Practice Strengths

Energy

Centered in Houston, the energy capital of America, Baker Hostetler’s Pipeline and Midstream Group possesses intimate knowledge of the issues affecting the transportation, storage and processing of crude oil, natural gas liquids and natural gas. Its members assist with all phases of project development, negotiate the necessary agreements from the investment stage through operational start-up, structure the ownership and financing of midstream facilities, represent buyers and sellers of midstream assets and handle complex disputes in litigation and arbitration.

Our transactional work encompasses corporate and commercial advice, structuring and governance of master limited partnerships and joint ventures, financing or private equity transactions, asset acquisitions and divestitures and mergers of midstream entities. We follow up by providing operational support that includes advice regarding necessary permits, the negotiation and preparation of agreements for rights-of-way; gathering and transportation, pipeline interconnection; processing; dock usage, terminal operation, storage, and commodity purchase and sale transactions.

Our litigation teams assist with project development and construction disputes; condemnation matters; delay and lost production claims; declarations of force majeure; allegations of discriminatory practices; implementation and operation of quality and gravity banks; responses to spills, leaks and environmental exposures; responses to inquiries from regulatory authorities; tariff issues; equipment and valve failures; subrogation and cost recovery claims following damages occasioned by third parties and natural disasters; personal injury claims and insurance coverage disputes.

When combined with the tax and regulatory strength of our Washington, D.C., office, the emphasis of our Denver, Columbus and Houston offices on oil and natural gas producers, and the special focus of our Houston, Los Angeles and Orlando lawyers on commercial and environmental problems facing energy companies, we have the capabilities to provide clients in the pipeline and midstream space with a full range of business, regulatory and litigation advice.

Pipeline and Midstream Assets

Midstream Assets
Baker Hostetler understands the business of the oil and gas industry, both onshore and offshore. Lawyers on our team have technical degrees, and many work with companies in the full spectrum of their businesses, whether involving deepwater transportation and gathering systems or interstate pipeline permitting and operation. Both pipeline owners and operators and equipment providers regularly rely upon our experience to capitalize on a deal, assert their commercial claims or defend against lawsuits.

Pipelines
Our team assists companies who construct, establish and operate the pipelines that move oil, natural gas and refined products to markets. Whether connecting deepwater projects to established systems, or building the infrastructure that will make shale investments viable, we transport our knowledge to where it is needed. Should a project become embroiled in regulatory or commercial disagreements, we possess the litigation and arbitration skills to get revenue flowing again.

Pipeline Operations
Our lawyers have significant experience defending administrative complaints, pursuing special permits for exposed segments of submerged pipelines and participating in PHMSA inspections (including inspections of integrity management programs, operator qualification plans, public awareness plans and pipeline operations manuals). We have participated in the preparation and editing of Facility Response Plans, Pipeline Operations Manuals, Operator Qualification Plans, Public Awareness Plans, SPCC Plans and Operations Manuals for marine terminal facilities regulated by 33 CFR Parts 154 and 156. We have also represented pipeline companies in connection with the prepara-tion of pipeline construction and operating agreements for intrastate natural gas pipelines.

Gathering, Storage and Processing
Natural gas drilling has transformed the landscape of onshore exploration and production, but the issues arising are not new. Baker Hostetler’s team possesses decades of experience to guide our clients from remote production to commercial markets.

Environmental
From product liability and toxic tort suits brought by individual plaintiffs to mass torts involving thousands of claimants, Baker Hostetler defends pipeline companies in environmental litigation. We assist our clients in obtaining environmental permits. We also aid companies in their emergency responses and defend petrochemical and energy clients from claims following releases and spills of hydrocarbons from pipelines, processing facilities, dock operations and tankers.

