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The Power Behind the Pipelines: Bayou Bridge Pipeline

Bayou Bridge is a proposed 162-mile oil pipeline running along the southern coast of Louisiana, from Lake Charles to St. James. The pipeline is proposed to carry 280,000 barrels of

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Bayou Bridge is a proposed 162-mile oil pipeline running along the southern coast of Louisiana, from Lake Charles to St. James. The pipeline is proposed to carry 280,000 barrels of crude oil per day through “11 Louisiana parishes and over 700 acres of fragile wetlands, and watersheds that supply drinking water for up to 300,000 people,” according to FracTracker, an oil and gas industry watchdog group.

Bayou Bridge LLC, the shell company building the pipeline, is a partnership between pipeline firm Energy Transfer Partners and Phillips 66, whose primary business is petroleum refining.

Despite substantial public opposition to the pipeline, especially from the communities along its route, the project enjoys broad political support from both major parties. The oil and gas industry has outsized power in Louisiana politics thanks to its persistent presence in the state, and oil and gas interests are major political donors. This dynamic has led to major conflicts of interest between Louisiana’s regulatory apparatus and Bayou Bridge. Former Louisiana Senator Mary Landrieu is currently a paid consultant advocating for Bayou Bridge at the same time as she is a lobbyist for the Louisiana Coastal Protection and Restoration Authority, which needed to sign off on the project before it could be built.

The oil and gas industry also donates heavily to Louisiana State University, and dominates the school’s Center for Energy Studies, which has consistently produced research that promotes industrial interests. An LSU report about the benefits of the Bayou Bridge Pipeline that has been used to promote the project to regulators and to the general public was paid for by Energy Transfer Partners and prepared by an economist with a long history of taking oil money for studies that advance the industry’s interests.

This report examines the financial interests behind the pipeline as well as its supporters in academia and state and federal government.

Key findings include:

I. Ownership

Bayou Bridge Pipeline will be owned by Bayou Bridge LLC, a partnership between Energy Transfer Partners (ETP), with a 60% stake in the project, and Phillips 66, with a 40% stake.

The project initially had a third partner – Sunoco Logistics Partners – which was owned by Energy Transfer Equity, which also owns ETP. Sunoco Logistics Partners and ETP each had a 30% stake in Bayou Bridge. In 2016, Sunoco Logistics Partners and ETP merged, with the resulting company (which took the ETP name) holding their combined 60% stake.

Energy Transfer Partners

The top individual owner of Energy Transfer Partners is its chairman and CEO Kelcy Warren, who reported direct ownership of 2,031,646 shares and indirect ownership of another 27,535,127 shares through his position in Energy Transfer Equity in an August 2017 SEC filing.

Ray Davis, who co-founded Energy Transfer Partners with Warren and stepped down in 2007, is still invested in the company through Energy Transfer Equity.

Major institutional investors in Energy Transfer Partners include Goldman Sachs, which declared ownership of of 57,504,199 shares in a September 2017 SEC filing, and Harvest Fund Advisors, a fund owned by the private equity firm Blackstone Group, which reported owning 55,063,439 shares in November 2017. Blackstone’s chairman and CEO is Stephen Schwarzman, an advisor to Donald Trump and the former chairman of the president’s strategic and policy forum.

Phillips 66

Phillips 66 is an oil and gas pipeline and refining company, split off from ConocoPhillips in 2012.

The largest owner of Phillips 66 is Berkshire Hathaway, the conglomerate holding company owned by billionaire investor Warren Buffett. Berkshire Hathaway’s 80 million shares equals 15.55% of all the outstanding Phillips 66 equity, according to filings with the SEC.

Other major Phillips 66 owners are the investment management firms Vanguard Group, which owns 31 million shares (5.96% of outstanding shares), and BlackRock, which owns 28 million shares (5.36%).

II. Lenders

A group of 40 different banks have pledged up to $12.25 billion in credit to the companies behind Bayou Bridge Pipeline, according to credit agreements filed by the companies with the SEC. This figure does not include $2.5 billion in project-level financing offered by many of the same banks specifically for the Dakota Access Pipeline.
The $12.25 billion in total lending available to the companies behind Bayou Bridge is comprised of:

Energy Transfer Partners and Energy Transfer Equity did not disclose the amounts pledged by the different banks in their most recently-negotiated credit agreements filed with the SEC. Previous credit agreements disclosed the amount that each bank was lending.

It is unclear why the Energy Transfer companies ceased disclosing the amounts that various banks have agreed to lend them; however, it is noteworthy that banks have recently been targeted by activists over their financing of ETP’s pipelines.

