Julia Sullivan and John Goodgame Global Energy Presentations Quoted by Midstream Business
Presentations by Akin Gump energy regulation, markets and enforcement co-head Julia Sullivan and energy partner John Goodgame at Akin Gump’s June 4 “The Global Energy Industry: 2014 Mid-Year Energy Briefing” were quoted by Midstream Business.
In the article “Infrastructure: Financing Is Able If Regs Are Willing,” Goodgame is quoted as saying “the good news” is that there is abundant capital available to start building more than $250 billion worth of natural gas pipeline infrastructure, most of which has been provided by master limited partnerships (MLPs).
Goodgame noted that, in 2013, MLPs grossed $49 billion in debt and equity capitalwith $24 billion to date in 2014. He added, “Capital market trends over the last five or more years have caused capital to be drawn to MLPs, which are publicly traded entities with tax advantages that generally distribute high yields, or at least high relative to what is available in other contexts—government securities, savings accounts, that sort of thing.”
However, as Sullivan noted, financing is not the only reason why projects are not being built; there are regulatory constraints delaying the development of these infrastructure projects that also diminish incentives in the market for shippers to commit to long-term firm contracts. She added, “First of all, they generally operate in short-term markets so they’re not going to sign up for 15 years of capacity. Secondly, the way the market rules work, they won’t necessarily get reimbursed for costs that they incurred from fuel supply.”
Sullivan said it would be economically beneficial to improve gas infrastructure and delivery systems, adding, “I don’t want to become an advocate for any specific projects but there are project proponents out there who have made pretty persuasive cases that if you had adequate gas infrastructure that allowed you to avoid these extreme price spikes, then the benefit of avoiding the price spike would pay for the gas infrastructure and more.”
To read additional media coverage of their presentations at Akin Gump’s “The Global Energy Industry: 2014 Mid-Year Energy Briefing,” please click here.