La. Admin. Code tit. 43 § XI-511

Current through Register Vol. 50, No. 11, November 20, 2024

Section XI-511 - Governing the Issuance of Orders Relative to the Transporting of Gas Using the Excess Capacity of Intrastate Gas Pipelines Pursuant to section 501 et seq. of the Act (Formerly section 131)

A. All definitions in this regulation are in accordance with those of §101

B. This regulation shall apply to the rights of the commissioner of conservation pursuant to Section 501 et seq., of the Act to determine whether or not excess capacity exists and to investigate the need for using said excess capacity of an intrastate natural gas transporter hereinafter identified as transporter with respect to transporting a gas supply owned by a person other than the proposed transporter.

C. All applications to the commissioner by an owner(s) of intrastate natural gas for an order directing a transporter to transport said owner's gas in the transporter's intrastate pipeline system hereinafter identified as transporter's pipelines, pursuant to the provisions of Section 553 of the Act shall be in writing, verified under oath by an individual having authority, shall be in the form approved by the commissioner, shall be noticed upon the proposed transporter by certified mail, and shall contain the following information:

1. the legal status of the applicant as shown below and a statement in writing of applicant's financial capabilities to construct, operate, maintain, and terminate any required connecting lines onto the transporter's pipelines;

a. if a sole proprietorship, state the name and address of the person owning said company;

b. if a partnership, state:

i. name, address and percentage of interest of each and every partner owning 20 percent or more interest;

ii. if said partnership is an affiliate of another entity, state the name and address and legal status of said affiliate;

c. if the applicant's legal status is a corporation, state:

i. the name and address of each shareholder owning 20 percent or more of the shares, together with the number and percentage of any class of voting shares of the corporation which such shareholder is authorized to vote; and

ii. the name and address of each affiliate of the corporation who could derive direct benefit from the proposed use of transporter's pipelines, together with, in the case of an affiliate controlled by the corporation, the number of shares and percentage of any class of voting stock of that affiliate owned, directly or indirectly, by that corporation and, in the case of an affiliate which controls that corporation, the number of shares and the percentage of any class of voting stock of that corporation, directly or indirectly owned by the affiliate;

iii. the nature of the services rendered by the applicant and those affiliates identified in Clause c.ii above and to whom;

iv. state of incorporation;

2. the operating capability of the applicant;

a. evidence of approval to construct, operate, and maintain any connecting pipeline facilities from the applicable state and federal agencies;

b. design information and details to conclusively demonstrate that all of the applicant's connecting lines are properly sized for the proposed flow volumes and in full accordance with all state and federal laws, rules and regulations, including but not limited to Parts 191 and 192, Title 49, of the Code of Federal Regulations, as amended;

c. a concise description of applicant's existing operations pertaining to the application;

3. excess capacity requested for which the proposed user thereof is willing to pay whether such capacity is used or not;

4. the period of time that the gas is to be transported;

5. if gas proposed for transportation is to be delivered to the transporter's pipeline from a third party's pipeline, where the third party is a certified intrastate natural gas transporter or has been authorized by the commissioner to construct and operate facilities for the transportation of natural gas in the state of Louisiana, and the subject gas is to be purchased from said third party, the applicant is not required to furnish the information as set forth in Paragraphs C.6-10, but Subparagraph 7.e is required;

6. complete geological information on the productive zone(s) which is proposed to supply the gas reserve subject to this application, including structural maps, fault trace maps, isopachous maps, and copies of all logs used in the geologic evaluation;

7. all well history, well test, reservoir and production data including, but not limited to, the following:

a. basic well information including total depth, plug-back total depth, perforated interval, net productive sand, sand top and base or water level, electrical survey (1-inch and 5-inch), porosity logs, side wall and conventional core analysis, and any other logs or well surveys (including bottom-hole pressure survey information);

b. complete well test information including deliverability tests obtained on each well completed or tested in the productive zone(s);

c. complete monthly production history and production test reports on all wells which have produced from the productive zone(s);

d. estimated deliverability from well(s) to be connected during the period gas is transported hereunder;

e. complete chromatographic gas analysis of the gas to be transported, the content of sulphur, inert components and water, heating value, gravity, and temperature;

f. measurement basis for all data submitted;

