Staff Report

Kinder Morgan paid the city of Kyle half of the financial obligation incurred last year in a settlement over the company’s Permian Highway Pipeline (PHP). The payment of $1.375 million was accepted by the city council at its regular meeting Dec. 1.

The city and the energy giant reached the settlement on Oct. 4, 2019, saying that the parties would develop a framework that would provide the city protections in addition to those provided by state and federal regulations. Among those protections was that Kinder Morgan would not be legally allowed to convert the pipeline from natural gas to crude oil.

The PHP encountered wide opposition once its proposed route through the Texas Hill Country became known in late 2018, and several unsuccessful lawsuits were filed.

On July 2 of this year, the Kyle City Council passed an ordinance that would have put stricter regulations on the pipeline’s construction in the city. Kinder Morgan then sued the city, asserting that state and federal law prohibits cities from regulating pipelines. The city amended its ordinance on Sept. 11 to address some of the claims that its ordinance was inconsistent with state and federal law.

Later this year, the PHP was rerouted slightly to avoid crossing the Blanco River. The initial route crossed the river twice, but the company decided to reroute after a drilling accident sent tens of thousands of gallons of drilling mud into the Trinity Aquifer during the initial attempted crossing in late March, which fouled nearby water wells.

Kinder Morgan says the pipeline is near completion and expects to begin moving products from West Texas oil fields to near Houston in 2021.

The city will use the money to pay for downtown park improvements.