Commenting on FERC’s Sept. 5 order overturning “monopolistic” offshore gas pipeline rates imposed by the Williams Companies, Apache Corp. said Friday that the decision is a victory for consumers and producers everywhere.

In an unprecedented move earlier this month, FERC reasserted jurisdiction over the portion of the North Padre Island (NPI) unregulated gathering facilities that Transcontinental Gas Pipe Line spun down to its gathering affiliate, Williams Field Services Co. (see Daily GPI, Sept. 9). FERC found that the unregulated affiliate then attempted to charge monopolistic rates while providing no additional services.

Apache, Shell Offshore Inc. and other affected producers shut in their gas and complained to FERC. The initial ruling of a FERC administrative law judge in August found that Williams affiliates acted in concert in offering gathering services and abused their monopoly market power to charge producers “not reasonable competitive market” rates (see Daily GPI, Aug. 15).

FERC’s Sept. 5 decision affirmed the judge’s ruling and established an unbundled gathering rate of 1.69 cents/MMBtu for the North Padre Island System, as opposed to the 12 cents/MMBtu originally presented by Williams as a “non-negotiable” rate to Apache.

Even before the Commission’s final order had been issued, Williams filed suit in Federal Court seeking to overturn the administrative law judge’s initial ruling.

“This is a landmark case for producers and consumers,” said Roger Plank, Apache’s CFO. “FERC is now at the forefront of federal efforts to curb market abuses that are artificially raising energy prices and preventing American natural gas from fulfilling its vital role in the nation’s energy mix. Unchecked, spindowns could enable pipelines to increase rates on virtually all gathering lines in the Gulf of Mexico, through which flows approximately 25% of the nation’s gas.”

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