A major gasoline pipeline has reached an agreement to give Midwestern refiners greater access to Pennsylvania markets, Kallanish Energy learns.
Houston-based Buckeye Partners has reached an agreement to allow Midwestern refiners to ship more fuel farther into Pennsylvania on its Laurel pipeline, a 350-mile line which historically was used by Philadelphia refineries to transport motor fuel and heating oil west across Pennsylvania.
Buckeye reached a settlement with refiners, large Western Pennsylvania retailers such as privately-held convenience store chain Sheetz, privately-held supermarket chain Giant Eagle and privately-held fuel marketer Guttman Energy, and state regulators to allow the Laurel pipeline to sell some of its capacity to fuel producers in Ohio, Illinois, and Michigan, to send fuels as far east as Altoona, Pennsylvania.
The 29-page (210 pages with appendixes) agreement was filed last week.
Three-year battle settled
The agreement to allow the Laurel pipeline to flow bi-directionally between Pittsburgh and Altoona settles a three-year battle fought before the Pennsylvania Public Utility Commission and the Federal Energy Regulatory Commission.
The line’s existing shippers and customers had argued to keep the pipeline flowing east to west, at least as far as Pittsburgh, maintaining capacity for Philadelphia and New Jersey refiners, as well as importers with fuel terminals on the Eastern seaboard.
But Midwestern producers had pressed Buckeye to allot some of its underused pipeline to flow fuel east, which would take market share away from East Coast producers.
Access through at least 2024
Under the settlement, east-to-west shippers would be guaranteed access to the line at least through the end of 2024, after which Buckeye could seek to switch the flow completely from west to east as far as Altoona.
“We are pleased to reach this agreement that settles nearly three years of proceedings aimed at ensuring Pennsylvania consumers, shippers, and retailers enjoy reliable access to fuels on the Laurel pipeline,” Buckeye said, in a statement.
Decisions by Pennsylvania and federal regulators had been against Buckeye, and its appeal before Pennsylvania’s Commonwealth Court was scheduled to be heard in September.
If the state Puc and Ferc agree to the settlement, the court case would be dropped.
Refinery fire, bankruptcy may have helped deal
Speculation is the pipeline settlement may have been accelerated by the Philadelphia Energy Solutions’ (Pes’) recent decision to close its 335,000-barrel-a-day refining complex in South Philadelphia after a June 21 fire.
Pes, which has filed for bankruptcy and is looking for a buyer, represents 25% of the refining capacity in the Northeast and is a major shipper on the Laurel pipeline.
The settlement provides if shipments from Pes or a successor company decline after 2022, the agreement will no longer apply and Buckeye can seek to use the pipeline exclusively to transport Midwestern fuels into central Pennsylvania.
This post appeared first on Kallanish Energy News.