Lawfare! The Energy Transfer Saga Continues + LNG and Intrastate Pipeline Movements

The LNG buildout in the Gulf region, including Texas and Louisiana intrastate pipelines, is underway. Tracking progress on these projects is difficult: LNG terminals are complex and project filings at FERC are often redacted, while intrastate pipelines lack a centralized repository for filings. Both can face complex litigation.

As demand for LNG exports rises, much of it will be met by these hard-to-track projects. To make informed decisions, stakeholders need thorough historical data, expert insights, and an understanding of permitting, regulations, and litigation.

The Arbo team offers advanced competitive intelligence on LNG projects by monitoring ten key FERC orders that usually follow a specific pattern. Recently, FERC issued two such orders for LNG projects. For intrastate pipelines, we gather state-level data from various sources, such as hydrostatic testing permits, land acquisitions, and air permits, to track progress. Many of these projects have shown recent advancement. Additionally, a recent filing by Louisiana Energy Gateway, LLC (LEG) at FERC is the latest chapter in a litigious saga with implications for all intrastate gathering pipelines.

LNG Terminal Project Updates

As we explained in Demystifying LNG Terminal Timelines, we track 10 key “stage gate” orders for LNG projects that fall into two segments - construction authorization orders and activity authorization orders. Corpus Christi Stage II (Corpus Christi) and Port Arthur Phase 1 (Port Arthur) each recently received stage gate authorizations.

Corpus Christi received authorization to energize electrical substations on April 17, which would fall under stage gate 6 — Energize Electrical Substations — signifying a key transition into the second segment of orders focused on authorizing activities and significant progress with construction. Orders in this second segment tend to come quickly, and signify a fast approaching in-service date. Port Arthur received authorization to commence underground piping (stage gate 3) on April 16, which is one of five orders in the construction authorization phase and while it represents progress, the project is still relatively early in its construction phase.

Pipeline Projects Are Progressing

As we discussed in The Haynesville Basin: Growing Interest and Growing Capacity, Arbo tracks the status of inter- and intra-state natural gas projects based in the Permian and Haynesville basins across the entire project life cycle. We recently added Moss Lake’s DeLa Express project to the list of projects we follow after it was accepted into pre-filing at FERC. This project is the largest greenfield natural gas project seen at FERC since Mountain Valley Pipeline, and we will be tracking it closely as it begins the project development process, from FERC certificate and environmental review proceedings to land acquisition efforts.

On the other end of the project development timeline, several of the projects in this region that we have been tracking over the last year have reached commercial operation in the last few months. On the interstate side, Line 40, the pipeline segment associated with the Venice Extension project, received authorization to commence service by the FERC and was placed into service on 4/12/2024. On the intrastate side, TC Energy’s Gillis Access was placed into service in March, which we identified through the acquisition of key operating permits from the Louisiana Department of Environmental Quality.

We track many key milestones that occur between when a project is announced and when it enters service. Over the last month, we have seen a lot of activity for projects in the Gulf Coast region:

Louisiana Connector acquired an easement in Texas, more than a year after the previous most recent land acquisition. The project also received its water quality certificate in April.
Holbrook Expansion has received a completed EA from FERC.
Venice Extension has received air permits for all three compressor stations, including greenfield New Roads CS, which has commenced construction.
Evangeline Pass has commenced construction of phase 2 of Compressor Station 527.
Driftwood’s Gillis Compressor Station received construction commencement extension from LDEQ for an additional 24 months. Commencement construction deadline is now July 6th, 2026.

Tend to Your Own Garden! Energy Transfer vs LEG “Lawfare”

In the “Tale of Two Swamps” section of our Second Quarter Litigation and Project Lookahead, we discussed Energy Transfer’s (ET) FERC petition asking it to assess whether LEG is actually an interstate transmission pipeline as opposed to a non jurisdictional gathering line and to clarify the “primary function” test it uses to make gathering determination. LEG and the Williams Companies, Inc. recently filed a response, accusing ET of using "lawfare" to impede competitors like LEG by denying pipeline crossing requests in the Haynesville Shale area.

ET has suffered recent defeats in Louisiana, as a state court determined the tactic to be commercially motivated. In its FERC filing, Williams and LEG cite this defeat as rational for ET to forum shop at FERC for another avenue to create further delays and uncertainty for the LEG System. They assert that FERC should dismiss the petition as improperly filed and argue that ET should “tend to its own garden” noting that companies routinely build gathering facilities without needing prior declaratory orders.

Technically, Williams and LEG explain that the LEG System’s length, diameter, and high pressure are all normal for gathering systems in the region due to the shale revolution and associated dramatic increase in supply and demand. They draw comparisons to ET’s Eagle Ford Gathering System, and accuse ET of “spilling much ink” about “length and diameter” while operating a comparable gathering system in Texas. They state that LEG will not fall under FERC jurisdiction under any contemplated operational scenario.

With respect to reconsidering the Commission’s current “primary function test” Williams and Leg state that it has provided regulatory stability for decades without enforcement issues. They argue that an industry-wide inquiry would only add to the uncertainty, delaying projects, stifling investment, and opening the floodgates for similar unsubstantiated inquiries.

Williams and LEG make a compelling case. The likelihood of FERC reconsidering its long-standing and rarely litigated gathering test is slim. The question is whether it will entertain ET’s request to apply this test to determine whether the LEG system as designed should indeed be FERC jurisdictional.

Procedurally, as Williams points out, filing this as a “Petition for Order to Show Cause” is odd, and to our knowledge, a case of first impression. So whether FERC entertains it as filed is an open question. But even if it does, Williams makes good points about the practicalities associated with the regional buildout, including the current footprint of large intrastate pipelines. The Commission also likely does not want to become mired in a never-ending series of gathering determinations brought by third parties, so there is a good chance that if it applies the test it will find in favor of LEG being a gathering line

If you would like the most recent Gulf Coast project tracker please contact us.

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