Please describe the manufacturing process that will be used for the pipe that will
400 be installed in the new build and replacement sections of the ETCO Pipeline.
401 A. As I stated earlier, the pipe material for the new build portion and replacement
402 sections will be manufactured of high strength carbon steel which is appropriate for a
403 crude oil pipeline, nominally 0.429 inch wall for the majority of the new pipe in non-
404 sensitive areas and up to 0.625 inch wall in unusually sensitive areas, road crossings
405 and waterbody crossings. The new pipe will be coated at the factory with external
406 fusion-bonded epoxy to protect against corrosion. Coating in the controlled
407 environment of a pipe plant greatly enhances the efficacy of the process. The factory
408 coating will be re-inspected in the field. Additionally, coating will be applied to all
ETCO Exhibit 2.0 Page 19 of 24
409 pipe welds. Further, all new pipe will be inspected and integrity-tested at the factory
410 to assure quality and adherence to standards.
411 Q. How will the manufactured pipe be transported to the installation locations in
412 the field?
413 A. The new pipe will be transported to the installation locations via rail and truck and in
414 accordance with federal regulations and industry standards.
415 Q. Please describe the installation techniques that will be used to install the new
416 pipeline in the field.
417 A. Advanced installation and excavation, soil-separation, decompaction and restoration
418 techniques will be employed to preserve soil productivity and profiles. Installation
419 techniques will include, where appropriate, trench-less installation technologies such
420 as conventional bores or horizontal direction drills, to avoid the need to excavate a
421 trench. In most areas, conventional installation techniques using trackhoes and
422 backhoes will be utilized to excavate the ditchline and sidebooms will be utilized to
423 string, weld, and lower the pipeline into the excavated ditch. The welding of the
424 pipeline will be performed through the use of automatic welding machines and each
425 weld will be 100 percent x-rayed. Coating of the weld will occur after x-ray. Once
426 the pipeline has been carefully lowered into the excavated ditchline, the pipeline will
427 be buried, cleaned, filled with water and hydrostatically tested to 125 percent of the
428 maximum operating pressure.
429 To avoid soil mixing, for those portions of the work area where there is a
430 chance of soil mixing, the top soil will be segregated, stripped and stored separately,
431 and then will be replaced after installation of the pipeline is completed. All disturbed
ETCO Exhibit 2.0 Page 20 of 24
432 areas will be restored to reflect pre-construction conditions and grades or otherwise
433 mitigated.
434 Q. Will remotely controllable sectionalizing valves be installed?
435 A. Yes. Along the pipeline route, numerous remotely controllable sectionalizing valves
436 will be installed, including at major waterbody crossings such as the Ohio River, to
437 allow rapid isolation of impaired line segments in the event of an emergency. These
438 valve sites will be linked to the Project’s Operations Control Center by modern
439 communication facilities. Mr. Todd Stamm’s direct testimony explains the
440 functions, operations and capabilities of the Operations Control Center.
441 Q. What testing and inspection of the installed pipeline will be performed before it
442 is put into service to transport crude oil?
443 A. The installation of the pipeline and the pump station at Patoka will be subject to
444 regulatory inspection, including by PHMSA inspectors operating from the agency's
445 Central Region office in Kansas City, Missouri, and field office in Des Plaines,
446 Illinois. Additionally, ETCO will employ construction, safety, agricultural and
447 environmental inspectors not affiliated with its pipeline contractors to assure
448 compliance with the contract specifications for pipeline construction, which
449 specifications will incorporate all regulatory and industry requirements.
450 Further, as part of the installation and conversion processes, the entire length
451 of the ETCO Pipeline will be rigorously tested for integrity in accordance with all
452 federal and state regulations and industry standards. The pipeline will be subjected
453 to careful inspection and testing to verify its integrity and compliance with all
454 regulatory standards and contract specifications. This testing will include checking
ETCO Exhibit 2.0 Page 21 of 24
455 coating integrity; examining by non-destructive testing 100 percent of field welds
456 (which is well above the 10 percent required by federal regulation); internally
457 inspecting the entire length of the line by using an in-line inspection tool known as a
458 caliper pig; and hydrostatically testing the pipeline. The line will go into service
459 only after thorough inspection and review to verify compliance with all applicable
460 federal and state statutes and regulations and all project construction standards and
461 requirements.
462 Q. How will the new pump station and metering facilities be constructed at the
463 Patoka Hub?
464 A. Metering facilities at the Patoka Hub will be designed and constructed in accordance
465 with Energy Transfer’s engineering and design specifications and with all applicable
466 industry standards.
