Updates from Quarterly Earnings Calls - Projects and Steel Tariffs

Many of the pipeline and LNG projects that are captured in LawIQ's platform are developed and oftentimes constructed by publicly traded companies that host quarterly earnings calls. While some of our customers regularly track or even participate in such calls, other customers may not have the time to benefit from the information that can be derived from the calls, including the competitive analysis and business opportunities that can be gleaned from the information presented. In addition to providing information on FERC projects, the calls also provide information about intrastate gas and oil pipeline projects that our research team follows on a qualitative basis, including projects in the Permian basin. This quarter also involved company commentary on how the newly imposed steel tariffs are impacting project development, as well as anticipated impacts on pipeline rates associated with the upcoming Form 501G filings (a topic we'll dive into in Friday's Insights).

FERC Pipeline Projects

For all FERC projects included in the platform, we provide a high/medium/low projected in-service date (ISD) by comparing key characteristics of a project to those in our historic data. During their recent earnings calls, Enbridge and TransCanada discussed the projected ISDs for several of their projects, which are consistent with the median dates provided in our platform, as shown in the below screenshots.

Both Nextera Energy and Dominion Energy held their earnings calls before FERC staff had issued the stop work orders for their projects. Before the stop work order, Nextera stated that it was still on track to put the Mountain Valley Pipeline project into service by the end of the first quarter of 2019, and Dominion confirmed its intent to put Atlantic Coast into service by the fourth quarter of 2019. (See Late-filed Information Can Delay a FERC Decision - What that May Mean for ACP/MVP for our most recent Insights on both projects.)

Williams discussed both its Constitution Pipeline project and its Northeast Supply Enhancement project. With respect to Constitution, Williams indicated that it intended to appeal FERC's denial of its rehearing request, which will challenge FERC's determination that the New York State Department of Environmental Conservation did not waive its right to issue a water quality certificate for the project. As for its Northeast Supply Enhancement project, Williams indicated that it had moved the projected in-service date for that project to the end of 2020 due to the need to resubmit water quality certificate applications in both New York and New Jersey.

Permian Intrastate Projects

This fall, we will begin providing our customers with qualitative reports on the progress of Permian intrastate pipeline projects based on our assessment of federal, state and local permitting, right of way acquisition and the financial progress of the various projects that have been proposed to provide takeaway capacity from the Permian. On this quarter's earnings calls, neither Sempra nor Boardwalk's parent company, Loews, provided an update on the Permian to Katy (P2K) natural gas pipeline that they had previously announced. We were recently informed by the Texas Railroad Commission staff that the application for this project was withdrawn. In addition, the project website is no longer operating. The P2K pipeline may be one of the first casualties, as a number of projects fight to gain commercial viability.

The following table shows the status of a number of Permian projects discussed during this quarter's earnings calls. We will be providing our insights on these projected ISDs based on our analysis of the public filings made by these projects at the federal, state and local levels. For now, we have listed the projects below in the order of their in-service dates, as discussed by the project owners during this quarter's earnings calls.

Keystone XL and Line 3

TransCanada stated that it expected primary construction for Keystone XL to begin in 2019 and that it will be completed in 2021. At this point, all written appeals and replies have been filed at the Nebraska Supreme Court. As to timing, we expect a final court decision by Q1 2019. TransCanada noted that the Nebraska PSC released an EIS last week with comments due by the end of this month. Since the alternative did not have an EIS, which is the crux of the complaint against it, an EIS needed to be performed for what has actually been approved. We do not see anything in the EIS that would hold up the process.

For Line 3, which we recently discussed in Enbridge's Line 3 Need Determination: Takeaways for Regulated Gas Pipelines (and FERC) , Enbridge reported that it expected to receive a written order from the Minnesota Public Service Commission that would document its decision approving the certificate of need and route permit through that state. Enbridge said it will be working on the other required permits through the end of 2018 and anticipates beginning construction during the first quarter of 2019 with plans to have the entire line in service in the second half of 2019.

Steel Tariff Update

As we discussed in Will President Trump's Steel Tariffs Slow Permian Takeaway Capacity Buildout?, Plains All American Pipeline acknowledged that its request for an exclusion from the tariffs on imported steel had been denied in July, but that the denial was without prejudice. Plains indicated that it intends to refile for the exclusion. If that exclusion request is also denied, the Cactus II project will bear a $40 million cost increase. Plains said that it would be moving forward with the project but still believes that imposing a tax on pre-existing orders is not just.

Our discussion on the steel tariffs suggested that the tariffs would at least cause the developers to "hit the pause button."  On its call, Kinder Morgan acknowledged that the tariffs on imported steel had created uncertainty, and that the uncertainty required it to spend extra time making sure that it has a clear supply chain that gets pipe to its projects at a predictable price and time, but noted that it believes the tariffs will not impact progress on Gulf Coast Express.

Insights Coming Soon

What to expect on forthcoming 501 G filings

Analysis of the pending Transco rate case

Insights You May Have Missed

Late-filed Information Can Delay a FERC Decision - What that May Mean for ACP/MVP 

Spire and National Fuel Decisions - Impact on LNG Projects and FERC Certificate Policy