Energy Transfer cannot block construction of a rival natural gas pipeline that crosses its own, a Louisiana court of appeals today ruled in a 3-0 decision, reversing a preliminary injunction granted a year earlier in midstream company's favor.
The long-awaited decision is an important step forward in the ongoing conflict over Energy Transfer's attempt to block US pipeline companies DT Midstream, Williams and Momentum Midstream from building gas pipelines that cross its own Tiger pipeline in northern Louisiana.
The April 2023 ruling by a state district court in favor of Energy Transfer prompted an outcry from industry groups and now-governor Jeff Landry, who warned the precedent set could threaten production growth out of the Haynesville shale and the coming US LNG export boom.
Louisiana district court judge Nicholas Gasper erred in his interpretation of Energy Transfer's servitude rights when ruling in April 2023 that the company could block DT Midstream, the 2nd Circuit Court of Appeals in Shreveport said in its ruling today.
The case hinges on the validity and meaning of the phrase "exclusive servitude" used in a contract Energy Transfer signed with the now-defunct timber company, Red River Louisiana, from which it purchased the right to construct and maintain the Tiger pipeline in 2010. Energy Transfer says that the "exclusive servitude" clause means no other entity can build a new gas line across the path of the Tiger line without its consent.
The 2nd Circuit Court of Appeals disagreed. The one-time use of the word "exclusive" does not mean Energy Transfer's servitude rights include all depths nor enable it to "subjectively block the crossing of another pipeline," the court said. Moreover, Energy Transfer failed to prove that the safety of the proposed crossing was a concern, but was concerned with how it could extract a commercial benefit from the crossing, the court said.
Energy Transfer in a Louisiana senate committee in March argued the three pipeline companies' projects propose an excessive number of crossings under and over the Tiger line, while an attorney for Momentum contended Energy Transfer is merely interested in controlling market share.
Williams applauded today's court decision, adding it supports its own appeal in the 2nd Circuit of three injunctions obtained by Energy Transfer against Williams' 1.8 Bcf/d (51mn m3/d) Louisiana Energy Gateway pipeline, which proposes to cross the Tiger pipeline. The legal dispute delayed expected completion of the project to the second half of 2025.
Energy Transfer also remains in litigation with Momentum, which in 2022 aimed to have its 1.7 Bcf/d New Generation Gas Gathering pipeline in service by the second half of 2024.
The Louisiana state senate is expected to vote in the coming weeks on a bill seeking to clarify pipeline servitude rights and expedite pipeline crossing disputes, advancing legislation promoted by the three natural gas pipeline companies being blocked by Energy Transfer. The bill is a companion to two bills that passed 100-0 and 99-0, respectively, in the Louisiana House of Representatives on 21 March.
