Wind versus oil: The pipe piles up in Lincoln County

As Lincoln County residents gathered in Canton Tuesday night to talk wind energy, the sun was setting nearby on miles of steel pipe piling up for a far more traditional sort of energy project.

The pipe sits less than a mile off the Worthing exit on Interstate 29, on land leased from Ron Albers by the owners of the Dakota Access pipeline.

Dakota Access would move North Dakota crude 1,134 miles, from the Bakken Oil patch to Patoka, Ill.

If it's approved, of course. It hasn't been.

The Public Utilities Commission has until Dec. 15, 2015 – one year from the date Dakota Access applied for a permit - to deny or grant the pipeline permission to lay 272 miles of the underground line in South Dakota. The evidentiary hearing on the matter will take place in September.

The oil would flow under northern Lincoln County, so plenty of landowners have a keen interest in the project.

Lincoln County resident Paul Zeeb called Tuesday, as I was driving to Canton for a wind farm hearing, to ask about the pipe pile. If miles of pipe sits ready to use on a farmer's land near the pipeline route, he said, how can anyone have confidence that the PUC is truly weighing the matter?

"In all fairness, if we're having hearings and we really have a say in it, why are they stockpiling pipe?" Zeeb asked.

It's a question that's come up in other contexts, as well. Landowners along the pipeline route have been paid easements already, with some taking deals before the pipeline was docketed on Dec. 15.

Albers told me Tuesday his land was leased Dec. 10, and pipe began to arrive in January.

Joey Mahmoud, an executive with Energy Transfer Partners, addressed the question of pre-permitting costs in January at a packed PUC public comment meeting.

If the pipeline project fails to get permitted, Mahmoud said, the easement money won't come back to the company. The costs are sunk, just like the costs for pipe, environmental impact studies, surveying, engineering and public relations.

The work's ongoing. Just a few days ago, Dakota Access filed some slight changes to the pipeline route, some of which were based on input from the January meetings in Sioux Falls and around the state. The pipeline path was moved further away from the Sioux Falls landfill, for example.

The contrast is stark between Dakota Access – backed by the Fortune 100 company Energy Transfer Partners - and the plan of the local investor-driven Dakota Power Community Wind. Zeeb's question, given the context and the timing, really puts that into perspective.

Essentially, the crude oil pipeline is a big enough investment and a sure enough deal that the company can spend millions on easements and pipe before even getting a permit.

The company's fact sheet says it will offer $47 million in easements to South Dakota landowners. If it fails to get a permit, that money's gone.

The pipeline is fighting a well-organized opposition in hopes of gaining a permit for a permanent pipeline, but it's doing so with the confidence of a proven product with a guaranteed market and a bankroll to match. It's also clear that the company's experience and strength in lobbying and permitting far outstrips the experience of the groups opposed to the project, as well.

So that's the pipeline. Let's talk about the wind project.

Dakota Power Community Wind is making deals with landowners that don't pay much until the wind turbines are placed.

Right now, they're looking at permits to build five test towers that would determine how much wind capacity there is, a process that could take three to five years. Only then, if the investors are convinced and willing to pay, would turbines be built.

Test tower landowners get a one-time, $1,000 payment. The 100-odd landowners who've signed up for options will get $100 a year until the turbines are built. If the turbines are built, they get 4 percent of the gross revenue.

If Dakota Wind had more money, it might spend more, but it doesn't. Dakota Wind's project developer Rob Johnson says the wind farm's raised about $2.5 million so far. That's barely enough for a single turbine.

The wind farm is fighting a well-organized opposition in hopes of gaining temporary permits, doing so to prove the value of a product (turbines) it's barely raised enough money to build even one of. The project and its backers have worked on wind projects in South Dakota, but they're essentially locals facing off against locals.

If the pipeline is built, of course, no one will see it. If the wind turbines are built, they would be a blight or a beauty, depending on your perspective.

For the next few months, at least, the pipeline's the visible one.

- John Hult is the Reader's Watchdog reporter for Argus Leader Media. Contact him with questions and concerns at 605-331-2301, 605-370-8617,twitter.com/ArgusJHultorFacebook.com/ArgusReadersWatchdog