June Newsreel: Enterprise, TEPPCO Pull Out of Offshore Project; El Paso Exec Supports Ruby Pipeline; and more

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Enterprise, TEPPCO Pull Out Of Offshore Project

TEPPCO Partners, L.P. announced that its affiliate, TEPPCO O/S Port System, LLC, will exit from the Texas Offshore Port System partnership (TOPS) and forfeit its investment and its one-third ownership interest in the partnership. As a result, TEPPCO expects to record a non-cash charge of $34 million against its earnings for the second quarter. The decision to dissociate from TOPS was in connection with a disagreement with one of its partners, an affiliate of Oiltanking Holdings America, Inc. Enterprise Offshore Port System, LLC, an affiliate of Enterprise Products Partners L.P., also elected to dissociate from TOPS.

In August 2008, affiliates of TEPPCO, Enterprise and Oiltanking Holding Americas, Inc. formed a joint venture to design, construct, own and operate a new Texas offshore crude oil port and pipeline system for delivery of waterborne crude oil to refining centers along the upper Texas Gulf Coast. The TOPS project includes an offshore port, two onshore storage facilities with 5.1 million barrels of total crude oil storage capacity, and an associated 160-mile pipeline system with capacity to deliver up to 1.8 million bpd of crude oil. The cost of the project had been estimated at $1.8 billion.

Oiltanking has alleged that the dissociation of affiliates of TEPPCO and Enterprise was wrongful and in breach of the TOPS partnership agreement. TEPPCO defended its actions by insisting that it was permitted by, and in accordance with, the terms of the TOPS partnership agreement.

El Paso Executive Strongly Supports Proposed Ruby Pipeline

Jim Cleary, president of El Paso’s Western Pipeline held a press briefing on May 4 to discuss the proposed Ruby Pipeline project. His message was clear. Despite current economic conditions the Ruby Pipeline project is moving forward and is a “win-win” project for natural gas consumers and producers. Cleary said El Paso Corp., parent company of Ruby Pipeline, L.L.C., is working steadily on various aspects of the project with the four contractors charged with building the 675 mile, 42-inch pipeline on everything from route planning to minimizing environmental impacts.

He was also quick to point out that they are working to procure carbon offsets to ensure that Ruby is the first carbon neutral pipeline in the U.S. Cleary said the company made its FERC filing in January and hopes to see a final Environmental Impact Statement by October and receive a Notice To Proceed by January 2010.

The pipeline is expected to begin at the Opal Hub in Wyoming and terminate at interconnects near Malin, OR. It represents a $3 billion investment in new pipeline infrastructure that will connect competitively priced natural gas reserves in the Rocky Mountain region with growing markets in the western U.S.