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Credit crunch will delay pipeline
Credit crunch will delay pipeline
While key partner in Longhorn project seeks financing, opponents raise safety questions
Austin American-Statesman
Friday, July 26, 2002
The startup date for the Longhorn gasoline pipeline has been delayed more than six weeks, until Oct. 1, as cash-flow problems force its backers to scramble for additional financing.
The delay comes less than a week after a federal judge ruled that additional environmental study was not needed, effectively clearing the way for Longhorn Partners Pipeline LP to begin operations. The partnership had planned to start filling the pipeline Aug. 15.
Officials from the Williams Cos. Inc., one of five partners in Longhorn, said the delay is a result of Williams' financial problems. The energy firm's stock closed Thursday at 88 cents a share, down from more than $30 a year ago, and some financial analysts are warning that the company could be headed for a bankruptcy court filing. In addition to owning 31.5 percent of Longhorn, Williams is responsible for operating it.
"Yes, Williams is in a credit crunch," said Kelly Swan, a spokesman for Williams. "We're living within our means. We're doing everything we can right now to restore our credit."
The pipeline, most of which is 52 years old, runs from Houston to West Texas, cutting through South Austin and other parts of Central Texas. Formerly used to ship crude oil, the line has been idle since 1995. Longhorn has spent about $60 million to refurbish and test it.
Most work on the pipeline was halted Wednesday. Allan Wolff, Williams' operations manager for the project, said the relatively little that remains to be done includes 5 miles of pressure testing with water in Blanco County and installation of a few check valves. He said work would resume when Longhorn lines up additional financing.
"It's frustrating that we're this close and something now comes up that we didn't really expect," Wolff said.
O.B. Harris, vice president of Longhorn, downplayed Williams' financial problems. He said the delay is largely a result of snags in lining up 1.1 million barrels of fuel, at a cost of about $35 million, to fill the pipeline. Longhorn is negotiating to secure the fuel, Harris said, but he declined to provide additional details.
Renea Hicks, a lawyer for two landowners and a Central Texas water district opposed to the pipeline, said Williams' balance sheet raises safety concerns.
"Somebody under financial pressure -- there's going to be some pressure to cut corners," Hicks said. "And if there is a problem in the future, they may not be around to clean up the mess."
Mary Jo Dees, who lives along Flat Creek in Blanco County, where Longhorn spilled drilling mud several weeks ago, said she hopes Williams' difficulties prove fatal to the project. Although state environmental officials say the spill poses no lasting hazard, Dees said she is "still afraid to get in the water."
rhaurwitz@statesman.com; 445-3604
While key partner in Longhorn project seeks financing, opponents raise safety questions
Austin American-Statesman
Friday, July 26, 2002
The startup date for the Longhorn gasoline pipeline has been delayed more than six weeks, until Oct. 1, as cash-flow problems force its backers to scramble for additional financing.
The delay comes less than a week after a federal judge ruled that additional environmental study was not needed, effectively clearing the way for Longhorn Partners Pipeline LP to begin operations. The partnership had planned to start filling the pipeline Aug. 15.
Officials from the Williams Cos. Inc., one of five partners in Longhorn, said the delay is a result of Williams' financial problems. The energy firm's stock closed Thursday at 88 cents a share, down from more than $30 a year ago, and some financial analysts are warning that the company could be headed for a bankruptcy court filing. In addition to owning 31.5 percent of Longhorn, Williams is responsible for operating it.
"Yes, Williams is in a credit crunch," said Kelly Swan, a spokesman for Williams. "We're living within our means. We're doing everything we can right now to restore our credit."
The pipeline, most of which is 52 years old, runs from Houston to West Texas, cutting through South Austin and other parts of Central Texas. Formerly used to ship crude oil, the line has been idle since 1995. Longhorn has spent about $60 million to refurbish and test it.
Most work on the pipeline was halted Wednesday. Allan Wolff, Williams' operations manager for the project, said the relatively little that remains to be done includes 5 miles of pressure testing with water in Blanco County and installation of a few check valves. He said work would resume when Longhorn lines up additional financing.
"It's frustrating that we're this close and something now comes up that we didn't really expect," Wolff said.
O.B. Harris, vice president of Longhorn, downplayed Williams' financial problems. He said the delay is largely a result of snags in lining up 1.1 million barrels of fuel, at a cost of about $35 million, to fill the pipeline. Longhorn is negotiating to secure the fuel, Harris said, but he declined to provide additional details.
Renea Hicks, a lawyer for two landowners and a Central Texas water district opposed to the pipeline, said Williams' balance sheet raises safety concerns.
"Somebody under financial pressure -- there's going to be some pressure to cut corners," Hicks said. "And if there is a problem in the future, they may not be around to clean up the mess."
Mary Jo Dees, who lives along Flat Creek in Blanco County, where Longhorn spilled drilling mud several weeks ago, said she hopes Williams' difficulties prove fatal to the project. Although state environmental officials say the spill poses no lasting hazard, Dees said she is "still afraid to get in the water."
rhaurwitz@statesman.com; 445-3604
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