December 2024, Vol. 251, No. 12
Government
FERC Rejects Effort to Regulate Williams’ Gathering Line
By Stephen Barlas, Contributing Editor, Washington, D.C.
(P&GJ) — The Federal Energy Regulatory Commission (FERC) just gave a big boost to interstate pipelines that are considering new connections between shale fields and customers.
Its decision at the end of September was a victory for Williams Companies, which had been targeted by Energy Transfer (ET), in this instance a pipeline route competitor, who argued Williams’ Louisiana Energy Gateway (LEG) project was an interstate pipeline and had to be regulated by the FERC. Williams argued that LEG was a gathering line and outside the FERC’s jurisdiction.
The LEG System will bring shale gas production from the Haynesville Shale, Tuscaloosa Marine, Austin Chalk, and surrounding production regions to downstream transmission systems and Gulf Coast markets. It will originate in east Texas and extend into Louisiana.
Energy Transfer argued the length and diameter of portions of the LEG system are longer and greater than what the commission typically considers to be gathering facilities.
In its order denying the ET petition, FERC stated facilities that are as large as typical transmission lines may be found to be gathering lines when other primary function factors demonstrate characteristics consistent with gathering. That was the case with the LEG system, the FERC decided.
ET owns and operates the Gulf Run pipeline system, with which Williams’ LEG system will directly compete.
After the FERC ruling, Williams issued a statement saying, “With this ruling, Williams continues to prevail against Energy Transfer’s efforts to hinder the development of our project. Williams is investing significant resources in Louisiana to support growing demand for low-cost, reliable, and clean natural gas and LNG, and we look forward to putting our LEG project into service by the second half of 2025.”
In a blog post, Van Ness Feldman LLP, which represented Williams before FERC, wrote:
“Williams’ victory … provides a greater degree of certainty to industry as gathering companies contemplate new projects to gather gas from burgeoning shale formations. The Order indicates that FERC is likely to continue to apply its primary function test flexibly in future proceedings, recognizing the changes that are occurring in natural gas production and gathering as a result of the shale gas revolution. As such, the order may reassure developers of other large, high-pressure systems that gather gas from shale formations that their facilities are non-jurisdictional.”
FERC has developed a number of tests to determine which facilities are non-jurisdictional gathering facilities and which facilities are jurisdictional transmission facilities.
The Commission relies on the “primary function test,” which considers the physical and geographical attributes of a facility, including: (1) the length and diameter of the pipeline, (2) the facilities’ geographical configuration, (3) the extension of the facilities beyond the central point in the field, (4) the location of compressors and processing plants, (5) the location of the wells along all or part of the facility, and (6) the operating pressures of the pipeline.
Energy Transfer argued LEG flunked those tests because its Juniper South section will extend 110 miles and be 42 inches in diameter. Williams claimed that the significant size and output of production areas to be crossed by the LEG System support the need for large-diameter gathering facilities.
Regarding the Juniper South segment, Williams asserts that its 110-mile pipeline is similarly dictated by the region’s large current and expected production, not only from the Haynesville Shale, but also from the Austin Chalk and Tuscaloosa Marine Shale production areas.
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