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Hedge Fund Agrees to Build New Pipeline to Replace Midla

In a development that could defuse the uproar over the proposed abandonment of the Midla pipeline system, and possibly give a boost to embattled U.S. Sen. Mary Landrieu’s (D-LA) prospects for reelection, a Boston-based hedge fund has agreed to a preliminary deal to build a new natural gas pipeline to replace Midla.

Landrieu’s office announced Wednesday that after negotiations with 12 municipalities in Louisiana, ArcLight Capital Partners LLC had agreed to build a 12-inch diameter pipeline from Winnsboro, LA, to Natchez, MS, replacing the current 8-inch diameter pipeline. The agreement must now be signed by all of the participants in the negotiations. Financial terms of the deal were not disclosed.

Last March, American Midstream Partners LP, one of the midstream companies in ArcLight’s portfolio, announced that it had started decommissioning the 88-year-old Midla system after customers had broken off negotiations over repairs and there was no interest to an open season (see Daily GPI, March 13). That unleashed the wrath of several key lawmakers, including U.S. Rep. Bill Cassidy (R-Baton Rouge), U.S. Sen. David Vitter (R-LA), and Landrieu, chairman of the Senate Committee on Energy and Natural Resources (see Daily GPI, April 11; April 7).

American Midstream filed an application [No. CP14-125-000] with FERC to abandon the Midla system on March 28. Despite Landrieu’s calls for the Federal Energy Regulatory Commission (FERC) to reject the company’s proposal, the regulatory agency last month agreed to its request for a rehearing for further consideration (see Daily GPI, Sept. 16).

“If ArcLight, American Midstream and Midla had been allowed to go forward with their plan to completely abandon the Midla pipeline and the customers in communities across nine parishes, the result would have slowed economic growth and hurt Louisiana families,” Landrieu said in a statement.

“I’m encouraged by the preliminary agreement that has been reached to ensure long-term, safe and reliable natural gas tens for thousands of consumers and businesses in Louisiana. This new pipeline will also help attract more industries to create high-paying jobs and greater opportunity.”

Landrieu was first elected to the U.S. Senate in 1996, and won reelection in 2002 and 2008. Although polls show her ahead of her Republican challengers in the first round of voting scheduled for Nov. 4, she must receive at least 50% of the vote to avoid a runoff on Dec. 6.

The 370-mile Midla pipeline system was built in 1926, traverses Louisiana and Mississippi, and was designed to move gas from the then-prolific Monroe Gas Field in Ouachita Parish, LA, to a Standard Oil (now ExxonMobil Corp.) refinery in Baton Rouge, LA. In the early to mid-1970s, the system carried up to 300 MMcf/d. The mainline consists of 16- to 22-inch diameter pipe.

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