FERC granted orders for two crude oil expansion projects in the Permian Basin proposed by subsidiaries of EnLink Midstream LLC, but denied an order to a unit of Enterprise Products Partners LP for a similar expansion on concerns with that project's open season.
The Federal Energy Regulatory Commission on Wednesday granted Enlink Crude Pipeline LLC a petition for declaratory order (PDO) for the overall tariff, rate structure and prorationing policy for the expansion of its Greater Chickadee system in the Midland sub-basin in West Texas [OR18-38].
The Commission also granted a PDO to EnLink Delaware Crude Pipeline LLC for a new pipeline system in the Delaware sub-basin in West Texas and New Mexico [OR19-3].
EnLink said the $12 million Greater Chickadee expansion would increase the system's capacity to 100,000 b/d, up from 62,000 b/d. Greater Chickadee includes about 150 miles of high- and low-pressure 12-inch diameter pipe that gathers and transports crude from points in Midland and Upton counties. The original Greater Chickadee system was approved by FERC in 2016.
In the Delaware sub-basin, EnLink's new system would gather and transport crude from points in New Mexico's Eddy and Lea counties to destinations in Eddy and in Loving County, TX. The $105 million project includes about 100 miles of six- to 12-inch diameter pipeline and associated infrastructure, and would have 100,000 b/d of capacity.
FERC denied a PDO to Enterprise Crude Pipeline LLC for rate structures, terms of service and proration procedures for new service on its expanded New Mexico System, which has been completed and placed into service. The 862-mile, four- to 12-inch diameter system has 190,000 b/d of capacity and transports crude from multiple origins in West Texas and New Mexico to a terminal and facilities in Midland, TX [OR18-27].
The Commission said it denied the PDO because an open season Enterprise held failed to meet the requirements of the Interstate Commerce Act (ICA). Specifically, the company didn't show that its minimum tender requirement didn't give large shippers an unfair advantage.
"Enterprise's open season terms required that interested shippers commit volumes of at least 100,000 b/d for at least 10 years," FERC said. "The fact that its offered capacity of 171,000 b/d was insufficient to accommodate more than one shipper at 100,000 b/d and that accommodation of multiple committed shippers would have reduced their individual commitments significantly below 100,000 b/d suggests that these terms may have given undue advantage to large shippers."
In a note to clients Thursday, ClearView Energy Partners LLC said it counted 10 PDO proceedings related to expansions pending before the Commission. The firm repeated its assertion that the growing number of affiliate transactions, coupled with the unique regulatory scheme for liquids lines under the ICA, was causing delays in PDO reviews at FERC.
"The conditional approvals for EnLink appear to reflect the Commission's focus on these issues," ClearView said. "The Enterprise order, however, addresses an aspect of open season structure that does not appear to have been an issue in PDOs we have previously followed, and provides guidance for future open seasons."