Shell Pipeline Forging Ahead with a New Refined Products Pipeline to Serve New Mexico

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Shell Pipeline Company (Houston Texas) is planning a new refined products pipeline to transport diesel, gasoline, and jet fuel from Odessa Texas to Bloomfield New Mexico. The $120 million New Mexico Products Pipeline project is in the permitting and environmental phase with the Bureau of Land Management (BLM) in New Mexico. If constructed, the Pipeline will originate at an existing refined products terminal in Odessa and follow a Northwesterly route to Bloomfield New Mexico.

The project will entail the conversion and reversing of an existing NGL pipeline as well as the laying of new pipe. In Texas, Shell will construct 380,000 barrels of new storage capacity with tank size ranging in size from 50,000 to 110,000 barrels and a new 2,000 horsepower pump station at the Odessa Terminal. Interconnecting with the terminal will be 60-Miles of new 16" diameter pipeline terminating near Jal New Mexico.

From Jal New Mexico, Shell will convert and reverse the flow of 406-Miles of an existing NGL pipeline and construct a new 40 Mile 16" segment of pipe to interconnect with a terminal in Bloomfield New Mexico. A second storage terminal will be constructed at Moriarty near Albuquerque New Mexico encompassing eleven new tanks ranging in size from 10,000 to 50,000 barrels.

To facilitate the 70,000-85,000 barrel per day flow rate on the pipeline, new pump stations will be constructed at San Luis, San Ysidro, Moriarty, Duran, Merritt, Mesa, and Maljammer New Mexico. The stations will all be between 800 and 1,600 horsepower, utilizing electric motors as the prime mover for the pump sets.

Shell Pipeline Company recently issued its draft environmental statement and hopes to receive a notice to proceed in the late forth Quarter of 2003. Shell plans on keeping the engineering in-house and will select a general contractor in 2004 to begin construction on the pipeline in mid to late 2004 with a 2005 completion date.

The New Mexico Products Pipeline has a history dating back to 1998 and a joint venture between Equilon Pipeline and Williams Pipe Line Company (Tulsa Oklahoma) called Aspen Products Pipeline LLC. The original plan was to build a contiguous pipeline from Odessa Texas to Salt Lake City Utah. Equilon was to work on the section up to Bloomfield and Williams would work on the Utah section. Both Equilon & Williams proceeded to execute separate environmental permitting processes for the BLM in their perspective states. The Williams portion being more complicated due to the fact that two other pipeline companies wanted to share the same utility corridor for their separate natural gas pipeline projects. Further complicating efforts, the Utah portion the new utility corridor would traverse a national forest. Equilon had a vested interest in keeping the permitting processes separate due to the fact that the New Mexico project is commercially viable on its own.

In August of 1999, Sinclair Oil Corporation submitted a brief to the BLM contending that the environmental permitting process for Aspen was being improperly segmented. In December 1999, the BLM decided to relocate all permitting for Aspen through its Utah office. In February 2000, the Utah BLM issued a statement that the New Mexico and Utah projects must be permitted in a single environmental impact statement, which included the two separate natural gas pipelines in the Utah segment. Shortly after this decision by the Utah BLM Equilon Pipeline asked and received consent from Williams and the Aspen partner ship was dissolved. In filling the brief Sinclair Oil hoped to protect its own interest in the region. Sinclair Oil owns a refinery in Wyoming and a products pipeline to Salt Lake City. The Aspen project would be in direct competition to their market share.

The original Equilon segment is now Shell Pipeline Company LP's New Mexico Products Pipeline project and Williams is in a holding pattern for its planned Utah pipeline segment. Shell Pipeline Company LP is a subsidiary of Shell Oil Products US, which is a business unit of Shell Oil Company the US operating arm of Royal Dutch Shell (NYSE:RD)(The Hague Netherlands). Shell Pipeline owns and or operates over 34,000 miles of pipeline in 34 states and the Gulf of Mexico.

Industrialinfo.com has been tracking the progress of this project since August of 1997.