FERC Takes Aim at Adjusting Pipe Rates in Light of Trump Tax Cut
Last Thursday the Federal Energy Regulatory Commission (FERC) held an open meeting during which the commissioners “took significant action” to address the Trump tax cut legislation enacted last December. FERC wants to be sure the tax cuts coming to electric companies and pipeline companies are passed on to consumers and pipeline shippers. We are still trying to make sense of it all and frankly, we still don’t fully understand it. What we can tell you about what FERC did last week is this: The agency proposed new solutions to eliminate “tax loopholes” for natural gas pipelines. Closing these so-called loopholes will eliminate certain tax benefits for MLPs–master limited partnerships. A good many pipeline companies (most) are organized as MLPs, which allows tax advantages to flow to investors. With certain tax benefits for MLP unitholders on the chopping block, all of a sudden some (most?) MLPs don’t look like such a hot investment anymore, at least on paper. Which has caused pipeline companies, many of them with operations in the Marcellus/Utica, to issue a flurry of public announcements to say “FERC’s actions won’t impact us all that much.” The stock market certainly didn’t share that sentiment with shares (called “units”) in MLPs taking a hit since FERC’s announcement. Below is a collection of stories–bits of stories–that we’ve pieced together in an attempt to shed light on what is happening, and how it may change the pipeline business in the future…
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In early March MDN reported that Sunoco Logistics’ underground horizontal drilling (HDD) work on its massive Mariner East 2 NGL pipeline near Philadelphia had resulted in several sinkholes developing (see 
We have to confess this story is a bit complex to understand. We will take a stab at making the complex understandable. Blue Racer Midstream has a subsidiary called Blue Racer NGL Pipelines LLC. The subsidiary operates the G-150 pipeline system, which provides batched propane and butane service. G-150 currently, located in West Virginia, connects a Natrium, WV processing plant to the TE Products Pipeline Co. (TEPPCO). The G-150 pipeline will also have a connection to the Mariner East 2 Pipeline when it goes into service, theoretically in June of this year. Currently the G-150 is flowing about 6,300 barrels per day of product through it–only 20% of its capacity. When the connection with ME2 is up and running, Blue Racer says it can handle 30,000 bbl/d through the G-150. However, Blue Racer itself signed up for most of the capacity (27,000 bbl/d). Blue Racer recently asked the Federal Energy Regulatory Commission (FERC) to allow it to have two different rate structures–a lower rate for “committed” shippers (Blue Racer itself with its 27,000 bbl/d) and a higher rate for uncommitted shippers. FERC rejected the request pointing out that existing shippers with contracts–namely Chesapeake Energy–would be left out in the cold in favor of Blue Racer moving its own volumes at lower prices. Yes, it’s complicated. Bottom line, Blue Racer can’t do what it wants and has to go back to the drawing board…
Dominion Energy’s $6.5 billion Atlantic Coast Pipeline (running from West Virginia through Virginia and into North Carolina) is supposed to get built this year. ACP began to cut trees along the pipeline’s path in late January (see 
The Pennsylvania Dept. of Environmental Protection (DEP) has just shut down further drilling for the Mariner East 2 Pipeline project at Snitz Creek in Lebanon County, PA because of a 50 gallon spill of non-toxic drilling mud. This isn’t the first time the DEP has stopped underground horizontal directional drilling (HDD) work at Snitz Creek. Last November they did the same thing for a piddly 1 gallon spill (see 
Anti-fossil fuel nutters have been on a holy mission to stop a 3.5-mile, 8-inch pipeline from being built under the Potomac River by Columbia Gas (see 
In April 2016, three Obama-appointed Federal Energy Regulatory Commission (FERC) commissioners approved the $116 million Williams Transco Garden State Expansion pipeline project (see 
There’s a number of threads to the ongoing saga of Constitution Pipeline, a $683 million, 124-mile pipeline from Susquehanna County, PA to Schoharie County, NY to move Marcellus gas into New York State and from there, into New England. The Andrew Cuomo-corrupted NY Dept. of Environmental Conservation (DEC) refused to grant the pipeline necessary federal stream crossing permits, blocking construction, in April 2016 (see 
Anti-fossil fuel nutters have been on a holy mission to stop a 3.5-mile, 8-inch pipeline from being installed under the Potomac River (see 
We’re not quite sure what to make of this story. North Carolina has been, as we’ve long pointed out, nitpicking in an attempt to slow down (or stop) the Atlantic Coast Pipeline (ACP) from traversing the state (see 
In January MDN brought you the sad news that the Philadelphia Energy Solutions (PES), which operates the East Coast’s largest refinery on the banks of the Delaware River, had filed for Chapter 11 bankruptcy (see 
Rover Pipeline is in hot water again. This time it’s not Captain Craig “Ahab” Butler from the Ohio EPA, but the West Virginia Dept. of Environmental Protection. In a letter just released publicly (dated March 5), WVDEP slapped Rover with a “cease-and-desist” order, stopping all construction of Rover in the state, because of inspections in February that found 14 violations of water pollution regulations. The violations occurred in Doddridge, Tyler and Wetzel counties. Violations ran the range of leaving trash behind at construction sites to improper perimeter controls (no erosion devices installed) to failure to clean up the roads they used. In addition to trouble in WV, Rover is also facing new issues in both Ohio and Pennsylvania. In February heavy rains in the region caused “slippage issues” where the pipeline is being installed. Rover filed a report with the Federal Energy Regulatory Commission (FERC) last week to say it has eight crews working to correct slippage issues at six locations along its 51-mile Burgettstown Lateral. Here’s the latest on WV shutting down Rover, and Rover’s work to fix slippage issues…
Last week MDN reported that due to underground horizontal direction drilling (HDD) in Chester County, PA for the Mariner East 2 (ME2) Pipeline project, a third sinkhole had developed. ME2 is being built close to the existing Mariner East 1 (ME1) pipeline. The sinkhole exposed a portion of the ME1 pipeline to the open air, which is why the head of the state Public Utility Commission (PUC) temporarily shut down the propane and ethane flowing through ME1 (see 
We bet you didn’t know that a bloated, inefficient government bureaucracy like the Pennsylvania Dept. of Environmental Protection (DEP) can cut down on the amount of time it takes them to review permits necessary in the drilling process (like erosion and stream crossing permits)–just by changing the paperwork. That’s the claim the DEP is making. Yesterday the DEP released new paperwork–new forms to fill out–for Chapter 105 General Permit Registrations relating to water obstructions and encroachments. These new forms “will improve the quality of General Permit registration requests, eliminate unnecessary redundancies, and reduce review time frames.” Yeah, and we have a bridge in Brooklyn we’d like to sell ya…
As we reported last week, this week the PA House of Representatives was due to host a hearing on a slate of bills aimed at fixing not only the slowmo way the state Dept. of Environmental Protection approves permits, but also roll back some of the egregious regulatory overreach in PA (see