TPT September 2007

From the AmericaS

The first US refinery in a generation is under consideration

Of pipelines new and old › Kinder Morgan Energy Partners, the second-largest publicly traded pipeline partnership in the US, has won approval from Washington for a rate plan intended to fund a $400 million expansion of its California-to-Nevada fuel pipeline. On 19 July the Federal Energy Regulatory Commission (FERC) approved the plan for the 550-mile Calnev pipeline, which ships gasoline, diesel, and jet fuel from Colton, in southern California, to Las Vegas. The company plans to build a 16” diameter pipeline to increase capacity on the system by 43,000 barrels a day, to 186,000 barrels. As reported by Bloomberg News (July 20), several users of the existing pipeline – including Exxon Mobil Corp, ConocoPhillips, Valero Energy Corp (all of the US), and Britain’s BP – protested the rate plan, claiming it would put the entire financial risk on them, the shippers, and allow the partnership to impose unreasonable fees. But the proposal by Kinder Morgan (Houston, Texas) for increasing capacity on its system was supported by several state officials and members of Congress. Commissioner Jon Wellinghoff said in a statement released during the FERC meeting, “This project is vital to the economy of southern Nevada.” The expanded pipeline could be operating by late 2009 or early 2010. › The pipe that exploded in midtown Manhattan during the evening rush hour on July 18, killing one person and injuring 40 others,

A Texas investment firm may respond to the Conoco call for more US refining capacity. As reported by Bloomberg News (14 June), Dallas-based Hyperion Resources is looking at a tract of land in South Dakota, as well as at other sites in the Midwest, for an oil refinery with capacity of 400,000 barrels a day. South Dakota abuts the states of Minnesota, Nebraska, and Wyoming. Hyperion said that its project could cost as much as $10 billion. A spokesman, Eric Williams, declined to discuss how it would be financed or how long it might take the company to gather the necessary permits. In the experience of other refinery entrepreneurs, this can be a long process. A refinery proposal by Arizona Clean Fuels Yuma waited five years for a main air quality permit to be issued, the company said last year. During the waiting period Yuma struck a deal with the Mexican government to build a $650 million pipeline that would link the refinery to the Mexican coast. Construction of the South Dakota refinery would take four years, Hyperion said. The company’s chairman is J Louis Frank, former chief of Horizon Offshore, a Houston oil and natural gas contractor.

The last refinery in the US was built in 1976; the last in Canada, in 1984.

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S eptember /O ctober 2007