American Midstream files for abandonment of Midla Mainline gas pipeline (Interactive Map)

Source:American Midstream Partners, LP

American Midstream files for abandonment of Midla Mainline gas pipeline American Midstream Partners, LP today announced that it has filed a request with the Federal Energy Regulatory Commission (FERC) to abandon use of its 1920’s vintage Midla ”Mainline” pipeline in order to ensure the safety of people and property along its route.

In its application, Midla explains that, due to original pipeline construction techniques, modern tools cannot be used to find or predict leaks. While the pipeline has leaked for decades, leakage rates are on the increase; cultivation and erosion have reduced pipeline burial depths; floods on the Mississippi River have destroyed six of eight river crossings; and development, including two schools, a prison and a planned housing community, has encroached on the right-of-way.

“While we are aware of no imminent danger, we cannot be sure the Midla pipeline is safe to operate,” said Steve Bergstrom, American Midstream Executive Chairman, President and Chief Executive Officer.“The fact that the pipeline is still in service five decades beyond its predicted useful life is a testament to Midla’s maintenance program. Like an old car, however, there is only so much maintenance that can be done before the frame gives way and the car must be replaced. Midla’s mainline has clearly reached that point, and needs to be shut down and a replacement pipeline or alternate form of service installed and commissioned.”

Once the American Midstream management team made the decision to retire the Midla Mainlines for safety reasons, the company began contacting customers in May 2013 to advise them of the pipeline’s condition and solicit their input on how to best proceed. In response to discussions with those hoping to spur industrial development, Midla commissioned a detailed engineering study that looked at a dozen sizing options for partial reconstruction of the Mainline. Midla also identified several non-pipeline alternatives for assuring that all its customers continue to receive gas service, including trucking compressed natural gas to Midla’s existing distribution system connections. While these are all more expensive than current service, Midla estimates that the delivered cost of natural gas to those it serves to be less than that paid during the gas price spikes of 2008, and if spread across Atmos Energy’s 600,000 customer meters in Louisiana and Mississippi, about $1.76 per month more than they presently pay, a small price to assure the safety of those along Midla’s route. Despite Midla’s efforts, its customers have not chosen an option or combination of options, nor have they suggested alternatives.

In its filing, Midla offers to recommence negotiations that were broken off by its biggest Mainline customer and suggests that the best way to get those negotiations back on track is for the FERC to hold a public Technical Conference in the next two to three weeks, at which Midla’s proposal can be clarified, customers can raise questions and express their concerns (as well as FERC Staff and other interested stakeholders), and Midla can answer them. Midla hopes the Technical Conference can be a springboard for a negotiated solution, and also provide the basis for an expeditious FERC decision on legal issues upon which Midla and its customers disagree. As Midla states in its filing: “An important predicate to useful negotiations, however, is a common understanding of the facts and the law. The facts can be better gleaned in a Technical Conference that, as noted, will facilitate an expeditious decision by the Commission on the law. Armed with both, the parties can turn to negotiating optimal outcomes.”

Midla’s number one objective is to assure public safety through the retirement of the Midla Mainline and substitution of one of the other options available to its customers. An expeditiously processed FERC decision will allow for what appears to be the most viable, trucked compressed natural gas service, to be arranged before the 2014-15 heating season.

Interactive map provided by ENvision Mapping and MapSearch Data.

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