Boardwalk Says Bluegrass Not Dead After Investment Halt

Boardwalk Pipeline Partners LP (BWP) said its Bluegrass pipeline project to ship natural gas liquids to the U.S. Gulf Coast may still be revived, even after suspending investments today with partner Williams Cos. (WMB)

“We are no longer funding any capital for those projects, but the joint venture between us and Williams is still in place and we continue to have discussions with customers,” Boardwalk Chief Executive Officer Stanley Horton said on a conference call with analysts today. “The project is not dead.”

Williams, the fourth-biggest pipeline operator by market value, said today it would halt investment in the project aimed at connecting growing supplies from the Marcellus and Utica shale areas in the Mid-Atlantic to the southern U.S. Tulsa, Oklahoma-based Williams blamed “an insufficient level of firm customer commitments” in a statement today.

Bluegrass’s demise would remove the “financing, regulatory and execution risks” of the project, while it may lead investors to “question the security” of other Williams projects, said Christopher Sighinolfi, a Jefferies LLC analyst in New York. Williams had included the pipeline in its projections, while Boardwalk hadn’t, Sighinolfi said.

Boardwalk, based in Houston, today reported first-quarter earnings that included a $10 million impairment cost related to the project. Bluegrass was proposed to ship as much as 400,000 barrels a day of products including butane and propane to petrochemical facilities along the Louisiana and Texas coast, with the potential for exports.

Tisch Family

Boardwalk is majority owned by Loews Corp., the holding company owned by New York’s Tisch family. On a separate earnings call today, Tisch Corp. CEO Jim Tisch said the project would have produced “enormous” returns.

“The producers in the Marcellus currently have enough takeaway capacity for the next few years, and they seem not to be thinking beyond that timeframe for what to do with the natural gas liquids,” Tisch said. “My guess is that we were a year or two early.”

Williams rose 1.1 percent to $41.70 at the close in New York. Boardwalk climbed 0.2 percent to $16.19.

Enterprise Products Partners LP (EPD), based in Houston, is the biggest pipeline operator by market capitalization.

To contact the reporters on this story: Tina Davis in New York at tinadavis@bloomberg.net; Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editors responsible for this story: Tina Davis at tinadavis@bloomberg.net Carlos Caminada, Steven Frank

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