FERC has set an expedited hearing to explore charges of anti-competitive behavior in the gathering activities of affiliated pipelines operating off the coast of Texas.

Specifically, the Federal Energy Regulatory Commission said it wants to “determine whether the open and non-discriminatory access requirements of Section 5 of the [Outer Continental Shelf Lands Act] have been or will be violated, and if so, to determine what the appropriate remedies should be” under the law.

At issue are two producer complaints filed against jurisdictional pipeline, Transcontinental Gas Pipe Line (Transco) and its unregulated affiliates — Williams Gas Processing-Gulf Coast Co. (WGP), Williams Field Services Co. (WFS) and Williams Gulf Coast Gathering Co. LLC (WGCGC) — for gathering services provided on the offshore North Padre Island System.

In its complaint filed last November, Shell Offshore Inc. alleged that Transco and its affiliates required it to enter into an arrangement that imposed “unjust and unreasonable” rates and anti-competitive terms and conditions for gathering service on the North Padre system. Shell called on FERC to re-assert jurisdiction over gathering in this case to protect shippers from the alleged illegal activities of Transco and the Williams affiliates.

Walter Oil & Gas (including Superior) made similar claims against the Williams companies in a January complaint, alleging that it was forced to execute a one-month interim gathering agreement with WGCGC that contained a higher rate than that being offered to most other shippers.

The North Padre system, which Transco abandoned to WGP last summer, consists of 3.83 miles of 10-inch pipeline and 18.79 miles of 20-inch pipe in the North Padre Island area off the Texas coast. The pipelines gather and move gas into Transco’s 24-inch lateral and into the Padre Island Plant onshore in Brooks County, TX. Shell, Walters and Superior are gas producers that own or control supplies attached to the North Padre system.

Although FERC “generally does not assert jurisdiction over affiliated gatherers” under the Natural Gas Act, the order noted the agency “can disregard the corporate form and exercise NGA jurisdiction over the gathering rates and services of affiliated gatherers, as if the gathering services were performed by the interstate pipeline company itself.”

The Commission ordered a prehearing conference to be convened within 10 days of the March 6 order to establish a procedural schedule, and called for an initial decision to be issued within 90 days.

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