8. copies of all lease information including unitization data, lease expiration dates, royalty and any special provisions pertaining to leases from which gas is to be produced and delivered to the transporter's pipelines;

9. history of any past gas deliveries from well(s) to be connected to the transporter's pipelines, and whether past deliveries were made into pipelines under the control of the Federal Energy Regulatory Commission as of the date of application;

10. copies of abandonment orders from any previous gas deliveries;

11. a conformed copy of the gas sales contract(s) involving the gas to be transported and a detailed statement concerning the end use of the gas. If the gas proposed for transportation:

a. is to be delivered from applicant's pipeline:

i. the applicant shall provide the sources of all gas in the said pipeline and all dispositions therefrom unless applicant is a certified intrastate natural gas transporter or has been authorized by the commissioner to construct and operate facilities for the transportation of natural gas in the state of Louisiana;

b. is to be delivered from a third party's pipeline:

i. the applicant shall provide the sources of all gas in the said pipeline and all dispositions therefrom unless the third party is a certified intrastate natural gas transporter or has been authorized by the commissioner to construct and operate facilities for the transportation of natural gas in the state of Louisiana;

ii. the applicant shall provide a conformed copy of all gas sales and transportation contracts which in any way could affect the jurisdictional status of any of the transporter's facilities;

12. schematic flow diagram of the producing facilities to be used by the applicant for connecting onto the transporter's pipelines. The schematic should include all wellhead equipment, lines, valves, separating and scrubbing equipment, all safety and shutdown controls, all liquid and gas metering equipment complete with capacity and pressure specifications for all above mentioned equipment;

13. map showing location of all facilities to be used in the installation along with:

a. proposed point(s) of entry onto the transporter's pipelines;

b. proposed point(s) of discharge of the gas from the transporter's pipelines;

c. location of any other interconnects on the applicant's intrastate system with other pipeline systems;

14. maximum pressure at which applicant can deliver gas at proposed inlet, and maximum pressure required by applicant at proposed outlet point(s) of transporter's pipelines, and maximum and minimum daily volumes of gas to be transported;

15. schematic flow diagram showing all facilities to be installed at the outlet point(s) indicating all necessary control, metering and emergency shutdown devices.

D. The applicant shall furnish all the foregoing information pertaining to the application for excess capacity to the proposed transporter. Where any of this information is on file with the commissioner, the applicant shall so state, and not be required to submit same with its application.

E. As a prerequisite to filing an application, it is required that the applicant provide written evidence to the commissioner that the applicant has explored in good faith with the proposed transporter the feasibility of utilizing the transporter's pipelines.

F. Upon receipt of the application referenced in Subsection C hereinabove, the commissioner shall notice and hear the matter in accordance with the commissioner's applicable rules of procedure. In determining whether or not excess capacity exists in the specific segment(s) of the transporter's pipelines in which the applicant's gas is to physically flow, the commissioner shall take into consideration the following matters:

1. the specific intrastate pipeline system(s) in which the gas is proposed to be transported, and the point(s) that the gas is to enter the transporter's pipelines and is to be discharged therefrom;

2. the period of time that said gas is to be transported;

3. whether or not the quality specifications of the gas to be transported, including the content of sulphur, inert components, water, ethane and heavier hydrocarbons, heating value, gravity and temperature meet or exceed the highest quality specifications of the gas then being transported in the transporter's pipelines;

4. the volume of gas required for the transporter's own use;

5. the existing character, pressure, gas flows, condition and all operating data relative to transporter's pipelines and whether any of the involved pipeline(s) now, or has ever been engaged in the transportation of interstate gas;