Mergers and Acquisitions
Our transactional lawyers have significant experience with transactional matters involving pipeline and midstream assets, including the acquisition and disposition of pipelines and mergers and stock purchases related to midstream assets. Baker Hostetler also counsels energy clients on the acquisition and disposition of such assets as gathering and transportation systems and storage and processing facilities. Our energy lawyers represent pipeline and midstream companies in their strategic acquisitions of complementary assets, as well as in their divestiture of under- and non-performing assets. We have handled all legal aspects of mergers and acquisitions, large and small, for our clients.

Master Limited Partnerships (MLPs)
Many of the country’s largest pipeline systems are owned by master limited partnerships (MLPs), a frequently used structure that is also the vehicle of choice for other parts of the midstream business.  Our attorneys have extensive experience in structuring MLPs and in handling the complex tax and business issues involved in advising on qualified income issues, asset drop-downs, joint ventures between affiliated entities, mergers between commonly controlled entities and other issues particular to the governance of MLPs.  Baker Hostetler has acted as counsel to numerous committees of outside directors, and as issuers’, underwriters’ or investors’ counsel in numerous master limited partnership securities offerings, including initial public offerings and royalty trusts. 

Maritime and Offshore Energy Issues
Whether in a port, at a terminal or far offshore, the business of oil and gas transportation and storage necessarily interconnects with maritime law. Baker Hostetler’s team possesses the knowledge and experience to handle these issues, whether arising from collisions, spills, loss or contamination of cargo, dock access and damage, terminal storage and blending agreements, regulatory issues, personal injuries and deaths or charter party disputes. We represent companies and their insurers in significant damage and loss claims, damages to subsea pipelines caused by vessels and disputes over facility construction and financing.

International
We go where business transports us. We have handled transactions arising from projects in Canada, Mexico, the Caribbean, Latin America, South America, Russia, Africa, the Middle East and China. In our import/export practice, we also aid producers and operators with international commercial and regulatory matters.

Leadership in Action

Valve Failure Generates 2,500 Claims and Three Class Actions: Case Management as a Cost-Effective Solution

Client: Pipeline Division of Major Integrated Oil Company

Type of Matter: 2,500 individual personal injury claimants and three class actions filed by inmates in three-unit prison complex alleging personal injuries from exposure to LPG released when a valve failed near the complex.

Our Client's Challenge: Managing claims by plaintiffs who lived across the State of Texas to keep all in county of event; responding to claims and to regulatory inquiries.

The Goal: Resolve claims in a cost-effective matter and respond to regulatory inquiries from Office of Pipeline Safety and Texas Railroad Commission.

Our Strategy: Obtain orders dismissing class actions, winnow down individual claims through discovery, obtain insurance coverage from manufacturer, seller and service company responsible for valve failure and settle or try remaining claims.

Results: Regulatory agencies imposed no fines, and insurance coverage paid for almost all of the costs of defense and settlements. In addition, more than half of the claims were dismissed for failure to respond to discovery and remaining claims were settled through claims management process funded by the settlement fund, including administrative costs of the process.

Pipeline and Midstream Assets Select Representative Matters

We help clients every day address cutting edge industry issues, such as:

