Energy pipeline companies should follow rules of the road
[Editor's note: This story originally was published by Real Clear Wire.]
By Tom Giovanetti
Real Clear Wire
The importance of natural gas to Texas is best demonstrated by the fact that if Texas were a country, we’d be the third largest producer of the fuel in the world. But while Texans understand the value of natural gas, we also appreciate that industry development must work within a framework that respects the rights of others. This is a critical principle that will allow the industry to continue to flourish.
Two energy companies, Williams and Momentum, who are seeking to build new Gulf Coast pipelines in Louisiana on the back of an existing pipeline built by Texas-based Energy Transfer, seem to be skirting traditional property rights agreements. More than ten years ago, Energy Transfer constructed a natural pipeline from Panola County in east Texas to eastern Louisiana. That pipeline has been operating safely ever since.
Last year, Williams and Momentum informed Energy Transfer of their plans to build new pipelines in the same area with an intent to cross Energy Transfer’s pipeline more than 140 times. This is irregular, if not unheard of, in the industry.
Before building its pipeline, Energy Transfer spent years obtaining permits, engaging with the public, and securing right-of-way permissions from landowners. Now these other companies seek to build their pipelines on top of Energy Transfer’s pipeline without federal regulatory approval or public support.
Without oversight and approvals from federal regulators like the Federal Energy Regulatory Commission (FERC), Williams and Momentum are also opening the door to legitimate safety concerns.
FERC is tasked with approving new interstate natural gas pipelines. Before reaching a decision, FERC follows an established procedure that includes applications, reviews, evaluations, and public comment. However, this process is only necessary for transmission pipelines, which are often large high-pressure lines traveling hundreds of miles. Smaller pipelines, known as gathering lines, are generally narrower and travel shorter distances and do not require FERC approval. Williams’s and Momentum’s proposed pipelines seem to fit the definition of a transmission line, yet the companies are classifying them as gathering lines, meaning no FERC oversight and no public input.
While it’s not unprecedented for pipelines to cross one another, the Williams and Momentum plans have about ten times more crossings than normal.
Pipeline crossings are kept to a minimum for good reasons. Digging and constructing around an existing pipeline can lead to damage, and operating competing pipelines in such close proximity can raise questions about liability if something goes wrong.
If a neighbor mentioned they were building a new driveway that was going to cross your property more than 140 times, most people would have questions. Not surprisingly, when these companies suggested these crossings, Energy Transfer asked questions before agreeing. Now, Williams and Momentum are claiming in court that Energy Transfer’s concerns are anticompetitive.
The actions of Momentum and Williams may be clever, but they could undermine decades of established practices in the gas industry. Energy companies need to respect the rights of other companies and property owners, while also respecting the role of well-tested regulatory processes that ensure safety for citizens.
Tom Giovanetti is president of the Institute for Policy Innovation (IPI), a public policy research organization based in Dallas, Texas.
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