Chesapeake, FERC in fight over pipeline contracts

Chesapeake Energy wants to terminate a $300 million pipeline contract in its Chapter 11 bankruptcy proceedings, Kallanish Energy reports.

That request has been opposed by pipeline giant Texas-based Energy Transfer.

Now the Federal Energy Regulatory Commission is supporting Energy Transfer and is getting involved in the ongoing legal fight, Reuters reported.

FERC has argued in bankruptcy filings that it should have equal say with the bankruptcy court over regulated pipeline contracts, it said.

A similar fight is brewing between Tallgrass Energy and bankrupt Ultra Petroleum, the media outlet reported.

In that case, FERC was asked to intervene on the cancellation of pipeline contracts through bankruptcies.

The latest issue arose after Chesapeake Energy asked the U.S. Bankruptcy Court in Houston, Texas, to approve breaking pipeline contracts for moving natural gas including with Energy Transfer and Crestwood Equity Partners.

That request was filed last June when Chesapeake filed for Chapter 11 protection.

The Oklahoma-based company also sued the FERC to keep two pipeline companies, ETC Tiger Pipeline and Gulf Southern, from interfering in its Chapter 11 proceedings.

Chesapeake said the negotiated contracts with those two pipeline companies could threaten its Chapter 11 reorganization plan.

It said it wanted the bankruptcy court, not FERC, decide the issue.

Chesapeake, the No. 6 largest natural gas producer in the U.S., has about $9 billion in debt and wants to shed $7 billion of debt in Chapter 11.

This post appeared first on Kallanish Energy News.