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Pipeline Brawl in Louisiana Rattles Industry Desperate to Build

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A legal battle in Louisiana is hobbling construction of three pipeline projects worth more than $2 billion. Yet the litigation isn’t from environmentalists: It’s spearheaded by one of the biggest natural gas pipeline operators in the US.

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Energy Transfer LP wants to block three of its rivals from building pipelines to move gas from northwest Louisiana and East Texas to export terminals on the Gulf Coast. Co-founded by Texas billionaire Kelcy Warren, the industry giant argues the projects by Williams Cos., DT Midstream Inc. and Momentum Midstream, by crossing under its own conduits, would encroach on its right of ways and that the companies haven’t taken adequate steps to ensure they’ll cross its own pipelines safely.

A victory by Energy Transfer would make it “nigh impossible” for some pipeline projects to advance, Louisiana Governor Jeff Landry wrote in a court filing in November during his time as state attorney general. Such a precedent could imperil an industry already desperate for pipeline expansion.

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The battle in Louisiana, home to more miles of pipeline per capita than anywhere else in the nation, comes as natural gas use in the US is expected to surge.

Utilities are bracing for the largest increase in power demand in a generation due to data centers for artificial intelligence, as well as computer-chip factories and a growing number of electric vehicles. Some of that additional power will come from wind and solar. But a significant portion will be from gas-fired plants.

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While environmentalists warn new pipelines will prolong US dependence on fossil fuel, industry leaders say the economy will suffer without them. Goldman Sachs Group estimates the nation needs to increase pipeline capacity by as much as 23% at a cost of nearly $25 billion to meet demand by 2030.

If state and federal officials can’t find ways to make it easier to permit and build pipelines, the outcry from utilities, tech companies and others will be significant, Williams Chief Executive Officer Alan Armstrong warned on a recent call with analysts.

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“The scream is going to get pretty loud,” Armstrong said on the call.

Read More: Permits for US Energy Projects Are So Bad Unlikely Allies Emerge

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Yet pipelines have become difficult to build, especially when crossing state lines. A string of major projects has flamed out in the face of political and legal challenges over the past decade, including TC Energy Corp.’s Keystone XL, Dominion Energy Inc. and Duke Energy Corp.’s Atlantic Coast gas pipeline and Williams’s Constitution project.

Part of the reason pipelines are so hard to build is that they require a litany of federal and state permits vulnerable to court challenges. Louisiana and Texas are among the few states where developers have managed to advance projects in recent years, in part because officials there haven’t aggressively used the federal Clean Water Act and other measures to block projects in the way they’ve been stymied in the Northeast.

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Now Williams, DT Midstream and Momentum Midstream are facing resistance from one of their own peers.

Energy Transfer contends the three companies have not provided enough information to determine whether the crossings will be safe.

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“We will continue to push back on these requests until we are able to review all pertinent information to ensure the safety of our pipelines and the landowners through which we pass,” Energy Transfer spokeswoman Vicki Granado said in an email.

It’s “extremely rare” for a pipeline developer to use the strategy Energy Transfer is employing to block competitors, Chad Zamarin, the executive vice president of corporate strategic development at Williams, said in an interview.

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“We have literally hundreds of thousands of miles of pipelines that cross each other all over the country,” he said.

Williams and the others argued Energy Transfer, which controls a sprawling pipeline network in the region, is trying to box them out. An affiliate of Momentum Midstream said in a November court filing said the company is “blatantly and openly engaged in anti-competitive conduct.”

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The lawsuits filed by Energy Transfer, including more than a dozen cases in local courts spread across the state, continue to play out.

Read More: A Pipeline Giant Is Pushing Texas Power Plants to the Brink

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Last week, a judge in a parish court ruled in favor of Williams on seven crossings in Beauregard Parish. And in another, an appeals court ruled Energy Transfer failed to prove “safety was an actual concern” and instead said the company appeared to be trying to “gain a ‘commercial’ benefit from the crossing.” The court reversed a temporary restraining order that had forced DT Midstream to stop construction.

An Energy Transfer pipeline under construction.

DT Midstream said it does not comment on pending litigation. Momentum Midstream declined to comment.

Energy Transfer, meanwhile, rejects the notion that it’s trying to stifle competition.

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“Our top priority is and will always remain the safety of our assets,” Granado said.

Copyright 2024 Bloomberg.

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Topics
Texas
Louisiana

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