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Pipeline's start pushed back till May
Pipeline's start pushed back till May
But date is tentative because Longhorn still in need of more cash and a federal review
Austin American-Statesman
Wednesday, October 16, 2002
In June, the partnership that owns the Longhorn gasoline pipeline said fuel would begin flowing July 31, "plus or minus two weeks."
In July, it said startup would occur Aug. 15. Then the date was changed to Oct. 1. That goal was scrapped in August, with no replacement date offered.
Now, Longhorn Partners Pipeline LP says it intends to begin operation in May. But even that date is uncertain because regulators with the U.S. Department of Transportation's Office of Pipeline Safety say they do not know how long it will take them to review Longhorn's emergency response plan and 40 safety measures required under a court settlement.
Longhorn officials say the delays are a result of efforts to obtain additional financing. Unfortunately for Longhorn, those efforts come at a time when the collapse of the Enron Corp. and a sharp decline in the stocks of many energy companies have made investors skittish.
"When you go out into the market and look for financing, it takes several months, especially when you're looking for sizable sums," O.B. Harris, vice president and asset manager for the Dallas-based partnership, said Tuesday.
Harris declined to reveal the amount sought and whether the partnership is pursuing an additional investor or a bank loan.
The financing is expected to be secured by the end of the year, said Allan Wolff, operations manager for the pipeline at the Williams Cos. Inc., a partner in Longhorn and the company responsible for upgrading and operating the line.
Longhorn plans to ship gasoline, diesel fuel and jet fuel from Houston to West Texas. The pipeline, most of which is 52 years old, formerly carried crude oil in the other direction but has been idle since 1995.
Longhorn's effort to reopen the pipeline for refined products has encountered intense opposition, primarily in Central Texas, where the line cuts through South Austin neighborhoods and across the Edwards Aquifer.
A lawsuit filed in federal court by the City of Austin, the Barton Springs-Edwards Aquifer Conservation District and two Hill Country landowners prompted a review of the project's environmental ramifications by the Office of Pipeline Safety and the Environmental Protection Agency. Longhorn agreed to undertake about $60 million in precautionary measures, including the replacement of some pipe and the installation of leak detection equipment.
In July, U.S. District Judge Sam Sparks of Austin rejected the plaintiffs' request for additional environmental study. Less than a week later, Williams announced that its plummeting stock price had created a credit crunch. It could not come up with $35 million to fill the pipeline with fuel.
Once additional financing is obtained, Harris said, crews must complete work on a leak detection cable in the Austin area. They also must finish fencing, grading and seeding along the right of way locally.
In Odessa, a few hundred feet of pipe must be installed, and finishing touches are needed at a measurement station, Harris said. In El Paso, a fire suppression system and loading rack are not complete.
The delays should give the plaintiffs time to pursue an appeal that they have filed with the 5th U.S. Circuit Court, based in New Orleans, said Renea Hicks, a lawyer for the conservation district and the two landowners.
The pipeline "shouldn't go through like it is without further study," Hicks said.
But date is tentative because Longhorn still in need of more cash and a federal review
Austin American-Statesman
Wednesday, October 16, 2002
In June, the partnership that owns the Longhorn gasoline pipeline said fuel would begin flowing July 31, "plus or minus two weeks."
In July, it said startup would occur Aug. 15. Then the date was changed to Oct. 1. That goal was scrapped in August, with no replacement date offered.
Now, Longhorn Partners Pipeline LP says it intends to begin operation in May. But even that date is uncertain because regulators with the U.S. Department of Transportation's Office of Pipeline Safety say they do not know how long it will take them to review Longhorn's emergency response plan and 40 safety measures required under a court settlement.
Longhorn officials say the delays are a result of efforts to obtain additional financing. Unfortunately for Longhorn, those efforts come at a time when the collapse of the Enron Corp. and a sharp decline in the stocks of many energy companies have made investors skittish.
"When you go out into the market and look for financing, it takes several months, especially when you're looking for sizable sums," O.B. Harris, vice president and asset manager for the Dallas-based partnership, said Tuesday.
Harris declined to reveal the amount sought and whether the partnership is pursuing an additional investor or a bank loan.
The financing is expected to be secured by the end of the year, said Allan Wolff, operations manager for the pipeline at the Williams Cos. Inc., a partner in Longhorn and the company responsible for upgrading and operating the line.
Longhorn plans to ship gasoline, diesel fuel and jet fuel from Houston to West Texas. The pipeline, most of which is 52 years old, formerly carried crude oil in the other direction but has been idle since 1995.
Longhorn's effort to reopen the pipeline for refined products has encountered intense opposition, primarily in Central Texas, where the line cuts through South Austin neighborhoods and across the Edwards Aquifer.
A lawsuit filed in federal court by the City of Austin, the Barton Springs-Edwards Aquifer Conservation District and two Hill Country landowners prompted a review of the project's environmental ramifications by the Office of Pipeline Safety and the Environmental Protection Agency. Longhorn agreed to undertake about $60 million in precautionary measures, including the replacement of some pipe and the installation of leak detection equipment.
In July, U.S. District Judge Sam Sparks of Austin rejected the plaintiffs' request for additional environmental study. Less than a week later, Williams announced that its plummeting stock price had created a credit crunch. It could not come up with $35 million to fill the pipeline with fuel.
Once additional financing is obtained, Harris said, crews must complete work on a leak detection cable in the Austin area. They also must finish fencing, grading and seeding along the right of way locally.
In Odessa, a few hundred feet of pipe must be installed, and finishing touches are needed at a measurement station, Harris said. In El Paso, a fire suppression system and loading rack are not complete.
The delays should give the plaintiffs time to pursue an appeal that they have filed with the 5th U.S. Circuit Court, based in New Orleans, said Renea Hicks, a lawyer for the conservation district and the two landowners.
The pipeline "shouldn't go through like it is without further study," Hicks said.
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