Union Pacific Railroad Co.’s construction of a storage-in-transit, or SIT, yard in Livonia designed to triple its capacity for storing chemical products in Louisiana may face threats of delays from a company that wants to drill two wells on the property.
The railroad filed a lawsuit in Baton Rouge federal court on Thursday against WarHorse Oil & Gas of Jarreau, seeking an injunction prohibiting the firm from “interfering with the planning, construction and operation of the Livonia SIT yard.”
Construction on the project began Aug. 3 and will take roughly a year to complete. It will include 21 yard tracks and two wye, or triangular junction, tracks to store railcars containing chemical products belonging to Union Pacific’s customers.
The railroad is already in negotiations with several area petrochemical plants for SIT storage, Union Pacific attorney Kathlyn Perez writes in the lawsuit, adding that the yard will be of particular benefit to plastics producers. The railroad says the SIT yard “complements Union Pacific’s overall expansion goals in Louisiana” and is a “strategic part” of serving Louisiana customers in the intra and interstate transportation of chemicals and plastics.
One of Union Pacific’s affiliates bought the 2,450-acre site from the Holloway Planting Co. in 1982, with the original owners maintaining the mineral rights. In January 2013, WarHorse secured a mineral lease for the property.
Given low gas prices, Union Pacific anticipated growing demand for storage from its customers, and in 2011 it began evaluating its need for expanding SIT space, according to the lawsuit. In 2013, it decided to construct the Livonia SIT Yard on 75 acres of the property.
Its current lack of storage capacity requires Union Pacific to transport cars across Louisiana and into Texas for storage, Perez notes, adding that the Livonia SIT yard will allow Union Pacific to be near its customers’ plastics production facilities, “allowing Louisiana product to stay in Louisiana.”
WarHorse has objected to the construction, claiming it will interfere with its mineral exploration rights. The two companies have been in discussions to resolve the conflict, according to the lawsuit, but to no avail. WarHorse currently has one producing well on the 2,450-acre property, outside the Livonia SIT yard footprint. WarHorse has since filed applications to drill two wells in the disputed area.
In the lawsuit, Union Pacific claims WarHorse violated Louisiana permitting requirements by telling the Louisiana Office of Conservation that it had an agreement with the surface owner to drill so it could circumvent legal notice requirements. Union Pacific denies ever agreeing to those plans.
WarHorse company officials referred questions this afternoon to attorney Jeremy Lacombe, who declined to comment until he has had a chance to review the lawsuit. Hearings in the matter have not yet been scheduled.
—Penny Font
