Academic journal article Energy Law Journal

Report of the Antitrust Committee

Academic journal article Energy Law Journal

Report of the Antitrust Committee

Article excerpt

This report summarizes antitrust developments of particular interest to energy law practitioners that occurred in the year 2004. The topics are covered in the following order:

I. Federal Trade Commission (FTC) Enforcement Actions and Reports

II. Major Competition-Related Federal Energy Regulatory Commission (FERC) Issuances and Orders

III. FTC Comments to States

IV. FTC Comments to the FERC and the U.S. Department of Energy (DOE)

V. Department of Justice (DOJ) Comments to the FERC

VI. Court Decisions


A. The FTC Approves Merger Between Enterprise Products and GulfTerra Energy

On November 26, 2004, the FTC cleared the merger of Enterprise Products Partners, L.P. (Enterprise), with GulfTerra Energy Partners, L.P., and GulfTerra Energy Company, LLC (GulfTerra).1 Enterprise and GulfTerra provide natural gas transportation, gathering, processing, and storage services; transportation, fractionation, storage, and terminaling of natural gas liquids; crude oil transportation; and offshore platform services.2 The general partner of GulfTerra was managed and 50%-owned by El Paso Corporation (which also owned 31.1% of GulfTerra). The general partner of Enterprise, Enterprise Products GP, LLC, was wholly owned by Dan L. Duncan.3 Enterprise merged with GulfTerra and GulfTerra's general partner through a series of transactions valued at approximately $13 billion.4

The FTC complained that the merger would increase the likelihood of collusion or coordinated interaction in certain markets for natural gas transportation, propane storage, and terminaling services. The FTC identified overlaps between Enterprise and GulfTerra pipeline assets "[i]n the West Central Deepwater region of the Gulf of Mexico" (where the companies owned interests in two of the three available pipelines) and between Enterprise and GulfTerra's propane storage and terminaling facilities in and around Hattiesburg, Mississippi (where the companies owned interests in three of only four propane storage facilities).5

The FTC required the companies to divest:

* Either Enterprise's ownership interest in Starfish Pipeline Company, LLC (a joint venture that owns the Stingray Pipeline, the Triton Pipeline, and a dehydration facility at Holly Beach, Louisiana) (Starfish Pipeline Interest) or GulfTerra's businesses, assets, and contracts relating to the ownership or operation of the HIOS Pipeline and the East Breaks Gathering System (HIOS/East Break Assets); and

* Either Enterprise's ownership interest in a propane storage and terminaling facility and related assets in Petal, Mississippi (Enterprise Propane Storage Interest) or Enterprise's wholly-owned liquefied petroleum gas (LPG) storage facility and related assets in Petal, Mississippi (Enterprise Petal LPG Storage Facility).

In addition, absent advance notice to the FTC, Enterprise and its affiliates are prohibited from acquiring any interest in gas storage caverns in Forrest County, Mississippi, or pipelines in the West Central Deepwater (or acquiring any interest in a business owning such assets). Further, they are prohibited from managing or operating such storage caverns or pipelines for a ten-year period.7

Enterprise petitioned for approval of the sale of "the Enterprise Propane Storage Interest to Enbridge Midcoast Energy, L.P., a wholly-owned subsidiary of Enbridge Energy Partners, L.P."8 The FTC approved that divestiture on December 31, 2004.9

B. The FTC Approves Magellan's Purchase of Shell Product Pipeline Assets

On November 26, 2004, the FTC announced it had cleared, subject to divestiture, Magellan Midstream Partners, L.P.'s (Magellan) acquisition of certain refined product pipeline and terminaling assets from Shell Oil Company (Shell).10 Magellan had agreed to acquire a package of Shell's Midwestern U.S. pipelines and terminals for $492.4 million, including an Oklahoma City, Oklahoma, terminal for gasoline, diesel, and other light petroleum products. …

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