U.S. Pipelines Face Massive Backlog, Permitting Problems

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Researched by Industrial Info Resources (Sugar Land, Texas)--Regulatory permitting at federal, state and local levels is a stumbling block for U.S. pipeline projects of all kinds. Protests, politics and pundits stymie projects in a variety of ways, from requiring ever-more in-depth testing and studies to protestors chaining themselves to bulldozers and climbing into pipe sections.

The trials and tribulations in the saga of the Keystone XL project by TransCanada Corporation (NYSE:TRP) (Calgary, Alberta) are a testament to this kind of regulatory headache and an extreme example of the impact that regulatory processes can have on a pipeline project. However, with the boom of new projects in the past three years, a new specter looms to haunt active pipeline activity: a massive backlog of projects.

In 2012, Industrial Info tracked $20 billion in new projects proposed that year. In 2013, that number jumped to nearly $36 billion. It climbed even further in 2014, with more than $54 billion in new projects being proposed. More than one-third of the projects brought forth in each of those years still linger in the permitting stage. While many face the typical public opinion-based obstacles that one might expect, others are facing a slower regulatory machine as federal and state regulatory agencies get backed up with more projects to review.

One such project is the Aegis pipeline by Enterprise Products Partners (NYSE:EPD) (Houston, Texas). Some portions of the project spent an extra 10 months in permitting, due to a backlog with the U.S. Army Corps of Engineers and other regulatory agencies. Likewise, a much smaller project in North Dakota--the Fryburg Lateral by Belle Fourche Pipeline, part of True Companies (Casper, Wyoming)--has been waiting on final approval from state regulators, forcing it to push back the construction start date into 2016.

On the positive side, with low prices making the economics of crude oil less than favorable, pipeline companies now have some breathing room to finish these projects as they wait for the price of crude oil to become profitable for producers.

For an example as to how U.S. midstream companies are being affected by the current economic environment, see August 12, 2015, article - American Midstream Partners Cuts 2015 Capex 10% Amid Delays in Eagle Ford, Bakken Projects.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and ten international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.