FTC seeks comments on El Paso bid to modify asset sales order
Nick Snow
OGJ Washington Editor
WASHINGTON, DC, July 8 -- The US Federal Trade Commission is seeking public comments on El Paso Energy Corp.’s request that the FTC modify a final consent order issued in 2001 to settle its challenge of El Paso’s acquisition of Coastal Corp. Comments will be accepted until Aug. 2, it indicated.
The order required El Paso to sell some gas pipelines to Williams Field Services and establish a $40 million development fund for Williams to use until 2021. In its June 28 request, El Paso said the requirement covered a central Gulf of Mexico production area served by its own pipelines and one owned by Coastal which that company acquired earlier when it bought American Natural Resources Co.
In order to acquire the ANR pipeline as it bought Coastal, the FTC ordered El Paso to sell its Tarpon and Green Canyon pipelines and establish the 20-year development fund for the purchaser to use to construct an additional pipeline. El Paso sold the pipelines to the Williams Cos. subsidiary and established the fund on Jan. 29, 2001, when it closed its acquisition of Coastal.
El Paso said that it took several actions since that time which have reduced its influence on the designated development area, notably on Feb. 27, 2007, when it sold the ANR pipeline to TransCanada Pipelines Ltd. “This sale introduced a new viable competitor into the market and restored ANR to its pre-merger status as a separate and independent pipeline alternative to El Paso,” the reconsideration request said.
Sold other interests
The company said that it also sold all of its deepwater pipeline interests in the gulf in 2004 to Enterprise Products Partners LP, including the Constitution and Anaconda pipelines which serve wells in and just south of the designated development area covered by the FTC’s original consent order.
El Paso said other changes since its Coastal acquisition have increased competition in the area covered by the development fund. “In particular, declining offshore production has created substantial excess capacity on the gulf pipelines, including those that serve the development area,” it said. “This excess capacity eliminates any constraints on the flow of gas that may have concerned the commission when the consent was negotiated.”
The development fund’s relevance also has declined significantly as gas producers have increasingly used horizontal drilling and hydraulic fracturing to recover gas from onshore shale formations at much lower costs, shifting the overall US gas exploration focus away from the gulf, it continued.
Williams also has not used any of the development fund’s money and El Paso said it appears unlikely that it will. It asked that the fund be eliminated and the money returned to El Paso, adding that Williams supports the request.
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