Western Gateway Pipeline to Advance in U.S.

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

California is facing a shortage of refined petroleum products. Kinder Morgan and Phillips 66 say they can address that with the Western Gateway Pipeline.

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200,000-bpd Pipeline

There's enough long-term interest from shippers to advance the Western Gateway Pipeline project that offers a stop-gap measure for California refinery closures, developers said Monday. Phillips 66 and Kinder Morgan issued a joint statement Monday saying they would move forward with the pipeline. According to Industrial Info Resources data, the project will include construction of a 1,300-mile grassroot pipeline from Borger, Texas, to Phoenix, Arizona, plus reversals of existing pipeline flows in the Midwest and Southern California. The pipeline is expected to transport up to 200,000 barrels per day (bpd) of refined fuel.

Subscribers to the Industrial Info Resources Global Market Intelligence (GMI) Project Database can learn more by viewing the related project reports.

"We're pleased to be able to use our existing assets to leverage growth opportunities for the Arizona and California markets," said Kim Dang, the chief executive officer for Kinder Morgan. "By utilizing existing pipeline assets across multiple states along the route, we're uniquely well-positioned to support a refined products transportation solution."

The project is a response to looming fuel shortages along the West Coast, particularly in California. The Wilmington Refinery, operated in Los Angeles by Phillips 66, is already closed, and the company shed staff early this year in part because of the fading footprint in California.

Industrial Info Resources has been following events since before Phillips 66 received its final batch of waterborne crude oil deliveries for its refinery complex in Los Angeles.

The Los Angeles refinery complex had a processing capacity of 133,000 bpd. Amid the closure, the U.S. Energy Information Administration (EIA), part of the U.S. Department of Energy, said that California may be forced to import fuels from out-of-state refineries to meet its transportation demands.

Mark Lashier, the chairman and chief executive officer at Phillips 66, said that market interest was strong for Western Gateway, which he said was a project that can play a role "in improving supply flexibility and reliability for West Coast markets."

No Panacea

But California may remain under stress. Valero Energy Corporation will close its Benicia Refinery in California during the second quarter, starving the state of gasoline. According to Industrial Info Resources data, decommissioning has a total investment value of around $15 million. Subscribers to the GMI Refining Project Database can learn more by viewing the project report.

By the Numbers

• 200,000-bpd pipeline backed by Kinder Morgan, Phillps 66
• $15 million to decommission the Benicia Refinery

California, meanwhile, is a target for President Donald Trump's fossil fuels strategy. The federal government in May used executive action to justify an order to Sable Offshore Corporation to restart its Santa Ynez pipeline system. Energy Secretary Chris Wright said the restart was necessary to counter state policies that are viewed as obstacles to energy development by the federal government, though the order may be stuck in legal limbo.

Subscribers to Industrial Info Resources' Production Project Database can learn more about Santa Ynez from a detailed project report.

California Governor Gavin Newsom, a potential presidential candidate for the Democrats, complained that Trump led the country into an unnecessary war in the Middle East, driving up consumer costs by way of a looming energy crisis, and now needs a bailout with the pipeline.

In part because of higher state taxes, California typically has the highest retail price for gasoline. At $5.84 per gallon, California gasoline prices are up 20% from year-ago levels as conflict drives up the price of crude oil.

Key Takeaways

• Shipper interest warrants pipeline to California
• The state has some of the highest retail gas prices and is shutting refineries

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).