Banks that pulled out of Dakota Access are financing Bayou Bridge

After a campaign targeting US Bank for its financing of ETP’s Dakota Access Pipeline, the bank announced that it would cease “project financing for the construction of oil or natural gas pipelines,” for which it the bank was applauded by activists. This only applied to project-level financing, however, and US Bank signed onto both the new $4 billion and $1 billion credit facilities with Energy Transfer Partners announced on December 6, 2017.

US Bank also appears to be party to credit agreements with Phillips 66 Partners, which owns a 40% stake in Bayou Bridge Pipeline, and its parent company Phillips 66. According to those agreements, filed on October 2016, US Bank has committed to lend up to $100 million to Phillips 66 and $20.25 million to Phillips 66 Partners.

Another bank, Norway’s DNB Capital, which had been a member of credit agreements with Energy Transfer Equity and both Energy Transfer Partners and Sunoco Logistics Partners before their merger, announced that it would sell off its loans to Energy Transfer Partners after pressure from activists over its role in financing Dakota Access. In its announcement, DNB said: “By selling our stake, we wish to signal how important it is that the affected indigenous population is involved and that their opinions are heard in these types of projects.”

While DNB did not join new financing agreements with Energy Transfer Partners or Energy Transfer Equity in 2017 after it announced it would sell its loans, the bank does appear to still be party to credit agreements with Phillips 66 and Phillips 66 Partners. According to the October 3, 2016 agreements, DNB has offered up to $243 million to Phillips 66 and $42 million to Phillips 66 Partners.

Bayou Bridge lenders are also owners of the firms behind the project

Goldman Sachs, which is a major equity owner in Energy Transfer Partners, is party to credit agreements with both Energy Transfer Partners and Phillips 66 Partners as well as both companies’ parent organizations. The bank owns 57.6 million shares of Energy Transfer Partners worth more than $1 billion and 3.2 million shares of Phillips 66 Partners worth $167 million according to an November 2017 filing with the SEC.

The chart below indicates which banks have financing agreements with Energy Transfer Equity, Energy Transfer Partners, Phillips 66, and Phillips 66 Partners.

Table 1. Lenders to Bayou Bridge companies

Bank Energy Transfer Equity Energy Transfer Partners Phillips 66 Phillips 66 Partners
Barclays Bank ✓ ✓ ✓ ✓
Mizuho Bank ✓ ✓ ✓ ✓
Bank of America ✓ ✓ ✓ ✓
Credit Suisse ✓ ✓ ✓ ✓
Royal Bank of Canada ✓ ✓ ✓ ✓
DNB Capital ✓ ✓
BNP Paribas ✓ ✓
Bank of Tokyo-Mitsubishi ✓ ✓ ✓ ✓
JPMorgan Chase ✓ ✓ ✓ ✓
Citibank ✓ ✓ ✓ ✓
Deutsche Bank ✓ ✓ ✓ ✓
Goldman Sachs ✓ ✓ ✓ ✓
Wells Fargo ✓ ✓ ✓
SunTrust Bank ✓ ✓ ✓
TD Bank ✓ ✓ ✓ ✓
USBank ✓ ✓ ✓
PNC Bank ✓ ✓ ✓
Sumitomo Mitsui ✓ ✓ ✓ ✓
Bank of Nova Scotia ✓ ✓ ✓ ✓
Compass Bank ✓ ✓
UBS ✓
HSBC ✓ ✓ ✓
Credit Agricole ✓ ✓
Intesa Sanpaolo ✓
Export Development Canada ✓
Morgan Stanley ✓ ✓
Bayerische Landesbank ✓ ✓
Commerzbank ✓ ✓
Comerica Bank ✓
UniCredit Bank ✓
NBAD ✓
Northern Trust Company ✓
Natixis ✓ ✓
Keybank ✓
Lloyds Bank ✓
Bank of New York Mellon ✓
Bank of Communications ✓
Fifth Third Bank ✓ ✓
Merrill Lynch ✓
Canadian Imperial Bank of Commerce ✓

Source: Securities and Exchange Commission

III. Louisiana State University

Louisiana State University, a public university which has published research promoting Bayou Bridge, has several major conflicts of interest with the firm and with the oil and gas industry at large.

David Dismukes and the Center for Energy Studies

In February 2017, the LSU Center for Energy Studies published a report commissioned by Energy Transfer Partners touting the pipeline as a potential source of major economic benefits for the state of Louisiana. The report, titled “Potential economic impacts of the Bayou Bridge pipeline,” was influential in securing necessary approvals and building public support for the pipeline. It was cited in numerous media reports and was submitted as testimony to the Louisiana Department of Natural Resources.

