Editor’s Note: This is an opinion column submitted by Charles Geisler and Julie Trimble.

For more on the fight over Crestwood’s plans in our region, see here. To submit an alternative or dissenting viewpoint to this column, contact me at jstein@ithacavoice.com.

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From Charles Geisler and Julie Trimble:

Crestwood Equity Partners, the Texas-based company proposing to store pressurized gases in salt caverns at Seneca Lake, reports a 4th Quarter net loss due to “impairments of goodwill and other long-lived assets.”  Let’s explore this misleading claim.

A perusal of Crestwood Quarterly Reports in 2014  tells a different story.  First, Crestwood has over-extended itself. The company owns hubs across the country, and is courting the Northeast. In fact, Crestwood carries nearly $2 billion in debt to operate and expand. When the price of oil plummets and the cost of storage rises, its expansion slows and finger-pointing begins.

Second, Crestwood’s Quarterly Reports show an impressive list of risks (Forward-Looking Statements). These include market fluctuations in crude oil, natural gas and NGL (natural gas liquids) prices; operating hazards, natural disasters, weather-related delays, and the timely receipt of necessary government approvals and permits. Why unduly emphasize the last?

Third, the 4th Quarter Report says its goodwill and other long-lived assets were reduced by $48.8 million and $34.3 million, respectively. We see, however, that $51.3 million of this impairment “reflects a decrease in customer drilling activity in our [distant] Fayetteville and Granite Wash systems.” This leaves $31.8 million attributable to permitting delays at the proposed Watkins Glen NGL storage facility and lower cash flows from its US Salt operations there. It turns out that companies are not required to disclose what they determine to be the fair value of goodwill, so they can manipulate it (recall AOL’s ‘goodwill impairment’ claims). “Impaired goodwill” often this signals poorly estimated losses or gains.

Fourth, there are other costs Crestwood opts not to disclose, such as the big brine spill from its injection pipeline in North Dakota last July. A Crestwood owned pipeline leaked a million gallons of drilling saltwater (10 to 30 times saltier than seawater) that reached Lake Sakakawea. Concentrated brine is a by-product of oil and gas production.  The spill went undetected for some time according to a county emergency manager, and some estimate that cleanup could take three years. Could this be the real cost culprit rather than permit delays?

Crestwood seems to expect royal treatment in New York and knows how to spin headline news to get it. The company’s lack of real candor is worrisome, should they become a long-term neighbor in the Finger Lakes.


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Jeff Stein

Jeff Stein is the founder and former editor of the Ithaca Voice.