“An Act of God” is Blamed for Pipeline Explosion Last September in Southwestern Penna.

by admin on May 18, 2019

Revolution Pipeline Explosion & Fire Quite Extensive and Damaging

EdgeMarc files for bankruptcy and blames Energy Transfer explosion; Energy Transfer says it was ‘an act of God’

From an Article by Anya Litvak, Pittsburgh Post Gazette, May 16, 2019

The early morning fireball that burst from the seams of Energy Transfer’s Revolution pipeline in September has surfaced as the central character in the bankruptcy of EdgeMarc Energy.

The Canonsburg oil and gas firm claimed in a Chapter 11 filing in Delaware on Tuesday that the rupture of the pipeline stranded gas from dozens of its Butler County shale wells and cut off a large chunk of the company’s revenue source.

The company’s assets include 45,000 acres in Butler County and in Monroe and Washington counties in Ohio and about 60 producing wells, including 48 shut-in wells in Pennsylvania.

But court filings reveal more than EdgeMarc’s financial woes. The Canonsburg oil and gas driller and Texas-based pipeline operator Energy Transfer have been engaged in a legal fight since February over culpability in the Beaver County landslide that broke apart the pipeline.

That legal dispute hinges on a concept called force majeure, a legal phrase that means, broadly, “an act of God.” In this case, Energy Transfer said the landslide that caused the Revolution pipeline to rupture was out of its control.

But, since early this year, EdgeMarc has been attempting to demonstrate in a court of law that Energy Transfer was directly responsible for the pipeline explosion.

The explosion burned down a house at the end of a suburban street in Beaver County. The Revolution pipeline — a 40.5-mile natural gas line that runs through Washington, Allegheny, Beaver and Butler counties — had been activated just prior to the burst.

Initially, Energy Transfer thought it could have the pipeline up and running within two months. It remains out of service and is unlikely to become operational this year.

While the pipeline continues to wait for repairs and regulators work through the environmental issues, the EdgeMarc case shows that there have been other consequences of the explosion.

In this case, the winding story began in 2011, when EdgeMarc burst onto the shale gas scene with a big name — it was co-owned by a Goldman Sachs investment fund with a minority interest from the Ontario Teachers’ Pension fund.

The company spent the first couple of years gathering up leases in Butler County as well as in Monroe County in Ohio, and began producing gas in 2015. To get its gas to market, EdgeMarc signed contracts with major pipelines guaranteeing space on their routes, and guaranteeing that it would pay for that space whether used or not.

The Revolution pipeline, which is a gathering pipe, was supposed to be the middle man, delivering EdgeMarc’s gas to the major pipelines.

It’s the weight of those contracts with their millions in monthly fees and the lack of revenue from the wells supposed to feed through Revolution that drove EdgeMarc into bankruptcy, the company said.

After trying for weeks to find a buyer for the company out of court and failing, EdgeMarc sought bankruptcy protection and is proposing an auction of its assets in mid-August.

The culpability dispute isn’t playing out in bankruptcy court. Pipeline operator Energy Transfer filed a lawsuit in Allegheny County Court of Common Pleas against EdgeMarc in February, alleging that the Canonsburg oil and gas company isn’t honoring its contract.

EdgeMarc responded that it had terminated the contract because the pipeline wasn’t put into commercial service by the date that Energy Transfer guaranteed: Jan. 1, 2019.

But Energy Transfer argued that the pipeline was commercially operating. For one day. On Sept. 10, the day of the explosion, Energy Transfer sent EdgeMarc two notices. The first announced that the pipeline had been put into commercial service the day before. The second said that it had suspended operations because of the explosion, which was an unforeseeable event, “an act of God.” In legal terms, it declared a force majeure.

The phrase is a staple of commodity contracts allowing either party to escape punishing losses and liability if something out of their control renders them unable to hold up their end of the bargain.

EdgeMarc was not pleased. In a legal filing, the Canonsburg company didn’t just call the timing suspicious; it accused Energy Transfer of taking “every opportunity to use the Revolution Explosion to its benefit,” “contriving a post-explosion notice,” “fabricating invoices to EdgeMarc as if the Revolution Explosion had never happened, and demanding over $7.3 million in credit support based on these purported invoices.”

As for that “act of God claim,” the reality is just the opposite, EdgeMarc said. “The direct consequence of ETC’s conduct — including its well-documented failures to undertake necessary erosion and sediment control measures — was a landslide during the build out of the Revolution System, resulting in a segment of pipeline in Beaver County being displaced down a hill which caused a pipeline rupture and explosion on Sept. 10, 2018.”

Energy Transfer specifically denied in its court filings that the landslide was a consequence of its activities. “Plaintiff further denies that it failed to take adequate erosion and sedimentation control measures, that any such failures were problematic, and that that plaintiff was on notice of any problem,” the company wrote.

Energy Transfer’s blanket denials in the EdgeMarc lawsuit contradict a consent order and agreement that the company signed with the Pennsylvania Department of Environmental Protection in June 2018.

That agreement chronicled a number of instances of ineffective or missing erosion controls on the Revolution pipeline right of way, spelled out the environmental violations issued as a result and said the company didn’t dispute the findings.

Energy Transfer’s legal argument that the landslide was not a consequence of its activities also appear to side step the findings of a consultant that the company hired to explore landslide hazards along the route after the explosion.

The consultant’s report, dated Feb. 23, said: “The slope failure that caused the pipeline separation … occurred from within the fill that was placed to restore the construction corridor to pre-construction grades.”

EdgeMarc’s bankruptcy filing Tuesday puts a hold on Energy Transfer’s lawsuit against the Canonsburg company.

Now, the small driller, which has 42 employees, will try to sell its assets and shed its burdensome pipeline contracts. It has secured $108 million in financing for the bankruptcy from KeyBank.


PA-DEP orders ETP to fix Revolution Pipeline erosion problems | StateImpact Pennsylvania, October 30, 2018

{ 1 comment… read it below or add one }

Mary Wildfire May 19, 2019 at 8:09 am

It’s about time God sued for defamation.

All these screw-ups that companies blame on “acts of God”

and then also all the warriors who “pray for peace” as though

the war was God’s idea.

Mary Wildfire, Roane County, WV


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