The LSU report was prepared by Center for Energy Studies executive director David Dismukes. In addition to running the Center for Energy Studies, Dismukes also runs a private economic consulting business,Acadia Consulting, that does work for the oil and gas industry, though this work is often difficult to distinguish from his work at the public university. Gregory Upton Jr, an assistant professor at the CES and the co-author of the Bayou Bridge report, is also a research associate at Acadian.

Dismukes has a history of publishing questionable research on behalf of oil and gas industry clients. In 2012, Dismukes published a study claiming that lawsuits over pollution caused by the oil and gas industry on Louisiana’s coast was costing the state tens of thousands of jobs and billions of dollars in lost revenue. A lawsuit later revealed that Dismukes’ study was prepared for ExxonMobil and Chevron and that he was trying to craft a narrative amenable to the oil companies’ interests and even trying to conceal their involvement with the report.

In 2014, Dismukes was selected by the Louisiana Public Service Commission to study the economic impacts of increased solar energy use, amid criticism from the solar industry over his ties to oil and gas interests. Solar producers brought up Dismukes’ legacy lawsuits report as well as paid work for America’s Natural Gas Alliance, a gas industry lobbying group.

Dismukes was appointed by Trump administration Energy Secretary Rick Perry to the National Petroleum Council in 2017. The Council is tasked with representing the oil and gas industry’s views to the Department of Energy.

The Center for Energy Studies, which Dismukes directs and which published the Bayou Bridge report, is an academic unit at Louisiana State University “mandated to provide energy information and analysis that responds to the needs of the legislature, public agencies, and business and civic groups,” according to its website.

The Center is advised by a 25 person council comprised almost entirely of oil and gas industry executives or lobbyists. The advisory council includes nine current oil and gas industry employees, two former employees, four representatives of energy industry trade groups, and four lobbyists for energy companies.

Notably, several advisory council members have direct connections to the Bayou Bridge pipeline. David Cagnolatti is the state government relations manager for Bayou Bridge co-owner Phillips 66 and Celeste Cheramie works for the lobbying firm Hood Baumann & Associates, which specializes in lobbying for the oil and gas industry. Cheramie is a former lobbyist who worked for Phillips 66, in addition to numerous other pipeline and drilling companies, as recently as 2013. Cheramie’s colleague Robert Baumann currently lobbies for Phillips 66.

Another advisory council member, Bradley Mittendorf, is a lobbyist for the controversial Energy Transfer Partners security contractor TigerSwan. TigerSwan has drawn criticism for its use of military tactics to surveil and undermine protests against ETP pipelines around the country.

By contrast, there are only two public officials on the council: the secretaries of the Public Service Commission and the Department of Natural Resources.
CES Advisory Council members with ties to the oil and gas industry include:

Aside from the heavy oil and gas industry influence on its advisory board, the Center for Energy Studies also recently rehired the lead author of a discredited study of the environmental impacts of hydraulic fracturing to lead the Louisiana Geological Survey.

Charles “Chip” Groat was lead author of a 2011 report from the University of Texas Austin Energy Institute that claimed that there was no evidence of hydraulic fracturing impacting water supplies. A PAI investigation in 2012 revealed that this claim was misleading, and that Groat had generally mischaracterized the findings of his co-authors and failed to disclose that he was a paid board member of the fracking company Plains Exploration and Production.

After PAI’s report, UT Austin convened an independent panel to review Groat’s report, which recommended that the report be retracted and spurred a revision of the school’s ethics policy. Shortly after the review was released, Groat retired from the university.

In July 2017, LSU hired Groat to direct the Louisiana Geological Survey.

Though the Survey does not have any regulatory authority over the pipeline, LSU’s hiring of Groat illustrates the school’s indifference towards oil and gas industry conflicts of interest.

Oil and gas ties at the LSU board of supervisors

The oil industry influence extends from the Center for Energy Studies all the way to Louisiana State University’s governing body, the board of supervisors.

Scott Angelle, a former Secretary of Natural Resources and Public Service Commissioner, sat on the LSU board of supervisors from 2012 through May 2017. Nearly that entire time, Angelle was also a board member at Sunoco Logistics Partners.

As described below, Angelle joined the Sunoco Logistics Partners board of directors in December 2012, just a month after his election to the Public Service Commission. Angelle’s time serving simultaneously on the Sunoco Logistics Partners board and the LSU board of supervisors coincided with the preparation and release of David Dismukes’ Bayou Bridge report, which directly benefited Angelle’s company.

In 2017, Angelle was appointed by Donald Trump to the Bureau of Safety and Environmental Enforcement in the Department of Interior. He was replaced on the LSU board of supervisors by Mary Werner, a vice president and board member at Sweet Lake Land & Oil Company.

