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Released July 11, 2024 | SUGAR LAND
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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Longtime energy-producing regions such as the Haynesville in Louisiana and Texas, and the Permian Basin in Texas, are interlaced with pipeline systems old and new. And with production increasing since the advent of the shale revolution, more pipelines are needed. Just as with new highways and roads, it is inevitable that new lines will cross existing ones.
In Louisiana's Haynesville, midstream giant Williams Companies Incorporated (NYSE:WMB) (Tulsa, Oklahoma) laid out plans for expanding its capacity to carry natural gas from that field to the U.S. Gulf Coast, with a system of lines known as the Louisiana Energy Gateway (LEG). Of necessity, those lines would cross seven existing pipelines owned by another midstream giant, Energy Transfer LP (NYSE:ET) (ET) (Dallas, Texas).
Energy Transfer had filed suit in Louisiana's 36th District Court in Beauregard Parish to prevent that construction. This is one of several lawsuits across Louisiana in which ET contends that the proposed crossings were a threat to its existing lines and that Williams, along with two others, had not provided enough information to determine whether the crossings will be safe. The other two companies being sued in separate actions include DT Midstream Incorporated (NYSE:DTM) (Detroit, Michigan) and Momentum Midstream (Houston, Texas). Among the three, the projects total more than $2 billion in investment.
Recently the 36th District Court found in favor of Williams on all seven crossings. The only stipulation is that Williams not use the "open cut method" in the crossings, which involves trenching.
Noting that this kind of strategy is extremely outside the norm and contending that Energy Transfer was simply trying to muzzle competition, Williams' Chad Zamarin, executive vice president of corporate strategic development, was quoted as saying, "We have literally hundreds of thousands of miles of pipelines that cross each other all over the country."
Energy Transfer contends that it is not trying to stifle competition, but only to ensure the safety of its own pipeline system.
Other Rulings Against Energy Transfer
In April, Louisiana's Second Court of Appeals had ruled against Energy Transfer on behalf of DT Midstream, a case in which Williams and Momentum had both filed amicus briefs backing DT's case. The court overturned a previous ruling that prevented a new DT line from crossing Energy Transfer's ETC Tiger pipeline system.
Energy Transfer had argued that its contract for the 2010 purchase of the Tiger pipeline gave it "exclusive servitude," contending that the phrase meant its permission was necessary for anyone to build a pipeline crossing Tiger.
DT, on the other hand, said "exclusive servitude" applied only to right of way on a parallel basis, not in crossing. While the original ruling found in favor of Energy Transfer, the Second Court of Appeals agreed with DT's view. The court's ruling stated, "we do not find that one-time use of the word 'exclusive' means that [Energy Transfer's] servitude includes all depths and can subjectively be used to block the crossing of another pipeline."
LEG Background
Projected to transport 1.8 billion cubic feet per day (Bcf/d) from the Haynesville to refineries and terminals on the Gulf Coast, Williams' LEG project was originally slated for completion in 2024. But the court delays have postponed that by about a year, with Williams planning a second-quarter 2025 date for the project's operational start.
By expanding takeaway capacity, the LEG project may enhance production in the area and provide more fuel for the U.S. and to feed the nation's growing LNG export capacity. Subscribers to Industrial Info's Global Market Intelligence (GMI) Pipelines Project Database can click here for the related project report.
Precedents Resulting from the 36th Court Ruling
According Zacks Equity Research, "The outcome of this legal battle establishes an important precedent for future disputes between energy infrastructure companies. It points out the judiciary's role in resolving complex regulatory and operational conflicts, reinforcing the importance of strong legal strategies and compliance measures."
Zacks adds that this will make it harder for Energy Transfer to prevent competitors from constructing new pipelines across its own, saying that the decision highlights "the importance of legal preparedness and strategic planning in the energy sector."
The Playing Field
Energy Transfer operates largely in Texas and Louisiana, two of the most pipeline-dense states in the union. Texas has more total pipelines than any other state, according to the U.S. Energy Information Administration (EIA). Louisiana, with 50,000 miles of pipelines but a fraction of its large neighbor's population, has more pipelines per capita than even Texas, according to Bloomberg.
