When I was named chairman of American Midstream in April 2013, one of the first things that caught my attention was the condition of the Midla “Mainline” pipeline, which was constructed in the 1920s by Standard Oil to bring gas from the Monroe Field to one of its refineries in Baton Rouge. Much like someone who examines a used car before purchasing it and a couple weeks into daily driving finds that major repairs are needed, we learned that the Midla “Mainline” was not in the condition we thought. Unlike a car that might need new brakes, a transmission or a coat of paint, we found that the Midla Mainline had the equivalent of a frame that was rusted its entire length and a gas tank that leaked.

In what is a testament to those who preceded us in operating and maintaining the line, we found that the pipeline has operated 50 years beyond its predicted life without having been replaced. Despite these efforts, however, time has taken its toll: leakage rates are multiples of those of much longer modern pipelines. The annual number of leaks has been on the rise, and we are down to two from eight lines crossing the Mississippi River. Erosion and cultivation have reduced burial depths and development has grown up around the pipeline, including two schools, a prison and a planned housing community.

Midla continues to maintain the pipe. We inject anti-corrosives, inspect it weekly from the air and walk it looking for leaks at least annually, and, in higher consequence areas, four times. Unfortunately, proactive maintenance that could be accomplished with modern internal monitoring tools is not possible. Rather, it is a case of find a leak and fix it, not predict a leak and prevent it.

As with many things not seen or heard, this pipeline quietly served not only Standard Oil’s needs, but also those of many small towns along its route, a true win-win. Over time, however, Standard Oil became Exxon, and its needs in Baton Rouge were served by other, more modern pipelines. The cost of maintenance grew, but the number of customers paying for that maintenance shrank dramatically. With safety our number one priority, the logical next step is to simply shut the Mainline down.

We do not want to leave our customers without natural gas service. So, beginning in May of 2013, we reached out to advise customers of the pipeline’s condition and solicit input on how to best proceed. We commissioned a detailed engineering study that looked at a dozen sizing options for partial reconstruction of the Mainline. Additionally, we identified several non-pipeline alternatives for assuring that all of our customers continue to receive gas service, including trucking compressed natural gas.

The stark reality is that these alternatives cost more than the current service and the costs would be borne by fewer customers. Despite Midla’s efforts, our customers have not chosen an option or combination of options, nor have they suggested alternatives. Those we hoped would be our allies in finding innovative ways to assure the public safety and plant seeds for economic growth have retreated to inflammatory advocacy. We believe the best way to re-open the dialogue is for the Federal Energy Regulatory Commission to hold a public technical conference in the next two to three weeks, at which Midla’s proposals can be clarified, customers and other stakeholders can raise questions and express their concerns, and Midla can answer them.

Midla’s number one priority is to assure public safety. We understand the difficulties communities face with the possibility of higher prices. We also remain hopeful that strategic and collegial achievement of our number one priority — assuring public safety — can also spur economic growth. Midla can once again be a win-win, if we work together.

 

Steve Bergstrom, Midla executive chairman, president and chief executive officer