Houston, 17 September (Argus) — Two US midstream companies are weighing expansions of fuel pipelines into Arizona, as supply concerns mount in the western US because of planned refinery closures.
Oneok is considering building a 200,000 b/d pipeline — the Sun Belt Connector — to carry gasoline, diesel and jet fuel from El Paso, Texas, to Phoenix, Arizona. The company is currently holding an open season through 7 November to gauge shipper interest in the project. The expected start date for the 440-mile line would be mid-2029.
The open season includes a joint tariff that would allow customers to move refined products from Oneok facilities in Houston, Texas, and southern Oklahoma to El Paso and Pheonix.
Another US pipeline giant, Kinder Morgan, is weighing a more modest boost to an existing line.
The company has launched a binding open season for a 3,250 b/d expansion of its SFPP East Line from El Paso to Tucson, Arizona. The SFPP East Line expansion is for incremental capacity to move gasoline, jet fuel and diesel, including diesel that meets the requirements for export into Mexico. The open season closes on 19 September.
The total amount of the expansion capacity available is scalable and will depend on customer interest, Kinder Morgan said. The expansion would be in service by April 2026.
A 2,500 b/d expansion of the same line went into effect in July, the company told Argus.
The two projects are being considered as two refineries in California — a key fuel supplier for landlocked Arizona — face planned closures in the coming months. Arizona relies on fuel supplies from California and Texas as it lacks its own refineries.
California is facing the loss of 17pc of its refining capacity within eight months. US refiner Phillips 66 plans to start winding down operations at its 139,000 b/d Los Angeles refinery this month with a complete shutdown by the end of 2025. In addition, independent firm Valero aims to close or repurpose its 145,000 b/d Benicia, California refinery by April 2026.
Some refiners are taking steps to fill the expected shortfall. Phillips 66 is planning to produce Carb gasoline — special fuel blend mandated that meets California’s stricter emissions rules — at its 105,000 b/d Ferndale refinery in Washington state to send to California. And US refiner HF Sinclair is also planning to increase production of Carb gasoline at its 145,000 b/d Puget Sound refinery in Anacortes, Washington.
In addition, independent refiner CVR Energy has raised the possibility of moving jet fuel by rail from refineries in the midcontinent to locations further west, but said it would focus on shipping products into areas with the most advantageous netbacks.
HF Sinclair also operates the southbound UNEV pipeline which carries refined products from refineries in Utah to Las Vegas, Nevada, another city which is heavily dependent on California for fuel. HF Sinclair did not respond to Argus queries about its midstream plans.
Only a handful of companies operate refined products pipelines in the western US, leaving California to depend on waterborne imports in times of shortages. Fuel imports into California, mainly from Asian countries including South Korea and India, are expected to increase sharply when the Phillips 66 and Valero refineries close.
By Eunice Bridges