Decisions made on either side of that border could inform a significant number of future plans and litigation in energy supply and infrastructure across the two states that combine to host the majority of the nation's refineries and energy import/export facilities. Industrial Info is tracking a large number of those projects.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
In Louisiana's Haynesville, midstream giant Williams Companies Incorporated (NYSE:WMB) (Tulsa, Oklahoma) laid out plans for expanding its capacity to carry natural gas from that field to the U.S. Gulf Coast, with a system of lines known as the Louisiana Energy Gateway (LEG). Of necessity, those lines would cross seven existing pipelines owned by another midstream giant, Energy Transfer LP (NYSE:ET) (ET) (Dallas, Texas).
Energy Transfer had filed suit in Louisiana's 36th District Court in Beauregard Parish to prevent that construction. This is one of several lawsuits across Louisiana in which ET contends that the proposed crossings were a threat to its existing lines and that Williams, along with two others, had not provided enough information to determine whether the crossings will be safe. The other two companies being sued in separate actions include DT Midstream Incorporated (NYSE:DTM) (Detroit, Michigan) and Momentum Midstream (Houston, Texas). Among the three, the projects total more than $2 billion in investment.
Recently the 36th District Court found in favor of Williams on all seven crossings. The only stipulation is that Williams not use the "open cut method" in the crossings, which involves trenching.
Noting that this kind of strategy is extremely outside the norm and contending that Energy Transfer was simply trying to muzzle competition, Williams' Chad Zamarin, executive vice president of corporate strategic development, was quoted as saying, "We have literally hundreds of thousands of miles of pipelines that cross each other all over the country."
Energy Transfer contends that it is not trying to stifle competition, but only to ensure the safety of its own pipeline system.
Other Rulings Against Energy Transfer
In April, Louisiana's Second Court of Appeals had ruled against Energy Transfer on behalf of DT Midstream, a case in which Williams and Momentum had both filed amicus briefs backing DT's case. The court overturned a previous ruling that prevented a new DT line from crossing Energy Transfer's ETC Tiger pipeline system.
Energy Transfer had argued that its contract for the 2010 purchase of the Tiger pipeline gave it "exclusive servitude," contending that the phrase meant its permission was necessary for anyone to build a pipeline crossing Tiger.
DT, on the other hand, said "exclusive servitude" applied only to right of way on a parallel basis, not in crossing. While the original ruling found in favor of Energy Transfer, the Second Court of Appeals agreed with DT's view. The court's ruling stated, "we do not find that one-time use of the word 'exclusive' means that [Energy Transfer's] servitude includes all depths and can subjectively be used to block the crossing of another pipeline."
LEG Background
Projected to transport 1.8 billion cubic feet per day (Bcf/d) from the Haynesville to refineries and terminals on the Gulf Coast, Williams' LEG project was originally slated for completion in 2024. But the court delays have postponed that by about a year, with Williams planning a second-quarter 2025 date for the project's operational start.
By expanding takeaway capacity, the LEG project may enhance production in the area and provide more fuel for the U.S. and to feed the nation's growing LNG export capacity. Subscribers to Industrial Info's Global Market Intelligence (GMI) Pipelines Project Database can click here for the related project report.
Precedents Resulting from the 36th Court Ruling
According Zacks Equity Research, "The outcome of this legal battle establishes an important precedent for future disputes between energy infrastructure companies. It points out the judiciary's role in resolving complex regulatory and operational conflicts, reinforcing the importance of strong legal strategies and compliance measures."
Zacks adds that this will make it harder for Energy Transfer to prevent competitors from constructing new pipelines across its own, saying that the decision highlights "the importance of legal preparedness and strategic planning in the energy sector."
The Playing Field
Energy Transfer operates largely in Texas and Louisiana, two of the most pipeline-dense states in the union. Texas has more total pipelines than any other state, according to the U.S. Energy Information Administration (EIA). Louisiana, with 50,000 miles of pipelines but a fraction of its large neighbor's population, has more pipelines per capita than even Texas, according to Bloomberg.
Decisions made on either side of that border could inform a significant number of future plans and litigation in energy supply and infrastructure across the two states that combine to host the majority of the nation's refineries and energy import/export facilities. Industrial Info is tracking a large number of those projects.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