Pipeline Litigation

• Defended over $1 billion in claims in AAA Commercial Rules arbitration for a major integrated energy company as co-owner of synthetic natural gas plant (producing lignite) in North Dakota. The federal court proceedings included work at the U.S. Supreme Court, U.S. Courts of Appeals and U.S. District Courts. Arbitration awards entered and federal court proceedings matter settled favorably.
• Defended a major integrated energy company in over 65 matters filed by 17,000 plaintiffs in Harris, Jefferson, Galveston and Bexar Counties, Texas, arising from a major spill from pipelines in the San Jacinto River near Houston. Acted as lead counsel in many matters and worked in joint defense for five years with counsel.
• Acted as lead counsel for a major energy company and handled thousands of claims and related litigation from an oil spill in Louisiana, including the successful defense of attempts to certify a class of plaintiffs in a Louisiana trial court to bring over $10 million in damages.
• Successfully defended a major integrated energy company against claims by the United States, including penalties assessed by the U.S. Coast Guard (federal government claim under OPA); lawsuit by the U.S. government was dismissed.
• Represented a major integrated energy company in obtaining summary judgment in favor of pipelines on claims for $14 million in lost profits (negligence and nuisance claims); summary judgment granted for client.
• Represent pipeline companies in acquiring and protecting rights-of-way and easements through negotiation when possible and condemnation when necessary.
• Represent pipeline companies in personal injury litigation arising out of construction projects.
• Successfully defended a major pipeline company accused of discrimination in violation of the Interstate Commerce Act as a result of rejecting tenders of “dumbbell crude” that damaged the common stream.
• Represented a pipeline company against four exploration and production companies in a dispute arising from a deepwater project. The dispute involved allegations of interference with the development of the pipeline project and delay damages occasioned by problems with the commissioning of the production platform. Achieved a recovery of full damages in excess of $30 million, plus attorneys’ fees.
• Represented a pipeline company and its London insurers against a platform owner when the platform came off-station during Hurricane Ike and ruptured the pipeline. Recovered the full costs of repairing the pipeline and the damages caused by loss of use of the pipeline – a multimillion-dollar recovery.
• Represented a commodities trading company in a dispute arising from its acquisition of the rights to use a pipeline to ship natural gas to the Western shore of Canada for export to Asia. Defended the company against claims of tortuous interference, misappropriation and theft of trade secrets, breach of a confidentiality agreement and breach of contract. Successfully settled the case by selling the rights to the disputing plaintiff at a profit to the client.

Pipeline Operations

• Represented several entities that own and operate jet fuel intrastate pipelines before the Pipeline and Hazardous Materials Safety Administration (PHMSA) in connection with the defense of administrative complaints, pursuit of special permits for exposed segments of submerged pipelines and participation in PHMSA inspections (including inspections of integrity management programs, operator qualification plans, public awareness plans and pipeline operations manuals).
• Assisted clients with oversight of API 653 inspection reporting for associated bulk fuel storage facilities, management of pipeline replacement contracts, negotiation of right-of-way permits and management of annual regulatory compliance training sessions for employees of the facilities.
• Represented several electric and natural gas utilities in connection with the preparation of pipeline construction and operating agreements for intrastate natural gas and ammonia pipelines, including Florida gas and electric utilities.
• Prepared and edited facility response plans, pipeline operations manuals, operator qualification plans, public awareness plans, SPCC plans and operations manuals for marine terminal facilities regulated by 33 CFR Parts 154 and 156.

Pipeline Transactions

• Represented the pipeline division of a large energy company in the formation of $200 million joint venture with the largest pipeline company in the U.S. for the construction and ownership of a 78-mile products pipeline in the State of Louisiana for shipment of 400,000 barrels/day of refined petroleum products.
• Represented an offshore pipeline system with the negotiation of pipeline construction agreement with major E&P producers in the Gulf of Mexico and long-term crude transportation agreements, with the value of the pipeline construction in excess of $1 billion.
• Represented a major midstream company with the acquisition of NGL pipeline and gas conditioning plant in Bakken Shale area for $185 million.
• Represented a midstream company with respect to negotiation of processing agreements and construction agreements with major refiner in Louisiana for an off-gas processing facility adjacent to refinery.
• Represented the pipeline division of a large energy company for the negotiation of long-term shipping agreements valued at $800 million with large refining companies.
• Evaluated and advised a pipeline company in a transaction arising from guarantees needed for a joint venture being formed in the oil sands development in Canada.
• Advised a pipeline company regarding the operation of its onshore oil and gas terminals and prepared the master operating agreements for use at the terminals.
• Advised a pipeline company as to the antitrust implications of forming a joint venture for the purpose of joint bidding on offshore oil and gas projects.

