Bluegrass Pipeline to be delayed a year

Company cites ongoing discussions with customers

By Ryan Quinn, Published:

Wednesday’s announcement that the proposed Bluegrass Pipeline will be delayed a year is a victory in “round one” for Kentuckians, a leading opponent to the project said.

Chris Schimmoeller, president of Envision Franklin County, said the company’s decision gives respite to landowners.

“I look forward to solving some of these issues without the pipeline breathing down our necks,” Schimmoeller said.

Williams announced Wednesday it is delaying the completion of the Bluegrass Pipeline project about a year, from 2015 until mid-to-late 2016.

“We continue to engage in ongoing discussions with potential customers regarding commitments to this large-scale, integrated solution that connects Marcellus-Utica natural gas liquids to diverse domestic markets, fractionation, storage and export facilities in the Gulf Coast,” Chief Executive Officer Alan Armstrong said in an end-of-2013 earnings press release.

The postponement — along with a shift in certain Canadian projects to an associated entity called Williams Partners — will reduce the Tulsa, Okla.-based company’s capital expenditures in the next two years by $1.4 billion.

“The new timeframe is more consistent with evolving market conditions,” the release stated, adding that the project is still subject to formal customer commitments.

Williams’ fourth quarter earnings call was slated for this morning. The company is reporting a 2013 net income of $430 million, down from $859 million in 2012.

Armstrong said in the release that declining margins for natural gas liquids were a challenge.

Williams Partners, in a separate release Wednesday, said its $165 million decrease in net income was primarily because of $297 million — 39 percent — lower natural gas liquids margin and lost production at its Geismar olefins plant.

The Louisiana petrochemical plant exploded in June, killing two workers and injuring nearly 80.

The news comes after several analysts asked officials at Boardwalk Pipeline Partners — Williams’ teammate in the Bluegrass Pipeline joint venture — last week, during an earnings call, whether the pipeline would progress.

Officials only repeated that they are still in discussions with customers and that a decision will be based on customer commitment and regulatory approval.

The Bluegrass Pipeline began an open season Oct. 29 to gauge market interest in the roughly 1,100-mile natural gas liquids pipeline, which is proposed to cross Franklin County on its way to the Gulf Coast from gas mining regions in the northeast.

An open season gives potential customers the chance to sign up through a nonbinding agreement, according to the U.S. Energy Information Administration, but “… If not enough interest is evident, the project will most likely be dropped or placed on indefinite hold.”

That open season was supposed to end in December, but it was extended to Jan. 17 “in response to requests of interested shippers who would like additional time to evaluate the pipeline project and the project’s market outlet options,” according to a press release from Boardwalk.

Boardwalk officials said last week, nearly a month after the open season ended, that the company was still speaking with customers for the project. One analyst asked if there’s a particular issue common to customers that might be hanging up commitments, but an official didn’t answer.

The fourth quarter earnings report also included that Boardwalk was reducing its quarterly dividend paid to shareholders. Officials cited difficult market conditions.

Schimmoeller said market realities and company statements about natural gas liquids prices aside, she believes residents’ opposition “definitely” had an impact on the decision.

“We’re going to be around for round two and round three,” she said. “… This is just a victory for so many people who have worked so hard.” 

Williams spokesman Tom Droege did not return calls seeking comment Wednesday evening.

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  • We listen to facts not "corporate" scare tactics. We want our "Blue Grass State" to stay clean not polluted, cause one spill is one too many. By the way, is this pipe line going through "YOUR " backyard?

  • It is not a victory for you folks in Kentucky.  Apparently you let the environmental extremists  overwhelm you with their scare tactics. The Alaska pipeline has existed for years with very few problems. The Blue Grrass Pipeline, as I understand it, would be underground and therefore even safer. Being alive has many risks. The risk to your health posed by the Bluegrass Pipeline is likely magnitudes less than your being struck by lightening or being killed by a falling meteor. In  the meantime, you Kentuckians just keep puffing on your cigarettes.

  • Melton said that the Bluegrass Pipeline was probably drug related and that he is committed to shutting it down.  Anyone with information is encouraged to post it on the Sheriff's Office Facebook, and be sure to check "Like"!

  • Williams announced, "commitments to this large-scale, integrated solution"...solution to what?  What is the problem that we are having that Williams has the solution to?  Nothing that Williams is proposing will benefit KY in the slightest.  Lessee, no benefits and all of the long term environmental costs if they screw up?  Hmmm.  I say no!