Document Type

Report

Publication Date

4-2016

Research Center

Center for Economic Development, Energy Policy Center

Abstract

In 2014 Spectra Energy (“Spectra”) and DTE Energy announced plans to build a high-pressure natural gas transmission pipeline (called “Nexus”) that would run from the Utica-Marcellus region near eastern Ohio across northern Ohio, into Michigan, and ultimately into Chicago and Ontario, Canada. The stated purpose for building the proposed pipeline is to take anticipated “growing” gas supplies produced from the Appalachian Basin to the “high demand” markets in Ohio, Michigan, Chicago and Ontario. Nexus proposes 250 miles of high pressure, 36 inch diameter pipeline capable of carrying around 1.5 billion cubic feet of natural gas per day.

However the route proposed by Nexus takes the pipeline through some of Ohio’s fastest growing and most prosperous communities. In particular, the pipeline route promises to disrupt development plans in the City of Green (Summit County). Importantly, as will be shown in the discussion below, the proposed route will render useless large portions of prime industrial and commercially zoned land that Green has earmarked for near term development. Much of this land is next to the Akron-Canton airport, and is of considerable interest to the business community.

Accordingly, the City of Green has proposed to Nexus an alternate route that accomplishes Nexus’s goals of moving natural gas from Appalachia to Michigan and Ontario. The alternate route, which could be built for about the same cost as Nexus’s plan, bypasses and spares the fast growing City of Green, instead taking the pipeline through a more rural area. With proper planning, potential negative impacts on future industrial or commercial development could be minimized by using an alternate route in a more rural setting. Although we expect that property value and tax losses, if any, would be minimal for the alternate route, these results are not set forth here.

The route currently proposed through the City of Green would, however, lead to uneconomic remnant parcels, as well as devalued or stranded residential parcels. The proposed route is shown on Exhibit 1 (both panels). Over the life of the pipeline, this would in turn lead to very substantial losses in property taxes and income tax for the City of Green. In short, while there may be compelling reasons for the pipeline to be built, and while it may be beneficial for portions of Ohio in terms of taxes and construction jobs, the current route leaves the City of Green to suffer disproportionately the losses the pipeline will cause. The following discussion sets forth the basis for this determination.

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