6. pressure required by the transporter to receive the gas and the pressure(s) at which the gas would have to be redelivered for the applicant or for the account of the applicant;

7. pressure limitations and all other limitations of the transporter's pipelines determined in accordance with all applicable state, federal and local laws and agency rules, regulations and orders including but not limited to such matters as population density along the transporter's pipelines and good engineering procedures, practices and calculations;

8. any and all matters applicable to or in any way connected with the applicant's gas, well(s) from which the gas is derived, facilities involved with the foregoing, or otherwise which could possibly subject the proposed transporter's pipelines, facilities or gas, to control by or within the jurisdiction of the Federal Energy Regulatory Commission, or any federal regulatory body having similar jurisdiction;

9. any requirement which would cause the transporter to alter or modify any of its existing pipeline facilities or operating pressures, gas flows, or procedures in such a way as to result in the abridgment, violation or abrogation of any of its existing contract obligations whatsoever whether such agreements or obligations are due to gas purchases, gas sales or gas transportation, and whether serviced by the involved or another segment(s) of the transporter's pipeline;

10. any requirement which would cause the transporter to alter or modify any involved segment of its pipeline(s), or facilities either by way of installing, operating or maintaining additional pipelines or compression facilities, looping of existing pipelines, or otherwise, so as to create or increase pipeline capacity;

11. all contractual obligations by a transporter existing as of 30 days after the date of application or date of hearing, whichever is sooner, requiring the utilization of pipeline capacity, including but not limited to the following:

a. the maximum existing contract purchase obligations of the transporter under contracts for the purchase of gas supplies, subject to change based on actual maximum deliverability under the gas purchase contracts;

b. the maximum existing contract delivery obligations of the transporter pursuant to its contracts for the sale of gas, which obligation shall always mean the transporter's maximum contractual delivery obligation, reduced solely by an amount equal to the physical inability of each purchaser of the transporter to receive its maximum contract quantity;

c. the maximum existing contract obligations of a transporter to receive and redeliver gas or equivalent gas under gas transportation or gas exchange contracts, subject to the provisions of Subparagraph b immediately above;

d. the maximum contract delivery obligations of transporter under any and all outstanding bonafide offers by the transporter to third parties which would require the utilization of any of transporter's pipelines, and affect transporter's pipeline capacity, which offer(s) is outstanding as of 30 days after the date of application or date of hearing, whichever is sooner;

e. the maximum existing contract purchase and delivery obligations of the transporter under all contracts including but not limited to gas purchase, sales, and transportation agreements. In determining the maximum contract purchase and delivery obligations, the greater of the sums of transporter's maximum purchase or delivery obligations will control, subject only to the provisions of Subparagraphs a and b above;

12. any adverse effect utilization of capacity in the segment(s) specifically involved would have on the transporter's ability to operate its pipeline system and meet its existing contractual obligations.

G. Where it is found that excess capacity exists within a pipeline on a part-time or temporary basis and the commissioner accordingly orders the transportation of gas during the periods when such excess capacity may be available, it shall be the responsibility of the owner of the gas being transported in the available excess capacity, and its buyer or the recipient of such gas, to adjust production and purchase or utilization of said gas so as not to impair the transporter's ability to render adequate service to its customers.

H. Prior to the issuance of any order hereunder, the applicant shall prove to the commissioner's satisfaction that the gas proposed to be carried in the excess capacity of the transporter's pipelines and the involved and related facilities of all parties, have not been, are not now, nor will be subject to control by or within the jurisdiction of the Federal Energy Regulatory Commission, or any federal regulatory body having similar jurisdiction, or any successor agency thereof. Further, any order issued hereunder shall provide that if, pursuant to such order, any gas carried or to be carried by a transporter or any involved or related facilities of any party has been, is, or could be subject to the jurisdiction of the Federal Energy Regulatory Commission, or any successor agency thereof, said order shall be considered violated thereby, and shall ipso facto terminate, and end all obligations and duties of the transporter required thereunder without further action by the transporter or the commissioner.

