• 61°

Kinder Morgan asks to ‘vacate’ pipeline project

Confirmation came Thursday that a proposal to repurpose a 964-mile pipeline to carry byproducts of fracking has been taken off the drawing board.

Houston-based energy giant Kinder Morgan filed a formal “request to vacate certificate” with the Federal Energy Regulatory Commission, effectively terminating the controversial Utica Marcellus Texas Pipeline project.

Such a request to vacate means “all of the authorizations that (FERC) has granted would be removed,” said Tamara Allen-Young, a media spokesperson for FERC.

“They are going to withdraw, basically, or give up their authorization,” Allen-Young said. “If they want to do something similar or the exact same thing, they would have to reapply.”

Allen-Young said that means Kinder Morgan would have “to start from square one” with any future repurposing project.

In the request to vacate, Kinder Morgan-owned Tennessee Gas Pipeline Company states it no longer needs the “certificate of public convenience and necessity” that FERC granted for the project on Sept. 29, 2017.

“Due to changed market circumstances, Tennessee no longer intends to pursue the (abandonment and capacity restoration project) and will continue to utilize its existing facilities and pipeline capacity to provide service to its shippers,” the request states. “Consequently, Tennessee hereby requests that (FERC) vacate the certificate granted to it in this proceeding. Tennessee appreciates (FERC’s) assistance with this matter.”

About 20 miles of Tennessee Gas Pipeline No. 1 run through Boyle County, which has been a hub for opposition to the pipeline proposal.

Kinder Morgan announced it would no longer pursue the project in its third-quarter earnings statement released Wednesday afternoon.

Kinder Morgan “has determined that it will not proceed with its previously proposed Utica Marcellus Texas Pipeline (UMTP) natural gas liquids project, instead maintaining that segment of an existing TGP pipeline in natural gas service while developing an attractive project to reverse its flow,” the statement reads. “TGP is now actively pursuing commercial arrangements for natural gas service from Appalachia to the Gulf of Mexico on that segment of its pipeline.”

The earnings statement also notes that the Tennessee Gas Pipeline is one of several natural gas pipelines owned by Kinder Morgan that saw increased activity in the third quarter.

“The natural gas pipelines segment had another outstanding quarter,” Kinder Morgan President Kim Dang said in the earnings statement. “The segment’s financial performance for the third quarter of 2018 was 9 percent higher relative to the third quarter of 2017.”

The termination of the UMTP project was also discussed on Kinder Morgan’s third-quarter earnings conference call, according to a transcript of the call produced by the Motley Fool investing company. That conversation focused on Kinder Morgan’s apparent desire to continue using the pipeline for natural gas, but to reverse the flow and carry natural gas from the northeast to the Gulf Coast.

“… so you mentioned on UMTP kind of moving away from that project. I think you had filed for abandonment on the TGP portion there in 2015,” said Colton Westbrooke Bean, an analyst for Tudor, Pickering, Holt & Co., according to the transcript. “Given the abandonment filing, is there anything incremental you need to do on permitting if you were to pursue a project there?”

“Yeah. We’re not pursuing that project any further and we reflected that in our accounting for the quarter,” responded Kinder Morgan CEO Steven Kean. “… And part of the reason for that is, we haven’t gotten the customer sign-up on UMTP, but just as importantly, we have a lot of interest in that pipe, which is currently in gas service — remaining in gas service and the potential for another long series of reversal projects that we’ve done on TGP in order to take the Marcellus and Utica gas south … it’s a function of a lack of opportunity on the one hand, but thankfully the emergence of a very good opportunity on the other.”

In response to a follow-up question, Kean said the Tennessee Gas Pipeline is “among the few remaining opportunities to take existing northbound capacity and turn it around.”

“So, it’s one of the last, if not the last, pipeline reversal projects,” Kean said, according to the transcript. “So, we think if we can — that it is attractive in this marketplace.”