Citing a lack of customers, companies suspend work on Bluegrass Pipeline

STAFF REPORT

Monday, April 28, 2014, 12:10 p.m. — The developers of the Bluegrass Pipeline are suspending investments in the project due to the lack of customers for the Natural Gas Liquids (NGLs) the pipeline would transport.

The announcement came Monday morning in messages posted on the Williams Co. website and the Bluegrass Pipeline website.

The pipeline project has seen considerable opposition from landowners and environmental groups who opposed the pipeline and opposed its use of eminent domain to acquire needed easements.

In a Williams Co. press release, the company said it had not been able to get sufficient commitments from customers for the NGLs, adding that it was continuing discussions on when demand will increase. Should demand increase, the project could be revived, the statement said.

The company’s options on the easements they have secured are good for three years. If the easements aren’t used, they revert back to the original property holder.

The initial money paid to landowners is nonrefundable. The balance of the payments were contingent on the completion of the pipeline. If the pipeline isn’t built, landowners will not receive the balance of the agreed payment.

The Bluegrass Pipeline was announced in May 2013 to connect the Marcellus and Utica NGLs with the Gulf Coast petrochemical processing and storage facilities. The pipeline would have connected to an existing natural gas pipeline that would be repurposed for NGLs that would end up in Louisiana for processing.

The pipeline was supposed to go into service in 2015 and have the capacity of between 200,000 and 400,000 barrels a day of natural gas liquids from the Ohio, West Virginia and Pennsylvania natural gas production areas.

Bill Lawson and Michael McMahon, representatives of Williams and Boardwalk Pipeline Partners LP, posted a joint announcement on the Bluegrass Pipeline website explaining the decision.

“While data show there will soon be a need for a large-scale solution like Bluegrass Pipeline to meet market needs, potential customers to-date have so far chosen to focus on local solutions. As a result, we continue to pursue support for the project, but we are exercising capital discipline and not investing additional capital at this time,” the statement said. “In short, Bluegrass Pipeline appears to be a project that’s ahead of its time.”

The Bluegrass Pipeline was a political issue in the 2014 Kentucky General Assembly. State Rep. David Floyd helped push a bill through the Kentucky House that would prevent the use of eminent domain proceedings by privately owned projects like the Bluegrass Pipeline. The legislation passed the House but failed to gain traction in the Senate.

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