I. Every order issued by the commissioner hereunder shall set the effective term thereof, quality, quantity, measurement and balancing, and further, after notice and hearing, if the parties cannot agree, shall fix the rates and charges to be paid by the owner of the gas to the transporter for the transportation of the gas, all in accordance with Section 555.E of the Act.

J. The applicant whose gas is being carried in the transporter's pipelines shall retain title to its gas at all times while in transit. Every order by the commissioner directing that a transporter carry the gas of the applicant in the excess capacity of the transporter's pipelines shall provide that said order shall not be effective unless and until the owner of the gas has executed in favor of the transporter a written indemnity and hold harmless agreement, in form as prescribed by the commissioner, with good and sufficient surety, in an amount as determined by the commissioner, protecting and indemnifying such transporter from and against any and all responsibilities, claims, losses, liabilities, damages of any nature or kind whatsoever, as well as any and all costs associated therewith, and whether for personal injury, property damage, or otherwise, including those of the transporter, the owner of the gas, third parties, or gas customers of the transporter, which may arise by virtue of any compliance by the transporter with such order, except that the written indemnity and hold harmless agreement shall not exonerate the transporter for any liability arising from his own negligence or fault.

K. Every order issued by the commissioner hereunder shall provide that in the event the transporter ordered to carry the applicant's gas has a specific need for the excess capacity of its pipeline(s), or a part thereof, to transport its own gas or the gas of its subsidiaries or of its parent or of a subsidiary of its parent, or to satisfy the requirements of its own transportation or sales contracts for which it then possesses adequate gas supply to fulfill, may in whole or in part terminate said order by giving written notice. Said notice shall be served by certified mail by the transporter on the commissioner and the applicant, shall specify the date on which effective, which shall be not less than 90 days of the date of said notice. If no opposition thereto is filed with the commissioner by the applicant, or the commissioner issues no objection in writing to the transporter and applicant, it shall be conclusively presumed for all purposes that all requirements of the Act are satisfied, that the transporter has a bona fide need for the excess capacity as stated in the notice, and that the public interest and the purposes of the Act would be best served by termination of the use of the excess capacity of the transporter's pipelines in whole or in part, and the order shall ipso facto terminate in accordance with the provisions of the notice. The above 90-day requirement may be waived by a written agreement filed with the commissioner and approved by the commissioner, said agreement to be signed by the interested parties or an authorized agent of the parties and verified under oath.

1. Either upon the filing of opposition by any party affected by the proposed termination, or upon his own initiative without opposition, the commissioner shall investigate the purported need of the transporter to so utilize its excess capacity and to disapprove the transporter's termination of the contract if, in fact, the transporter does not have a bonafide need for the excess capacity; or if, in the opinion of the commissioner, the public interest and the purposes of the Act would best be served by continuation of the transportation of the gas of the other person user. Any such opposition made by parties affected or by the commissioner shall be made within 30 days from the date of receipt by the commissioner of notice of termination from the transporter and such opposition shall be in writing and served by certified mail on the transporter and the commissioner. The commissioner may call a public hearing in order to obtain additional information required to approve or disapprove the proposed termination. Notice of any such opposition shall suspend the proposed termination of use of transporter's excess capacity until such time as the commissioner issues an order approving or disapproving same.

L. Every order issued by the commissioner hereunder shall provide that in the event of any emergency which could cause danger to person or property, a transporter may without any order or permission of anyone, including the commissioner, and without liability to any person, including the owner of gas being transported in excess capacity of the transporter's pipelines, terminate in whole or in part the transportation of said gas during the period of the emergency. The transporter as soon as practicable must notify the owner of said gas and the commissioner, of said emergency, the reason therefore, and the expected duration thereof. Upon the termination of the emergency, the transporter shall notify the commissioner and the owner of the gas, and shall forthwith comply with applicable order(s) of the commissioner.

