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Destruction of house haunts Energy Transfer's huge Rover gas project


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Destruction of house haunts Energy Transfer's huge Rover gas project

Energy Transfer Partners LP's Rover pipeline project faces a possible delay in its permitting and construction schedule after the developer knocked down a house of potential historic significance near the proposed route.

Despite the complication, Energy Transfer anticipated FERC would issue a certificate order shortly, according to spokeswoman Vicki Granado.

Height Securities analyst Katie Bays said a quick approval might not happen. "We believe FERC will behave conservatively throughout this unprecedented process and withhold a decision until the [memorandum of agreement with stakeholders] has been prepared," Bays said in a Dec. 20 note. "This likely delays work for Rover to mid-late January, cutting into construction time ahead of the March 31 tree-clearing deadline."

Energy Transfer's Rover Pipeline LLC project would transport 3.25 Bcf/d of Appalachian supplies to Midwest, Gulf Coast and Canadian markets. Rover Pipeline purchased the 1843 Rezin and Maria Stoneman House in Carroll County, Ohio, in May 2015. Rover intended to use the house as an operating office for Energy Transfer Corp LP's Operations Midwest Division, which would operate the eastern half of the Rover pipeline and other assets in the region. The house was across a street from the proposed site of a compressor station for the Rover project and outside of the right of way. The company ultimately decided the house was too small for its plans. Despite the house's eligibility for listing as a historic structure, which the Ohio State Historic Preservation Office had communicated to the developer by January, Rover Pipeline demolished it by September.

FERC determined by Dec. 5 that Section 110(k) of the National Historic Preservation Act did apply to the situation. According to Matt Spangler, a spokesman for the Advisory Council on Historic Preservation, Section 110(k) prohibits a federal agency from granting a permit to an applicant that attempts to avoid Section 106 of the act, which requires an agency to take into account the effects on historic properties. However, FERC told the advisory council that there were circumstances that warrant continuing to review the project's application and possibly granting it a certificate order.

The Advisory Council on Historic Preservation praised Rover Pipeline and the Ohio State Historic Preservation Office for reaching an agreement that would help make up for the destruction of the house. Rover Pipeline agreed to supply $1.3 million for an endowment fund for a long-term mitigation plan, including educational efforts regarding historic preservation in Ohio. The endowment will be administered by the State Historic Preservation Office. The Advisory Council on Historic Preservation also recognized the company was on a tight schedule. But the council still asked FERC to consider making a "determination of adverse effect," which would require consultation among the commission, the developer, historic preservation agencies and other interested parties, which would take time.

In a Dec. 16 letter to FERC, Rover Pipeline said further delays of the certificate order would result in "devastating implications" for customers, project employees, and producer-shippers who are hoping to begin delivering 1.55 Bcf/d in July 2017. "Federal agencies should also consider, among other things, the significance of the historic properties affected, and prior history of violations of Section 110(k), if any, by the project proponent," it said.

In an earlier filing, Rover Pipeline informed FERC that it had not purchased the Stoneman House specifically for the pipeline project, and it insisted its actions were that of a "private landowner."

"While the application noted that the project would indirectly affect the property, it did not state that Rover would directly remove the structure since its removal is not necessary for the project," the company said. "However, in retrospect, [Rover Pipeline] could have updated its docket with the commission to reflect that the property's status had changed." (FERC docket CP15-93)