Increasingly sophisticated opposition to oil and gas pipelines is adding costs to projects as developers work to get ahead of protests and litigation, but midstream executives say there is still no better time to be in the business.
A group of executives from some of the U.S. and Canada's biggest pipeline developers on March 7 swapped stories in Houston about the pushback from environmental groups and other pipeline protesters, which they say are getting more and more successful at using the legal process to hold up projects in the courts.
"The effort is much more intense. There's more opposition," Kinder Morgan Inc. CEO Steven Kean said at CERAWeek by IHS Markit. "It's more organized, and it's also the tactics have devolved."
Energy Transfer Partners LP CEO Kelcy Warren gave one example in which protesters drilled holes in an oil pipeline. Although the pipeline did not have oil flowing, Warren said the stunt was indicative of the more extreme opposition to natural gas and oil pipelines. "It's a changed environment, and it's going to add to all of our costs," he said.
Warren and ETP have experience dealing with intense opposition to the company's projects. Energy Transfer developed the controversial Dakota Access crude oil pipeline, which saw protesters flock to the project site from around the country. ETP is also behind the Rover natural gas pipeline, which is delayed after a series of spills led state and federal regulators to penalize the company for construction missteps, the Bayou Bridge oil pipeline under construction in Louisiana, where a federal judge stopped construction, and the Mariner East NGL pipeline that Pennsylvania regulators also just suspended flows after discovering sink holes along the system.
TransCanada Corp. CEO Russell Girling said the opposition, although more intense, is being spearheaded by a relatively small number of protesters from the "keep it in the ground" movement, a comment made often by those in the industry.
"We don't think this is the majority of folks," Girling said. "It's a small group of folks who, in our view, just want to make sure this stuff stays in the ground."
Despite those challenges, executives said it is a good time to be in the pipeline business, where strong natural gas production is driving the need for more transportation capacity in certain key markets. When asked whether the midstream industry can keep up with bullish production forecasts in places like the Bakken Shale, Warren responded, "Oh yeah."
"You get a little fatigued from time to time — there's just so many things being thrown at you," he said. "But if you're a pipeliner, it doesn't get better than this."