Gathering, Storage and Processing

• Represented a pipeline company in a construction dispute arising from the design and construction of an onshore natural gas processing facility. Obtained a favorable settlement against the project engineers and contractor that resulted in recovery of the costs to repair the facility.
• Represented a pipeline company in a dispute arising from the operation of an offshore pipeline system following the institution of a quality bank on the system. Obtained a settlement from the disputing shippers allowing the quality bank to be established and preventing any delay in the operation of the system.

Environmental

• Represented pipeline companies in pollution claims following releases of oil from aging pipelines.
• Represented pipeline companies in inquiries by state and federal regulatory agencies following pipeline mishaps.
• Represented clients in PHMSA, USEPA and Coast Guard inspections and audits.
• Participated with clients in Coast Guard inspections and audits, management of pipeline spill response actions, participation in annual spill drill exercises and table top sessions.
• Advised a pipeline company as to its reporting obligations under the new greenhouse gas regulations, and assisted the company with its compliance obligations.
• Represented pipeline companies in obtaining permits required by Clean Air Act.
• Provided oversight of pipeline spill response actions in connection with releases from an underground 12-inch jet fuel pipeline in Florida Keys and from a train derailment in upstate New York that struck two above-ground 12-inch jet fuel pipelines.

Mergers and Acquisitions

• Represented Quanta Services, Inc., in its $350 million acquisition of Price Gregory Services, the country’s largest natural gas pipeline construction company.
• Represented one of the world’s largest energy companies in a $250 million joint venture with a common carrier pipeline company to construct and own new products pipeline in Louisiana.
• Represented the same company on $500 million sale of a refinery located in Kansas.
• Represented the same company on $30 million acquisition of major terminal and pipeline assets in Texas.
• Represented the same company in negotiating $800 million of throughput agreements with refiners in Louisiana.
• Represented major midstream company in the acquisition of a gas conditioning plant in the Bakken Shale area.
• Represented an independent midstream company in the design, construction and operation of an off-gas processing facility in south Louisiana, as well as the sales of products from that facility.

Master Limited Partnerships (MLPs)

• Represented the audit, conflicts and governance committees of two different MLPs involved in three separate merger transactions ($3.3, $5.9 and $9.5 billion in size), all of which were part of creating one of the nation’s largest publicly traded energy partnerships, with an enterprise value of more than $42 billion. Because the entities share common ownership, Delaware law required the review and approval of the transactions by committees of independent directors.
• Represented a large pipeline MLP in negotiation of pipeline ownership and transportation agreements with contracts valued at over $1.5 billion.
• Represented an independent oil and gas company that owned the general partner of an MLP in the sale/leaseback of two pipeline systems to the MLP. One transaction involved the sale of the pipeline system and entry into related long-term transportation agreements, while the other transaction involved a financing lease of a system in which the parent company remained the lessee.

Maritime and Offshore Energy Issues

• Represented an offshore pipeline company in recovering the costs of inspection and removal of debris when a drilling rig sank on top of the pipeline in a hurricane.
• Represented a pipeline company against a ship owner in damages caused by a ship sinking and settling on a pipeline in the Gulf of Mexico. Recovered the full costs of removing the vessel and repairing the pipeline.
• Represented a pipeline company against a salvage company when the company caused damages to an offshore pipeline during salvage operations. Recovered the full costs of repairing the pipeline and the loss of use of the pipeline.

International

• Acted as lead counsel for a major engineering company in handling the appeal that overturned in part a $14 million international arbitration award from the ICC Court of Arbitration relating to disputes in Peru involving construction of gas processing plants near well sites, gas liquid fractionation plants, gas pipelines and related electric power generation and transmission facilities for “well head to wire” project. Tried matter before arbitration panel on claims totaling $25 million; matter settled favorably.
• Defended a London insurer in a bad faith and breach of contract lawsuit following its denial of insurance coverage for the loss of use of a pipeline caused by a hydrate plug following Hurricane Rita. Successfully obtained a favorable settlement at substantially less than the plaintiff’s demand while also maintaining the relationship for the insurer.
• Advised a pipeline company as to its contractual agreements for the import of pipe for use in its development projects.