American Midstream asks objection be thrown out in gas pipeline case

Published 12:11am Friday, April 18, 2014

NATCHEZ — The company that is seeking to abandon the area’s only natural gas pipeline requested federal regulators throw out an objection to its proposal this week.

Atmos Energy filed a complaint against American Midstream in late March, shortly before the company announced its intentions to abandon the Midla pipeline, which runs from Monroe, La., to Baton Rouge through the Natchez area.

In the filing, Atmos complained that American Midstream’s open season offering late last year was inappropriate and Atmos had been informed of the intention to abandon the pipeline shortly after American Midstream was acquired by Arclight Capital, a hedge fund.

“Despite just having acquired the system, Midla’s new management immediately claimed that the Midla pipeline system had not been properly maintained, and the company was no longer certain that its mainline was safe to operate. Midla personnel told Atmos that the pipeline would require significant infrastructure investments in order to continue safely operating. Midla also opined that large sections of the Midla pipeline system did not justify the expense of repairs,” the Atmos complaint states.

The complaint also says no significant remedial measures have been taken to address the pipeline’s alleged issues or indications abandonment was necessary.

The Atmos complaint also states negotiations with American Midstream during the months leading up to the abandonment discussion “were contingent upon customers either accepting abandonment of service or agreeing to 20-year contracts for replacement service at rates that were many multiples of existing rates.”

“Midla also repeatedly threatened abandonment of service, initially through a bankruptcy filing, and then subsequently through an abandonment proceeding. Midla demonstrated no willingness to accept any options other than the two described above in these ‘settlement’ talks,” the complaint said.

In its response requesting the Atmos complaint be dismissed, American Midstream said it has been working and will continue to work with customers to find a solution to the 87-year-old pipeline.

“The driving factor for our ongoing efforts is the safety of the people living and working along the pipeline,” American Midstream President Steve Bergstrom said.

“Even if a serious breach of the pipeline occurs far from population centers around the mainline, a breach and the subsequent investigation and recertification could shut down the pipeline for up to one year and leave customers without natural gas. We are offering a safe replacement alternative that will provide a higher level of service and help draw new industry and jobs to the area.”

American Midstram’s objective is to ensure customers have uninterrupted natural gas service, and the company is open to a wide varity of options, Bergstrom said.

“We paid for detailed engineering studies and cost estimates of alternative service options, and made the studies available to our customers,” he said. “We also provided detailed right-of-way information to entities considering the development of alternative solutions. In addition, we offered to convey the pipeline to Atmos at no cost. In summary, we are committed to finding a long-term solution that addresses the needs of all constituents.”

American Midstrem’s filing asks for a technical conference with the Federal Energy Regulatory Commission to address what it characterizes are misconceptions about the proposal.

The FERC must approve any abandonment before the proposal can move forward. FERC rejected American Midstream’s request for a shortened objection period last week.

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