467 Q. What engineering analyses and inspections have been performed to determine
468 that the existing gas pipeline is suitable to be used for crude oil transportation?
469 A. The existing pipeline design parameters (outside diameter, wall thickness, and grade)
470 have been evaluated to ensure the pipe design is adequate for the new product that
471 will be transported and the pipeline operating pressure will be maintained at its
472 current pressure when placed into crude oil service. Internal inspections have been
473 conducted on the route of converted pipeline to determine mechanical integrity of the
474 pipe.
475 Q. What inspection, testing, and other work will be required to convert the gas
476 pipeline to crude oil transportation service?
477 A. Inline inspection tools will be installed and run through the entire pipeline. Data from
ETCO Exhibit 2.0 Page 22 of 24
478 the tool runs will be evaluated to determine if any portions of the existing pipe
479 coating or the pipe itself need to be addressed. The existing pipe will also undergo a
480 hydrostatic test on the entire line being converted to ensure mechanical integrity.
481 Q. Will the mainline valves be replaced on the existing gas pipeline?
482 A. Yes. ETCO will be removing all existing mainline valves and installing new
483 mainline valves.
484 Q. Why is the existing natural gas pipeline being replaced at three locations in
485 Illinois?
486 A. The small section of pipeline being replaced between the Ohio River and Joppa
487 station is required because the existing pipeline size is 26 inches and the Project
488 requires a 30 inch line. The Ohio River crossing is being replaced because the current
489 crossing will remain in gas service. The final determination of need to replace the
490 Lake of Egypt crossing is pending results from the latest internal inspection tool run
491 and this segment may not require replacement, but it has been included in the plans
492 for the conversion at this time.
493 Q. Will other improvements be made to the existing natural gas pipeline as part of
494 the conversion process?
495 A. Yes, leak detection will be installed and all mainline valves will be automated in
496 order to be operated from a central control room. In addition, launcher and receiver
497 barrels will be installed to enable internal integrity inspection and testing of the
498 pipeline.
499 VI. ECONOMIC DEVELOPMENT BENEFITS OF THE PROJECT
500 Q. Will the Project benefit the overall economy of Illinois and the United States?
ETCO Exhibit 2.0 Page 23 of 24
501 A. Yes. As Mr. Damon Rahbar-Daniels describes in his direct testimony, the Project
502 will benefit the overall economy of both the United States and Illinois by providing
503 efficient access to more reliable, less expensive crude oil supplies. The benefits of a
504 growing U.S. economy are obvious. This is also a benefit for Illinois. In addition,
505 construction of the Project will bring capital expenditures and jobs to Illinois.
506 Q. What is the estimated amount of investment in Illinois from development and
507 construction of the Project?
508 A. The expected amount of investment in Illinois from development and construction
509 of the Project is $230 million.
510 Q. How many construction jobs will be created in Illinois for work on the Project?
511 A. It is anticipated that over 800 directly related construction jobs will be created in
512 Illinois at the peak of pipeline and pump station construction. Construction of the
513 Project will require welders, mechanics, electricians, pipefitters, and heavy
514 equipment operators.
515 Q. Will design and construction of the Project in Illinois require local professional
516 services?
517 A. Yes, the Project will use local professional services such as engineering, surveying,
518 real estate and legal. Local engineering and surveying companies will be utilized to
519 perform surveys and videography of county roadways prior to construction
520 commencing. Additional ancillary economic benefits for Illinois are also
521 anticipated, such as an increased use of local restaurants, lodging, and other retail
522 businesses by those employed on the Project.
523 Q. Will any materials necessary for the Project be manufactured in Illinois?
ETCO Exhibit 2.0 Page 24 of 24
524 A. Yes. The Project will require steel pipe, fittings, valves, pumps and control devices,
525 some of which are expected to be manufactured by or purchased from Illinois
526 businesses. ETCO is also investigating the use of a local Illinois company that
527 manufactures drain tile and support structures for drain tile, to produce replacement
528 drain tile and support structures to be installed where necessary.
529 Q. Will the Project generate any payments to local landowners?
530 A. Yes. Right-of-way payments to landowners in Illinois for the new build portion of
531 the Project are projected to be approximately $8.0 million.
532 Q. Will construction and operation of the Project have any impacts on state and
533 local tax receipts in Illinois?
534 A. Yes. Local employment and business generation will result in increased income tax
535 and sales and use tax revenues for the State of Illinois and local governments. The
536 installation of the new build portion of the pipeline will result in additional property
537 tax revenues for local governmental units it traverses.
538 Q. Does this conclude your prepared direct testimony?
539 A. Yes.