Photographer: Andrew Burton/Getty Images

Blackstone’s New Pipeline Asset Is Wreaking Environmental Havoc

  • Federal filings show more violations than other big pipelines
  • Project will transport natural gas from Marcellus shale

In the energy business, it’s one of the biggest projects going today: construction of a 710-mile pipeline to transport natural gas from America’s most prolific shale deposit in the eastern U.S. to consumers in the Midwest and Canada. Even Blackstone Group LP has agreed to take a sizable stake.

But it holds another, more dubious, distinction. The Energy Transfer Partners LP pipeline has racked up more environmental violations than other major interstate natural gas pipelines built in the last two years, according to a Bloomberg analysis of regulatory filings during that period. And that’s all since U.S. regulators approved the $4.2 billion project in February.

“Not only is it a situation where there are probably more incidents and more headlines than any other pipeline, on a project basis it’s a magnitude that we haven’t seen in years,” said Kyle Cooper, director of research with IAF Advisors in Houston.

In Ohio, Energy Transfer has been cited for damaging protected wetlands and improperly disposing of wastewater, among other things. In West Virginia, a state regulator temporarily ordered the company last month to cease and desist activities after it inadvertently polluted streams.

And in Washington, the Federal Energy Regulatory Commission has halted horizontal drilling on certain segments of the pipeline, following a massive 50,000-barrel spill of diesel-tainted drilling fluid.

The Rover pipeline, running from the Marcellus shale deposit, is Energy Transfer’s biggest project since its controversial Dakota Access oil pipeline. Chief Executive Officer Kelcy Warren said on July 31 that he was “baffled” by regulators’ allegations. That same day, his company reached a deal to sell a 32 percent stake in the Rover unit to Blackstone for about $1.57 billion in cash. It’s expected to close in the fourth quarter. Blackstone spokeswoman Paula Chirhart said the firm declined to comment.

“Rover will be built in compliance with all safety and environmental regulations and in some instances we will exceed those requirements,” said Energy Transfer spokeswoman Alexis Daniel, in response to Bloomberg’s violation tally.

— With assistance by David Carey

    Before it's here, it's on the Bloomberg Terminal.