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Doggett tries to block pipeline's startup
Doggett tries to block pipeline's startup
Longhorn partner's shaky finances should be reviewed, he says
By Ralph K.M. Haurwitz
Austin American-Statesman
Thursday, August 1, 2002
Rep. Lloyd Doggett, citing the weakened fiscal health of a key partner in the Longhorn gasoline pipeline, urged U.S. Transportation Secretary Norman Mineta on Wednesday to withhold approval for startup until a financial review can be completed.
The Williams Cos. Inc., one of five partners in Longhorn Partners Pipeline LP and the operator of the pipeline, last week suspended preparations for the startup amid growing concern about Williams' cash flow, share price and creditworthiness.
Longhorn has delayed its intended startup date to Oct. 1 for the pipeline, which runs from Houston to El Paso on a path that crosses South Austin and other parts of Central Texas. The pipeline, much of which is 52 years old, formerly carried crude oil but has been idle since 1995.
"This is a recipe for disaster," Doggett said in a letter to Mineta. "We cannot have a pipeline of this vintage, carrying this kind of dangerous product through densely populated areas and across the drinking water supply for hundreds of thousands of people, start operation on the back of what may be a financially crumbling enterprise such as Williams."
The Austin Democrat said Longhorn's announcement that it was trying to raise $35 million to fill the pipeline with fuel was not encouraging. He also questioned whether the company's pledge to secure $15 million in pollution liability insurance was adequate. A review of the project's finances should include "a full opportunity for public input," Doggett said.
Under federal law, a pipeline may not transport oil products until the Transportation Department approves the pipeline operator's spill response plan. The rules require sufficient personnel and equipment to handle a "worst case" spill, fire or explosion.
"We're going to do whatever it takes to follow the law and make sure the line is in compliance with everything," said Patricia Klinger, a spokeswoman for the Transportation Department's Research and Special Programs Administration, which includes the Office of Pipeline Safety.
Some environmental activists have questioned the financial health of another Longhorn partner: the Beacon Energy Fund. Beacon is a private equity fund managed by JPMorgan Partners, the private equity arm of investment banking giant J.P. Morgan Chase & Co.
Last week, Moody's Investors Service reduced its outlook for J.P. Morgan Chase to "negative" from "stable," in part because of the bank's dealings with the now-bankrupt Enron Corp.
A statement issued by Longhorn said its finances were sound. Longhorn said its more than $300 million in assets, including the pipeline and pumping stations, would be available to pay any liability incurred.
The partnership also said $15 million of insurance is a minimum and it intends to secure at least $35 million to $50 million in total pollution liability coverage. In addition, Longhorn said, it intends to obtain an umbrella liability policy of $25 million for most other types of losses that might occur in the event of a pipeline failure.
rhaurwitz@statesman.com; 445-3604
Pipeline rules
Federal safety regulations require pipeline operators to have sufficient personnel and equipment: `Each operator shall identify and ensure, by contract or other approved means, the resources necessary to remove, to the maximum extent practicable, a worst case discharge and to mitigate or prevent a substantial threat of a worst case discharge.'
Longhorn partner's shaky finances should be reviewed, he says
By Ralph K.M. Haurwitz
Austin American-Statesman
Thursday, August 1, 2002
Rep. Lloyd Doggett, citing the weakened fiscal health of a key partner in the Longhorn gasoline pipeline, urged U.S. Transportation Secretary Norman Mineta on Wednesday to withhold approval for startup until a financial review can be completed.
The Williams Cos. Inc., one of five partners in Longhorn Partners Pipeline LP and the operator of the pipeline, last week suspended preparations for the startup amid growing concern about Williams' cash flow, share price and creditworthiness.
Longhorn has delayed its intended startup date to Oct. 1 for the pipeline, which runs from Houston to El Paso on a path that crosses South Austin and other parts of Central Texas. The pipeline, much of which is 52 years old, formerly carried crude oil but has been idle since 1995.
"This is a recipe for disaster," Doggett said in a letter to Mineta. "We cannot have a pipeline of this vintage, carrying this kind of dangerous product through densely populated areas and across the drinking water supply for hundreds of thousands of people, start operation on the back of what may be a financially crumbling enterprise such as Williams."
The Austin Democrat said Longhorn's announcement that it was trying to raise $35 million to fill the pipeline with fuel was not encouraging. He also questioned whether the company's pledge to secure $15 million in pollution liability insurance was adequate. A review of the project's finances should include "a full opportunity for public input," Doggett said.
Under federal law, a pipeline may not transport oil products until the Transportation Department approves the pipeline operator's spill response plan. The rules require sufficient personnel and equipment to handle a "worst case" spill, fire or explosion.
"We're going to do whatever it takes to follow the law and make sure the line is in compliance with everything," said Patricia Klinger, a spokeswoman for the Transportation Department's Research and Special Programs Administration, which includes the Office of Pipeline Safety.
Some environmental activists have questioned the financial health of another Longhorn partner: the Beacon Energy Fund. Beacon is a private equity fund managed by JPMorgan Partners, the private equity arm of investment banking giant J.P. Morgan Chase & Co.
Last week, Moody's Investors Service reduced its outlook for J.P. Morgan Chase to "negative" from "stable," in part because of the bank's dealings with the now-bankrupt Enron Corp.
A statement issued by Longhorn said its finances were sound. Longhorn said its more than $300 million in assets, including the pipeline and pumping stations, would be available to pay any liability incurred.
The partnership also said $15 million of insurance is a minimum and it intends to secure at least $35 million to $50 million in total pollution liability coverage. In addition, Longhorn said, it intends to obtain an umbrella liability policy of $25 million for most other types of losses that might occur in the event of a pipeline failure.
rhaurwitz@statesman.com; 445-3604
Pipeline rules
Federal safety regulations require pipeline operators to have sufficient personnel and equipment: `Each operator shall identify and ensure, by contract or other approved means, the resources necessary to remove, to the maximum extent practicable, a worst case discharge and to mitigate or prevent a substantial threat of a worst case discharge.'
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