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legal Battles Slowing Pipeline Construction in Louisiana

(Bloomberg) — A series of legal battles in Louisiana has slowed construction of pipeline projects worth more than $2 billion in the state. Yet the litigation wasn’t from environmentalists: It was spearheaded by one of the biggest natural gas pipeline operators in the US.

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Over the past few months, Energy Transfer LP has fought in court to block rivals from building pipelines to move gas to export terminals on the Gulf Coast. Co-founded by Texas billionaire Kelcy Warren, the industry giant argued 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 hadn’t taken adequate steps to ensure they’ll cross its own pipelines safely.

On Tuesday, Momentum and Energy Transfer said they had settled their dispute, allowing Momentum to proceed with its project to ship gas from the Haynesville shale basin of Louisiana and Texas to the Gulf Coast.

DT Midstream found an alternative to crossing Energy Transfer’s pipeline, but the legal fight continued. In April, a state appellate court ruled in DT Midstream’s favor.

A victory by Energy Transfer would have made 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.

The dispute between Energy Transfer and Williams is ongoing.

The battles in Louisiana, home to more miles of pipeline per capita than anywhere else in the nation, have come 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.

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.

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

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.

Energy Transfer contended in its lawsuits that the three companies had not provided enough information to determine whether the crossings will be safe.

“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.

“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.”

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.”

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

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

(Corrects status of pipeline projects in the first and fourth paragraphs and status of lawsuits in the second, third and fourth paragraphs.)

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