IV. Politicians and regulators

Bayou Bridge enjoys wide political support in Louisiana, where the oil and gas industry has a long history and deep political power. Pipeline backers come from both major political parties, including Democratic Governor John Bel Edwards and former Senator Mary Landrieu and Republican Congressman Clay Higgins.

Prominent politicians backing the pipeline have received thousands of dollars in campaign contributions from Energy Transfer Partners and Phillips 66 and their executives. According to data from the National Institute on Money in State Politics and the Center for Responsive Politics, Energy Transfer Partners and its CEO Kelcy Warren have given at least $143,350 to Louisiana politicians, including $41,400 to Mary Landrieu and $8,000 to John Bel Edwards. Phillips 66 has donated at least $148,050, including $5,000 to Landrieu.

Former Senator Mary Landrieu

Mary Landrieu, a lobbyist who served as Senator for Louisiana from 1997 through 2015, is a paid consultant who has been advocating Bayou Bridge on behalf of Energy Transfer Partners. Landrieu is also registered to lobby for the Louisiana Coastal Protection and Restoration Authority, which presents a major conflict of interest for the regulatory body, whose approval ETP needed to secure before building Bayou Bridge.

The Landrieu family is heavily involved in Louisiana politics; her father Moon Landrieu was mayor of New Orleans and her brother Mitch Landrieu is a former Lieutenant Governor and is currently the mayor of New Orleans.

Throughout her career, Mary Landrieu has been an ally of the oil and gas industry. As chair of the Senate Energy Committee, she backed legislation to expedite construction of the Keystone XL pipeline. She also pressured former President Barack Obama to lift the moratorium on deepwater drilling imposed after the catastrophic oil spill at BP’s Deepwater Horizon platform. When Landrieu lost her 2015 election to Bill Cassidy, she cited the lobbying firm Van Ness Feldman’s “substantive and sophisticated approach to important public policy issues in the areas of energy, the environment and natural resources” as a major factor in taking a job there.

Landrieu also sits on the strategic advisory board of Genie Oil and Gas, an Israeli company drilling for oil in the occupied Golan Heights, alongside former Vice President and Halliburton CEO Dick Cheney, News Corp chairman Rupert Murdoch, former New Mexico Governor Bill Richardson, and former Treasury Secretary Larry Summers, and former CIA Director James Woolsey.

After stepping down from her US Senate seat in 2015, Landrieu joined the lobbying firm Van Ness Feldman, whose clients include Royal Dutch Shell, Noble Energy, and Kinder Morgan as well as the Louisiana Coastal Protection and Restoration Authority, a state regulator that needed to approve the Bayou Bridge pipeline before the project could move forward.

Landrieu has been a vocal advocate for Bayou Bridge, testifying in support of the pipeline at public Department of Environmental Quality hearings and publishing an article in the Advocate endorsing the project. While Landrieu and Van Ness Feldman are not registered to lobby for any of the companies behind the pipeline, Energy Transfer Partners has been paying Landrieu to advocate for Bayou Bridge. Landrieu identified herself as a “consultant” on Bayou Bridge in her article and told protesters that she would back the project even if she did not work for them.

According to the Center for Responsive Politics, the oil and gas industry was a top donor to Landrieu over her tenure in the US Senate. Oil and gas industry individuals and political action committees gave more than $1.7 million to Landrieu, more than any other industry except for lawyers and law firms.

Landrieu received $41,400 in campaign contributions from Energy Transfer Partners and its executives according to campaign finance data analyzed by CRP, including $7,800 from ETP CEO Kelcy Warren. Warren also donated $12,600 to the Big Easy Committee, Landrieu’s joint fundraising committee. The Phillips 66 PAC gave $5,000 to Landrieu.

Landrieu has also received $7,800 from Louisiana lobbyist Thomas Evenden Williams. Williams is the former legislative director for former governor Bobby Jindal, and has been a lobbyist for Energy Transfer Equity, ETP’s parent company, since 2012. According to Louisiana lobbying records, Williams has also lobbied for ETP subsidiary ETC Tiger Pipeline LLC since 2009. Williams’ former lobbying clients include the Louisiana Oil and Gas Association and Oklahoma-based driller Chesapeake Energy.

Former Secretary of Natural Resources, Lieutenant Governor, and Public Service Commissioner Scott Angelle

Scott Angelle held key regulatory positions in Louisiana state government from 2004 through 2017. During some of that time – from December 2012 through April 2017 – Angelle was also a board member at Sunoco Logistics Partners, the Energy Transfer Equity subsidiary that was a part owner of the Bayou Bridge project until its merger with Energy Transfer Partners.

