Between a Rock and a Hard Place for Louisiana Pipeline Operators?

May 24, 2014 § Leave a comment

Legislators in Louisiana are pushing for state control of interstate pipelineshutterstock_5793058s once abandonment is approved by the Federal Energy Regulatory Commission (FERC). If Senate Bill 525 becomes law, the intrastate pipeline then would be subject to the Louisiana Public Service Commission, which would have the final say in whether the pipeline could be abandoned.

It is unclear how the bill’s sponsors intend to deal with the issue of effectively usurping federal jurisdiction over interstate pipeline safety by PHMSA, if the Commission does not approve abandonment. Under the bill, if the Commission does approve abandonment, the pipeline’s operators then would have to cover the costs of providing customers with alternate means to get natural gas.  The bill would place an undue burden on pipeline companies who would be forced to continue to operate aging infrastructure under an uncertain regulatory structure with conflicting demands. The bill was drafted in response to Midla pipeline’s application for abandonment of an 87-year old pipeline, which supplies natural gas to residents in eastern parishes, and may have operated past the end of its useful life.

The bill also appears to ignore the safety issues central to abandonment.  American Midstream Partners LP  filed its request with the FERC to abandon its 1920’s vintage Midla Pipeline in order to ensure the safety of people and property along its route.   In its application, Midla outlined compelling reasons for abandonment including the inability to use modern technology to detect and predict leaks on the pipeline.  Despite the company’s efforts to maintain the pipeline, at some point the aging infrastructure has been irreparably impacted by time.  Cultivation and erosion has whittled away depth of cover; floods on the Mississippi River have destroyed six of eight river crossings; and development, including two schools, a prison and a planned housing community, has encroached on the right-of-way.

Reports indicate that  at the point the company made the decision to retire the Midla mainlines for safety reasons, efforts began in earnest to engage stakeholders in the process.  American Midstream identified several alternatives for assuring that impacted customers would continue to receive gas service post pipeline abandonment.  Rather than engage in this process, lawmakers want to force American Midstream’s hand, and in the process may be creating more serious problems than they hoped to solve.


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