The regional manager for LAWCO said he is concerned about AGL Resources drawing millions of gallons of water a day to make another cavern under Lake Peigneur. It is the first time the drinking water supplier has entered the debate over the proposed expansion of the natural gas storage facility.

Jim Brugh testified Thursday night at a public hearing conducted by the state Department of Natural Resources. The hearing was required as part of a tentative operating agreement between the state and Jefferson Island Storage and Hub, AGL’s subsidiary as the company seeks to expand its operations at Lake Peigneur.

Concerns about the amount of drinking water to be drawn from the Chicot Aquifer to create the new caverns have been repeated for years, but have been given new life.

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AGL has agreed to decrease the amount drawn to 3 million gallons a day for a two- to five-year period, which is less than a percent of the total amount of water withdrawn from the aquifer, Jefferson Island Storage Hub and Pivotal Energy President Dana Grams said.

The operating agreement, however, allows AGL to request more water usage without a public hearing, opponents said.

Brugh testified that his company’s water wells, which provide water services for New Iberia, Loreauville and other parts of Iberia Parish, could be impacted severely by AGL’s well pumping.

The amount of water AGL proposes to withdraw each day equates to the amount of drinking water extracted daily from the well for the city of New Iberia, Brugh said.

About five years ago, the company built a new well field in New Iberia because of a known contamination site in the Chicot Aquifer. The new well field was built to back away from the contamination site, “in an effort to ensure contamination-free water for at least the next 50 years for approximately 60,000 to 70,000 residents,” Brugh said.

“Increased withdrawal from the Chicot Aquifer by AGL’s proposed well-pumping would significantly accelerate the rate of potential contaminates from the known contamination source to New Iberia,” Brugh said.

Testimony

In his testimony, Grams said that the salt-domed caverns are a safe means of storage for an energy source with a growing demand.

The company estimates the state will receive $28.5 million in revenue over 40 years from the Lake Peigneur operations, in addition to $1 million in royalties. Those estimates do not include the state and local property taxes the company will pay, Grams said.

Overall, the company expects its facilities in Iberia and Vermilion parishes to have a $93 million economic impact.

“This agreement represents a true win-win-win for everyone involved,” Grams said.

Save Lake Peigneur members argued there is no win for the approximately 4,000 residents who live within a mile of the lake and the company’s facilities.

There will be no resolution for those residents without the federal environmental impact study they are pushing for, they said, which would provide further analysis and answer the many unknowns about what the project will bring.

A breakdown of the state’s earnings from AGL from Save Lake Peigneur President Nara Crowley showed the $28 million as $700,000 a year, which equates to $175 for each of the 4,000 residents surrounding the lake, Crowley said.

“This is not an anti-business thing,” said state Sen. Troy Hebert, D-Jeanerette. “These are not people against economic development. These people here tonight are concerned about the safety of their families. We need to look at other options.”

The Department of Natural Resources hired environmental consultant Sherwood Gagliano to complete a technical review of the proposal. After a lengthy technical presentation, Gagliano said his findings reveal a “minimal impact on the water (Chicot Aquifer), a minimal impact on the lake and it will have an economic benefit.”

Save Lake Peigneur members received the 70-page report the day before the hearing, they said.

The operating agreement allows the caverns to be used for other energy storage, including oil and carbon dioxide, which residents argued was not reviewed in the technical report by Gagliano. The operating agreement also does not limit future natural gas storage caverns under the lake, which residents said also was not studied in Gagliano’s report.

“This is paving the way for a massive gas storage field in the middle of our community, raping of us our precious drinking water, and circumventing the lease laws that all other companies abide by,” said Lake Peigneur resident Rachel Lecompte. “Why is AGL so special? Are we going to roll over just because someone throws a bunch of money at us in this new era of ethics?”

Jefferson Island Storage and Hub presented letters of support from Erath Mayor George Dupuis, James “Jimmy” Shea of the Bayou Companies and North Louisiana state Rep. Henry Burns, R-Bossier City.

Prominent lobbying group executives from the Louisiana Association of Business and Industry and the Louisiana Oil and Gas Association also spoke out in person to support AGL’s expansion.

Save Lake Peigneur boasted 20 letters of support for a federal environmental study from entities and officials including the city of New Iberia, the town of Delcambre, the village of Loreauville, the Iberia Parish Council, U.S. Sen. David Vitter, U.S. Sen. Mary Landrieu, U.S. Rep. Charlie Melancon, the Iberia Parish delegation and Scott Angelle, acting as the Louisiana Groundwater Commission chairman.

What’s next

If approved by the state Mineral Board, the agreement will settle pending litigation with the state and allow the company to apply for the roughly 20 permits it needs to build two additional natural gas storage caverns at the bottom of the lake, said Bernard “Bernie” Boudreaux, a lawyer representing the state.

Boudreaux, former 16th Judicial District attorney, told the crowd the operating agreement prevents the state from having to face AGL in court. If the operating agreement is not signed, the company will likely continue its lawsuit against the state.

If a judge decides in favor of the state, AGL would continue to operate its two natural gas storage facilities under an old storage lease. In more than two pages, the lease has only one line of regulation for the company to follow.

If AGL prevails in court, the company would be able to expand its facilities and operate four caverns under one line of regulation, Boudreaux said.

“What struck me tonight is that you are all genuinely concerned, and you’ve all been polite and civil,” Boudreaux said. “But if JISH wins in court, they’ll expand without the protections that are outlined in the 23-page agreement.”

The public comment period for the operating agreement ends at 4:30 p.m. Oct. 15.