California Energy Commission votes against a Texas-California refined products pipeline

Aug. 26, 2003
The California Energy Commission unanimously adopted a feasibility study that recommended against building a refined products pipeline to California from Texas.

By OGJ editors
HOUSTON, Aug. 26 -- The California Energy Commission unanimously adopted a feasibility study that recommended against the concept of building a refined products pipeline to California from Texas.

The 16-page study determined Texas refineries do not produce enough supplies of the type of gasoline used in California, now or in the future, to merit construction of a Texas-California pipeline.

Longhorn Partners Pipeline LP, Dallas, is developing a 700 mile, 18 in. pipeline that would transport refined products from Gulf Coast refineries across West Texas to a gateway market in El Paso, Tex. From there, products could be distributed throughout New Mexico and Arizona via other pipelines (OGJ, Dec. 11, 2000, p. 72).

The study recommended that the state of California encourage the completion and operation of the Longhorn pipeline. Meanwhile, the final portion of the construction has been delayed pending adequate financing.

The feasibility study said the state of California should encourage increasing pipeline capacity from El Paso to Arizona and Nevada, "although California's financial participation in this project is not recommended or seen as needed."

Additional capacity to those states would allow markets now dependent on California for fuel to receive more refined product from the Gulf Coast, the report said. Such a move indirectly would increase gasoline supplies available for California.

"Today, Arizona gets nearly 70% of its gasoline from California," said Energy Commissioner James Boyd. "By increasing the pipeline from El Paso to Phoenix, we can decrease Arizona's dependence on West Coast refineries and use our state's refinery capacity to make more California gasoline."

A Houston-based Kinder Morgan Energy Partners LP pipeline, originating in El Paso, currently supplies part of the Arizona gasoline market. KMEP recently increased deliveries of gasoline to Phoenix following a July 30 rupture of a segment of its Tucson-to-Phoenix products pipeline that spilled 12,000 gal of fuel (OGJ Online, Aug. 19, 2003).

Study details
California's demand for gasoline is expected to grow 1.3-3%/year during 10 years. Meanwhile, California refinery production is expected to grow 1%/year or less, the study said.

California is a net exporter of motor fuels with California refineries supplying gasoline, diesel, and jet fuel to growing markets in Nevada and Arizona.

"Limited prospects for additional in-state refining capacity means that sources of refined motor fuels from outside the state will become increasingly necessary to serve California's market demand and the demands of neighboring markets," the study said.

Meanwhile, gasoline demand also continues to grow in western Texas, New Mexico, and Arizona, the study said.