Energy Transfer Accused of Boxing Out Louisiana Pipeline Rivals

Rachel Adams-Heard and Elizabeth Elkin, Bloomberg News  January 22, 2023

(Bloomberg) -- A natural gas pipeline developer is accusing Energy Transfer LP of “anticompetitive” behavior after the company denied three projects from crossing its pipelines in Louisiana, sparking a legal battle affecting more than than $2 billion of energy infrastructure.

A Momentum Midstream affiliate told a Louisiana district court that Energy Transfer is holding up its $1.6 billion project by refusing to let the firm cross the pipelines of its much larger rival. Energy Transfer owns a vital stretch of lines across East Texas and Louisiana and is seeking to expand its Gulf Run system amid booming demand for gas along Louisiana’s coast, where the fuel is chilled to a liquid for export.

“Energy Transfer is blatantly and openly engaged in anti-competitive conduct and unfair trade practices in violation of Louisiana law,” the affiliate, New Generation Gas Gathering LLC, said in a November court filing. “Without entry by competitors, expansion of Gulf Run thus would allow Energy Transfer to control approximately 80% of the relevant market.”

The arguments come in a case in which Energy Transfer sued to block Momentum’s project from crossing its pipelines, saying it would impede upon its rights. Energy Transfer won a similar case against another pipeline company, DT Midstream, earlier this year. That case is now being appealed.

Energy Transfer, co-founded and chaired by billionaire Kelcy Warren, is a behemoth in the pipeline industry. In Texas’s beleaguered energy market, the Dallas-based operator stands out for what for what insiders and customers describe as an especially aggressive negotiating culture, and engaging in activities one expert called “authorized monopoly abuse.”

Read More: A Pipeline Giant Is Helping to Push Texas’s Power Grid to the Brink

Private equity-backed Momentum is one of three developers sparring with Energy Transfer in Louisiana’s courts. Those companies are arguing that the pipeline giant’s claim of holding exclusive right to key parts of the state threatens to upend the gas pipeline industry, raise costs for consumers and potentially harm America’s status as a dominating energy exporter. One case even captured the attention of Louisiana Attorney General Jeff Landry, who’s soon to be the state’s next governor.

Energy Transfer has also sought temporary restraining orders against affiliates of Williams Cos. and DT Midstream for two projects, arguing that its contracts give it exclusive rights to the land and that crossings could jeopardize the safety of its pipelines. Proponents say new projects are essential to ensuring gas from the Haynesville shale formation, primarily in East Texas and northwestern Louisiana, can meet the demand of export terminals and end users along the coast.

In the case of DT Midstream, Energy Transfer won in district court, though the judge said he “does not like the potential consequence” of the ruling. DT Midstream appealed the decision. The company has since disclosed it was able to use an alternate route and is now seeking damages from Energy Transfer for the additional cost, which it calls “significant.”

Energy Transfer, Momentum and DT Midstream representatives declined to comment, citing ongoing litigation. A Williams representative said “pipeline crossings are a standard industry practice necessary for our ability to gather and deliver low-cost, reliable and clean natural gas to premium markets.”

Energy Transfer has said in legal filings that it believes DT Midstream’s appeal is moot. The company also said crossings sought by Williams and Momentum were numerous, contained incomplete information and disregarded landowner contracts that Energy Transfer says gives the operator exclusive right over certain stretches.

Louisiana’s attorney general said that the district judge’s interpretation of “exclusive” in the DT Midstream case is wrong. In a supporting brief filed in the company’s appeal, Landry’s office said the district judge’s decision “will have far-reaching consequences for Louisiana’s energy sector and, indeed, perhaps for the nation’s energy independence.”

Energy Transfer is no stranger to pipeline delays. Its own projects have faced repeated legal and regulatory snafus, most famously in the case of the Dakota Access crude pipeline, which drew on-the-ground protests and years of lawsuits.

Natural gas production from the Haynesville shale basin already faces bottlenecks from a lack of pipeline capacity, the Louisiana Oil & Gas Association said in a supporting brief in DT Midstream’s case. Chesapeake Energy, one of Louisiana’s biggest producers, is a key customer of the Momentum pipeline project and has a 35% ownership option.

--With assistance from Ruth Liao and Mitchell Ferman.

©2023 Bloomberg L.P.

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I find this to be a disturbing story.  I hope the Courts figure out some way to “fix” this.  Our family land has 2 gas pipelines and 1 water line on R-O-Ws we granted.  I’d prefer not to have any more pipelines, but I REALLY don’t like the idea of a company to which we granted a R-O-W could declare that they could prevent us from granting another one to a different company that would run either above or below the existing pipeline.

Maybe  Gov Landry can fashion some legislative fix.  

Perhaps all of the players on this Site can begin to push back on any future grants of R-O-W to Energy Partners.  Of course, they could take us to Court and get the R-O-W anyhow, but it would really slow them down and cost them money. 

All of these pipeline expansions are being built to benefit the LNG export industry.  As intrastate pipelines I would think that Louisiana has existing case law that will come into play and that the Attorney General will play a part.  The LNG industry is likely to put their weight behind maximizing transportation options. This area of south Louisiana is a spider web of existing pipelines and new construction of any significant distance will often if not always have to cross one or more existing lines.  Sounds like an anti competition effort on the part of Energy Transfer to limit producers options on whose pipeline they can send their gas through.

thanks.  Assuming Energy Transfer Partners plan on building more pipelines in NW La or East TX, I still think we land owners should make our views know to Energy Transfer Partners, FERC, and our local State representatives and senators.

By all means.

Just to relate my experience with our local state representative, Dennis Bamburg, Jr. I emailed Representative Bamburg to relay my concerns about this issue and 10 minutes later, got an email back from his office advising that my email had been brought to his attention. Another 20 minutes and I get a call from Representative Bamburg himself. He was not aware of this particular issue and was interested to find out more. If you dont know your local representatives, heres a link.

We actually have a section of the ETP Tiger pipeline on our property and in that contract it is specified that they must allow other pipelines to cross them. Its hard to think of everything to include in these agreements but shows that good representation can pay for itself down the road.

Bacon:  that's a good idea, and unbelievable responsiveness from Mr. Bamburg.  But I think that this issue may lie more with FERC - Federal Energy Regulatory Commission.  So sending the same message to Senator's Kennedy and Cassidy, and Rep Johnson might also help.  While I'm "from" Louisiana, I haven't lived there in more than 30 years.  Still own some land and minerals.

Skip:  Do you think that the Energy Transfer Partners issue is federal, state, or both?



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