Enterprise Products Breached Contract, Energy Transfer Says

Enterprise Products Partners LP (EPD) abandoned an agreement to build a pipeline while planning to pursue a similar project with another company, Energy Transfer Partners LP said in a lawsuit.

Energy Transfer sued Enterprise in Texas state court in Dallas on Sept. 30, alleging breach of contract, breach of fiduciary duty and unfair competition. Dallas-based Energy Transfer also sued the third company, Enbridge Inc. (ENB), alleging interference with contract.

Enterprise, the biggest U.S. pipeline operator, formed a joint venture with Energy Transfer in April to build a 400,000- barrel-a-day crude oil line from Cushing, Oklahoma, to Houston. Enterprise, based in Houston, called off the project Aug. 19. The company announced a partnership with Calgary-based Enbridge on Sept. 29 to build an 800,000-barrel-a-day pipeline between the two cities.

“Enterprise first tried to persuade” Energy Transfer “to terminate the joint venture due to the new pipeline’s supposed lack of commercial viability, while simultaneously plotting to establish a new joint venture to build the same pipeline,” Energy Transfer said in its complaint. “When Enterprise could not persuade Energy Transfer to terminate the joint venture, Enterprise simply pretended that the joint venture never existed.”

Energy Transfer is seeking a share of the profits of the pipeline as well as unspecified damages, including punitive damages.

The lawsuit is Energy Transfer Partners LP (ETP) v. Enterprise Products Partners LP, 11-12667, District Court, Dallas County, Texas (Dallas).

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; Mike Lee in Dallas at mlee326@bloomberg.net.

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Susan Warren at susanwarren@bloomberg.net.

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