Angelle was appointed Secretary of the Louisiana Department of Natural Resources, which regulates oil and gas drilling, in 2004 by then-Governor Kathleen Blanco. He remained at LNDR until August 2012, when he stepped down to run for a seat on the Public Service Commission. That month Governor Bobby Jindal appointed him to the Louisiana State University board of supervisors.

In November 2012, Angelle was elected to the represent the second Public Service Commission district, and the very next month he was named to the board of directors of Sunoco Logistics Partners.

From January 2013 through May 2017, Angelle sat on the Public Service Commission and the LSU board of supervisors at the same time as he had a board seat at Sunoco Logistics Partners at a much higher rate of pay than his government job.

Angelle’s Sunoco board seat did not survive the company’s merger with Energy Transfer Partners, which was completed in mid-2017, and in May of that year Angelle took a job with the Trump administration in the Department of Interior as Director of the Bureau of Safety and Environmental Enforcement.

In addition to his 2012 Public Service Commission election, Angelle ran for governor in 2015 and for Congress in 2016, both of which he lost in the primary.

According to the National Institute on Money in State Politics, Angelle received at least $10,400 from Energy Transfer Partners CEO Kelcy Warren and $10,000 from Energy Transfer Partners. Angelle also received $5,500 from Thomas Williams, the Energy Transfer lobbyist.

Commissioner of Administration Jay Dardenne

Louisiana Commissioner of Administration Jay Dardenne sits on the Louisiana Coastal Protection and Restoration Authority, one of the final regulatory authorities to approve Bayou Bridge.

Dardenne, who has served in Louisiana government since 1992, has received more than $445,000 for his various electoral campaigns from individuals and businesses in the oil and gas industry, including $1,000 from Energy Transfer Partners and $1,250 from Phillips 66 according to data from the National Institute on Money in State Politics. Dardenne’s largest oil and gas industry donors are members of the Hise family, which owns Hise Exploration Partners. Anne and Bill Hise donated a combined $45,750 to Dardenne between 1996 and 2017.

Prior to his role in John Bel Edwards’ administration, Dardenne served as Lieutenant Governor to Bobby Jindal. In 2015, Dardenne ran for governor in Louisiana’s blanket primary, coming in fourth place after Edwards, former Senator David Vitter, and Scott Angelle. After Edwards won the general election, he appointed Dardenne as his Commissioner of Administration.

During the 2015 election Dardenne called the Clean Power Plan, meant to curb carbon emissions contributing to global warming, “a real attempt at overreaching by the federal government” and committed himself to “protect and strengthen Louisiana’s oil and gas industry.”

Governor John Bel Edwards

Louisiana Governor John Bel Edwards came out in support of the Bayou Bridge pipeline on his monthly radio show in February 2017.

Edwards, a Democrat, has received at least $122,550 from the oil and gas industry for his various campaigns, including $8,000 from Energy Transfer Partners and $500 from Phillips 66. Edwards has also received $15,250 from the lobbyist Thomas Evenden Williams and his firm.

Congressman Clay Higgins

Clay Higgins, the Republican elected in 2016 to represent Louisiana’s third district in the House of Representatives, has endorsed the pipeline, publishing a column in April 2017 on The Hill.

Higgins, a law enforcement officer known primarily for a controversial cell phone video filmed at the Auschwitz-Birkenau Memorial and Museum and his call for “Christendom” to kill all “radicalized Islamic suspects,” defeated former Sunoco Logistics Partners board member Scott Angelle for his seat in Congress, despite Angelle raising nearly six times as much money as Higgins.

According to the Center for Responsive Politics, the oil and gas industry is the second largest industry donor to Higgins, surpassed only by agribusiness. Higgins has received $23,550 from individuals and PACs in the oil and gas industry.

Clarification

This report identified a conflict of interest between former Senator Mary Landrieu and the Coastal Protection and Restoration Authority (CPRA), a state agency that needed to sign off on Bayou Bridge Pipeline before construction could begin. Landrieu, who is registered to lobby for CPRA, is also advocating for the Bayou Bridge Pipeline. The necessity of CPRA’s approval for the pipeline was identified by Energy Transfer Partners (ETP), the majority owner, in a statement on December 14, 2017 as well as in reporting based on that statement.

PAI has learned that CPRA has issued a letter of no objection to the pipeline project, though it is unclear when the agency provided this approval. ETP’s statement about needing the approval, which was still on the Bayou Bridge website when this report was published, has since been removed.

This report has been updated to clarify that the necessary approval from CPRA has been issued.

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