Suspected Leak Prompts Crestwood to Call for New Pressure Tests at Proposed LPG Storage Site

READING, May 22, 2018 — In response to fresh evidence of salt cavern leaks, Crestwood says it will conduct a new series of pressure tests of a unlined cavern near Watkins Glen that it proposes to use for high-pressure storage of liquid petroleum gas, or LPG.

A subsidiary of the Houston-based company is asking the state Department of Environmental Conservation to suspend any decision on its controversial eight-year bid for an LPG storage permit pending the outcome of the new tests.

The surprise disclosure came in a May 17 letter from Kevin Bernstein, a Syracuse attorney for the Finger Lakes LPG Storage subsidiary, to DEC Commissioner Basil Seggos.

Bernstein did not elaborate in his letter on the incident or condition that triggered the alarm.

But he noted that the new owners of U.S. Salt — which Crestwood agreed to sell last Fall — were developing new solution mining salt wells and that one of those wells “may be in communication” with an adjacent cavity called “Gallery 10” or with other wells or caverns nearby.

In addition to pressure-testing Gallery 10, Bernstein said the company “will install a pressure monitor on Well 44,” an entry-point to “Gallery 1,” which Crestwood proposes to use for high-pressure LPG storage.

Opponents of Crestwood’s proposal have long contended that caverns in and around the U.S. Salt property are riddled with faults and are unsuitable for storing explosive hydrocarbons under high pressure.

The company has argued that the caverns are safe, but it has insisted on keeping confidential much of the data that might support that conclusion.

The need to install a pressure monitor on Well 44 “suggests that the integrity of ‘Gallery 1’ may be compromised,” Deborah Goldberg of EarthJustice wrote Seggos in a May 18 response to the Bernstein letter. 

Goldberg represents Gas Free Seneca, a local environmental group formed in 2011 to oppose the LPG storage bid, which was launched in 2009. GFS claims that 450 Seneca Lake property owners and more than 500 local businesses also seek to block the project.

The DEC has already drafted a proposed permit, and an administrative law judge at the DEC has issued detailed findings. But Seggos hasn’t made a final decision.

Bernstein did not return a phone call to explain whether Crestwood or Kissner Group Holdings, the new owners of U.S. Salt, detected the potential problem leak. Calls to a spokesman for Kissner also went unanswered.

The DEC acknowledged that it has received Bernstein’s letter and said it is evaluating it.

Bernstein said in his letter to Seggos that “during the development of one of the (Kissner) wells, Well 64, we became aware that Well 64 may be in communication with either Gallery 10 (which consists of Wells 18, 52 and 57) and/or other nearby wells….”

The purpose of the letter, Bernstein wrote, “is to report this development to you and ask that you hold in abeyance any decision on the appeals that are pending until the outcome of this pressure test has been reported to the (DEC) and those involved in this proceeding have had an opportunity to comment.”

H.C. Clark of Houston, Gas Free Seneca’s primary expert on cavern geology, has consistently argued that potential cavern integrity flaws have been inadequately disclosed in the permit application, Goldberg wrote in her letter to Seggos.

“At the very least,” Goldberg added, “Finger Lakes LPG should be required to disclose to Dr. Clark … all studies of the wells at the site, including those conducted by U.S. Salt and other entities affiliated with Finger Lakes LPG, that have been conducted over the past five years….

“Finger Lakes also should be required to disclose other reported observations of conditions that prompted the need for additional testing that may appear in email, text messages or other media.”

DEC records show that a permit application to install a brine line at Well 64 was suspended on May 18.

The U.S. Salt plant sits on the western shoreline of Seneca Lake in Reading, about two miles north of Watkins Glen. Over many decades, salt wells were drilled into the hillside above the lake as the first step in the solution mining process. 

After water is injected into the salt-lined wells, brine is extracted. The brine is then processed into high-quality salt. The process leaves behind unlined caverns, bordered mostly by salt but also by shale. For decades, several caverns have been used to store LPG and natural gas, and Crestwood continues to store natural gas there.

But the issue of cavern stability has always lurked in the background. 

In the 1960s, a 400,000-ton section of roof fell in a U.S. Salt cavern that TEPPCO had been using to store LPG. TEPPCO later abandoned the site. Today it stores LPG in a cavity that it dug across Route 14. It is lined to ensure against leaks.

In the 1970s, the federal government conducted an exhaustive study to see whether the caverns were suitable for nuclear waste storage. They weren’t.

In 2001, natural gas explosions in the central Kansas town of Hutchinson that killed two people were tied to nearby gas storage caverns. In response, the DEC ordered reviews of the integrity of several storage caverns at U.S. Salt. 

A decade later, Crestwood proposed storing pressurized liquid butane in a cavern that had been deemed unsuitable for storage in 2001. It has since backed away from that plan.

In 2012, shale rock caverns at the Todhunter Terminal in Middletown, Ohio, were emptied of natural gas after a series of leaks and fires. Propane detectors were distributed to 70 homes near the terminal out of concern that cavern leaks could trigger fires or explosions.

Crestwood is only the latest in a revolving door of companies — including TEPPCO and NYSEG — that have attempted to store volatile hydrocarbons in the unlined salt and shale caverns in Reading. 

Last fall, Crestwood Equity Partners LP took a major step toward disengagement from the Reading site. On Oct. 31, it announced the sale of U.S. Salt operations to Kissner for $225 million. However, it retained rights to store LPG and natural gas in certain caverns. 

Crestwood had acquired U.S. Salt in 2013 as part of its purchase of Inergy LP, which had bought it in 2008 in the early days of the Marcellus natural gas boom. Inergy had said it intended to spend $191 million developing up to 5 billion square feet of storage capacity in the U.S. Salt caverns.

Salt mining has never been a core business for either Inergy or Crestwood.

Crestwood has continued to pursue the LPG storage permit that Inergy first sought in 2009, but the DEC has delayed any final decision amid widespread skepticism about the geologic integrity.

State regulations call for the appointment of a state geologist to give his or her blessing to underground storage applications.

However, that post has been vacant throughout the administration of Gov. Andrew Cuomo.

Earlier this month, gubernatorial candidate Cynthia Nixon made Crestwood’s LPG permit application an issue in her bid to challenge Cuomo for the Democratic nomination this fall.

At a press conference in Geneva, Nixon criticized Cuomo for failing to take a stand on two environmental issues critical to the Finger Lakes: a proposed trash incinerator in Romulus, and the Crestwood LPG project in Reading.

Days later, Cuomo issued a statement that said the incinerator project was inappropriate for the Finger Lakes. He has remained silent on the Crestwood proposal.