Gas Gap: AEC v. Kinder Morgan

Some Minnesotans will remember a time in the not-so-distant past when the state did not have the propane that it needed during peak need: the Minnesota winter.

Propane suppliers who started the winter with lower-than-usual levels of the heating fuel have simply been unable to catch up with demand in Minnesota and the rest of the polar-gripped Upper Midwest as below-zero readings ratchet up consumption and price.

Why did they start the winter with lower than usual levels?

Maybe the lawsuit filed in Kandiyohi County by Alliance Energy Services, located in Willmar, Minnesota and removed to federal court (U.S. District Court (D. Minn.) (Nelson, J.)) last month by the Kinder Morgan powerhouse defendants holds some clues?

Allegedly, Kinder Morgan interrupted its delivery of propane to AES to pump condensate back to Canada.

Based on available data, Alliance believes that the forced reduction in capacity alone prevented Alliance from transporting and selling approximately 210,000 barrels per month during the Winter Period to meet Alliance’s customer demand.

In fact, AES’ position in its lawsuit is that it could have sold 1.5 million more barrels of propane were it not for Kinder Morgan’s failure to fulfill the promised propane under the contract.

In November of 2013, KM Cochin secured its presidential permit from the U.S. State Department, clearing the government approval way for KM Cochin to reverse its pipeline and transport bitumen-thinning diluent from the United States to Alberta’s oil sands region, for mixing with Alberta’s heavy oil, and then shipped back into the U.S. (via Keystone XL pipeline or other means) for refining and consumption in Texas facilities.

Who knew these pipelines have material swishing back and forth? When you think about it, it makes cents.