California: El Paso Corp. withheld gas during crisis, judge rules

The San Diego Union Tribune ^ | September 24, 2002 | Joe Cantlupe COPLEY NEWS SERVICE

[snopercod]

I won't visit the LA Slimes website, but if anybody cares, there it this:

Gas ruling clouded by safety issues

Federal safety officials are raising doubts about a judge's ruling that El Paso Corp. should have run its natural gas pipeline at peak pressure during the California energy crisis. The questions--echoed by industry safety experts--could bolster the Houston energy company's claim that it did not illegally squeeze gas supplies to drive up prices in California.

[Robert357]

I know for a fact that after the Bellingham pipe line explosion, that Olypic Pipeline Co., the operator, was not allowed to run at full production for quite a while. That was liquid fuels and there was no declared energy emergency that was made worse on a supply side by the shortage.

From what I can gather the FERC judge is probably looking for a scapegoat to give to California. Personally, I think that the question is going to boil down to "during a Gov Declared energy emergency, should a pipeline be allowed to reduce its capacity because of a recent death causing explosion until such a point as the integrity of the pipeline has been throughly checked and tested."

That is going to be a frightening precident (sp) if FERC doesn't overturn the decision.

Actually, that could be good politics for Republicans! Althought I don't like the idea of using safety in politics, it seems less un-ethical that cartoons of Bush pushing little old ladies in wheelchairs off a cliff. The Democrats deserve just about anything the Republicans give to them after that.

Let me explain. The main backers of more restrictive pipeline operations toward increasing safety are Democratic Senators and Congressmen from the State of Washington and a few other states. This could be an interesting wedge issue for Republicans to pick up nationally. Patty Murray, the Senate campaign finance chair is a strong spokesperson for more pipeline safety. This could drive a wedge between many democrats in California and those in Washington, New Mexico, and some of the states along the Mississippi River. Since Republicans control the Administration, it should be easy to set up.

[snopercod]

Something else was going on during the same time frame that "...El Paso subsidiaries 'withheld extremely large amounts of capacity...from November 2000 to March 2001.":

This: Gramm Accuses Clinton, Bush of Abusing Energy Law to Deal with California Crisis

Eric J. Fygi, the Energy Department's acting general counsel who drew up the emergency order signed by Mr. Clinton and extended by Mr. Bush, said it was proper to use the powerful law because northern California military bases were threatened. But he said there is "a legitimate issue" as to whether the U.S. will be liable for damage claims if the PG&E Corp. unit fails to pay its bills when they come due Feb. 25.

After the hearing Friday, PG&E spokesman Shawn Cooper indicated that there isn't any problem paying that bill. PG&E, he said, will be able to pay the $300 million owed to 27 gas suppliers covered by the order. California has allowed PG&E to pass on natural-gas price increases to consumers, he said, unlike retail electricity prices in the state, which remain capped.

Mr. Fygi said the unprecedented order was signed by President Clinton on Jan. 19 after he received pleas from California Gov. Gray Davis and from PG&E's chairman. On Jan. 23, Spencer Abraham, the new energy secretary, heeded another plea from Gov. Davis. "Secretary Abraham, with two full days of the job under his belt, instructed me to extend these orders," Mr. Fygi said. The two orders, one dealing with natural gas and another sending electricity supplies into the state under a different law, ended Feb. 6.

Mr. Fygi testified that Clinton administration lawyers realized they couldn't order the sales without invoking the Defense Production Act. The act was passed at the height of the Korean War to give the president powers to commandeer scarce materials for defense purposes.

Mr. Fygi said the problem wasn't a scarcity of natural gas, but rather PG&E's credit woes. The lawyers decided the potential threat to military bases in the area and facilities of the National Aeronautics and Space Administration justified the use of the law.

[Hostage]

You forgot to mention there were many people killed by the explosion. Therefore it was only good sense to lower the MAOP (hence lowering the amount flowing) until safety had been addressed.

Good points about highlighting dem positions on pipeline safety.

[snopercod]

A little more from GRAMM COMMENTS ON CALIFORNIA ENERGY CRISIS AND THE USE OF DEFENSE PRODUCTION ACT

"In this extraordinary use of the Defense Production Act, President Clinton delegated authority to the Energy Secretary, and the Energy Secretary, under the name of the Defense Production Act, forced suppliers to sell to parties that they would not have supplied in the absence of the use of the police power of the federal government.

"They issued an order that required a sale to be made under conditions where the sellers would never have agreed to sell in the absence of the use of the police power of the federal government. It was an order that required a sale at a price the seller never would have accepted under any ordinary circumstance and with no guarantee that the product – in this case, natural gas – would be paid for. I am not aware that the natural gas has yet in fact been paid for.

Once again, the "gougers" were never paid?

[Dog Gone]

It doesn't matter whether you're gouging or not, if you don't get paid at all. In fact, the party who "sold" the gas is the one getting ripped off.

[snopercod]

I sure wish the companies being stiffed would come out with an accounting of their California accounts receivable.

BTW, the Defense Production Act is the one that Nixon used to impose wage and price controls. It was re-authorized in 2001, with no significant changes that I could see. I guess Sen. Gramm was not persuasive.

[Ernest_at_the_Beach]

My head hurts, been chasing all the Links!

Did we get this one:

Natural-Gas Companies Find Unexpected Lift in California ,/a>

Now the latest Business Week thinks this is going to make Gay Davis look good again.

[Robert357]

Once again, the "gougers" were never paid?

My head hurts. This is becoming typical. If the "gougers" were not paid, how come California needs to borrow all that money? I know....they are democrats, and democrats always need more money..(/sarcasm)

[Robert357]

Occidental's Elk Hills field is producing at about 10% above its stated capacity, says John Allen, general manager for the operation, about 15 miles west of Bakersfield in south-central California.

Of Course! It's all Al Gores fault!

Someone in the Administration should get FERC judge Wagner (or someone in the SEC) to make a finding that Occiental Petroleum was price gouging and withholding needed natural gas from the California market during a declared energy emergency.

Say anyone want to pass this along to the Power Generators that are now auditing the Cal PX?

[Robert357]

Boy do I feel silly, I saw 10% over stated capacity and thought 10% under.

NEVER MIND!

[snopercod]

That's OK. My brain is running well under 10% of rated capacity. Have a good weekend my friend.

[snopercod]

Just adding some facts to the thread. The Department of Transportation ordered El Paso to run their line at 80% capacity for safety reasons:

5. Once operation is resumed, restrict the maximum allowable operating pressure to 80 percent (80%) of the operating pressure of Line 1103 at the time of failure, which was calculated to be 538 psig.

El Paso cranks up public relations machine