City objects to gas pipeline abandonment

Published 12:04 am Wednesday, May 14, 2014

NATCHEZ — The City of Natchez has filed an objection to the abandonment of a pipeline that supplies natural gas to the area.

City Attorney Hyde Carby reported to the Natchez Board of Aldermen Tuesday at its finance meeting prior to the regular meeting that the city filed an objection that would reserve the city’s ability to speak before the Federal Energy Regulatory Commission (FERC) about the proposed abandonment of the pipeline.

American Midstream Partners (AMP) recently filed a request to abandon the Midla pipeline, which runs from Monroe to Baton Rouge through the Natchez-Vidalia area and is the only pipeline supplying natural gas to the area.

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The shutdown could mean no natural gas service to an area that includes Clayton, Ferriday, Vidalia, Natchez and Woodville, or significantly increased prices as the pipeline’s owners raise transmission fees.

Carby said Natchez is the most concentrated group of residents the pipeline serves, and its abandonment would greatly affect the city.

Ward 1 Alderwoman Joyce Arceneaux-Mathis asked Carby how the abandonment of the pipeline would affect ordinary residents.

Carby said Atmos Energy, which provides gas to the area, would still have to provide service.

Carby said another pipeline could be built, which would be an expensive and lengthy process, or gas could be trucked in.

“Regardless of whether another pipeline is built or (gas) is trucked in, rates will go up,” Carby said. “It would be very bad for our area.”

Ward 5 Alderman Mark Fortenbery said he does not believe it is feasible to truck gas into the area.

Carby said many people are concerned about how fast AMP is trying to abandon the pipeline.

“This is happening awfully quickly,” Carby said. “While it could ultimately be the best thing (for the pipeline) to be abandoned, I think most people are concerned with the rate at which (AMP) are trying to get before FERC.”

“We have impressed upon (FERC) that it would be tremendously bad for this to be yanked out from under us, particularly, at the speed they’re trying to do it.”

Mayor Butch Brown said he does not believe FERC will allow the pipeline to be abandoned.

Brown said when AMP first started the process to abandon the pipeline, they released public statements and met with city leaders in Natchez, Vidalia and other areas.

Brown said AMP said the pipeline is “old and antiquated and leaking.”

AMP later “changed their words,” Brown said, to say the pipeline had the potential for possible dangerous leaks.

Brown said what precipitated the proposed abandonment was that AMP asked Atmos to pay for the replacement of pipeline from Winnsboro.

“They refused, obviously,” he said.

Brown said he does not believe FERC will issue a ruling on the abandonment “in his lifetime.”

“In the meantime, I think there can be some concessions made by Atmos and (AMP) in how to pipe gas from other pipelines that are in our region,” he said.

Atmos filed a complaint against American Midstream in late March, shortly before the company announced its intentions to abandon the Midla pipeline.

In the filing, Atmos complained that American Midstream’s open season offering late last year was inappropriate and Atmos had been informed of the intention to abandon the pipeline shortly after American Midstream was acquired by Arclight Capital, a hedge fund.

The Atmos complaint also states negotiations with American Midstream during the months leading up to the abandonment discussion “were contingent upon customers either accepting abandonment of service or agreeing to 20-year contracts for replacement service at rates that were many multiples of existing rates.”