M. If either the transporter or applicant is rendered unable, wholly or in part, by force majeure to carry out its obligations, on such party's giving notice and reasonably full particulars of such force majeure, in writing or by telegraph, to the other party within a reasonable time after the occurrence of the cause relied on, then the obligations of the party giving such notice, so far as they are affected by such force majeure, shall be suspended during the continuance of any inability so caused.

N. If for any reason conditions occur during the term of the applicable order which would render continued compliance with the order impracticable, dangerous to person or property, or illegal, the transporter may apply immediately to the commissioner for relief from all or a portion of the requirements of the order.

O. Every order issued by the commissioner shall identify the source(s) of gas approved for transportation in the transporter's pipelines and the gas shall be limited to the sources so identified.

P. Every order issued by the commissioner shall provide for the filing of periodic reports including but not limited to reports necessary to determine the quantity, quality and balancing of gas being transported in the excess capacity of transporter's pipelines.

Q. In the event the applicant is unable to demonstrate to the satisfaction of the commissioner that it has the necessary financial standing so as not to jeopardize the financial position of the transporter, then the applicant will be given an opportunity to provide and file a performance bond with the commissioner in favor of the transporter:

1. the amount of the bond shall in no event be less than the amount sufficient to cover the greater of the sums determined from Subparagraphs a and b or c and d below:

a. an amount determined as the product of:

i. applicant's estimated peak day volume;

ii. 60 days; and

iii. estimated rate and charges for the transportation service; plus

b. an estimated amount to reimburse the proposed transporter for the cost involved in establishing input and output points (delivery points) and related facilities for receiving and delivering gas as proposed by the applicant;

c. an amount determined as the product of:

i. the excess capacity (expressed as a daily volume) for which applicant is to pay transporter whether used or not;

ii. 60 days; and

iii. the estimated rates and charges for the transportation service; plus

d. an estimated amount to reimburse the proposed transporter for the cost involved in establishing input and output points (delivery points) and related facilities for receiving and delivering gas as proposed by the applicant.

2. The estimated rates and charges and estimated costs involved in establishing delivery points and related facilities shall be the applicant's best estimate at the time of application, but the actual amount of surety and bonding capability of the applicant shall be subject to revision by the commissioner at such time as actual rates and charges and volume of gas to be transported, if any, have been determined by the commissioner or have been agreed upon as between applicant and transporter or transporters.

R. Every order issued by the commissioner shall provide that the excess capacity obtained by the applicant shall not be assigned in whole or in part unless agreed to in writing by the transporter and approved by the commissioner.

S. The following general rules will affect all proceedings initiated under Subsections A-S of this regulation.

1. Except as provided herein, by law, or by the Act, all applications, reports, approvals, orders and notices to interested parties, the method of serving same, and all public hearings conducted under the Act shall be in accordance with the rules of procedure of the commissioner, this regulation, applicable law, and the Act.

2. This regulation set out herein applies only to the provisions of the Act (Chapter 7, Title 30).

3. Unless prohibited by specific provisions of the Act or by law, the commissioner may waive any or all of the requirements of the foregoing regulation and grant additional time to comply with any provision of the Act on written request, and upon reasonable cause shown if he finds that the application and enforcement thereof will make undue hardship on the person affected, or will seriously impede the efficiency of the commissioner's administration of the Act and that the application or enforcement thereof is not necessary to the accomplishment of the purposes of the Act.

4. This regulation, in the absence of an emergency, may not be amended, or new regulation promulgated without notice and opportunity for public hearing, as provided for in Title 30, Chapter 1, Section 6 of the Louisiana Revised Statutes of 1950, as amended.

La. Admin. Code tit. 43, § XI-511

Promulgated by the Department of Natural Resources, Office of Conservation, LR 1:477 (November 1975), amended LR 4:81 (March 1978), LR 12:601 (September 1986), Repromulgated LR 49282 (2/1/2023).

AUTHORITY NOTE: Promulgated in accordance with R.S. 30:501-599, 601-606.