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By Nathan Risser, Bloomberg
Phillips 66 and Kinder Morgan Inc. plan to build a new pipeline system and reverse the flow on some existing conduits to haul gasoline and other fuels to California, Arizona and Nevada.
As California’s in-state refining capacity dwindles, the regional market is becoming increasingly reliant on imported fuels, especially gasoline. The pipeline project hatched by Phillips 66 and Kinder will carry fuels from as far away as the Midwest to augment supplies sent by refiners in Washington State and Asia.
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The project, slated for completion around 2029, would be the first pipeline system to deliver motor fuels into California, a state long considered an island disconnected from the major refining hubs of the Gulf Coast and Midwest.
The investment comes amid a wave of California refinery closures or conversions — including the imminent shutdown of Phillips 66’s Los Angeles-area plant — that threaten to squeeze motorists with shrinking fuel supplies and higher pump prices. Consumers in some neighboring states also are expected to feel the impacts.
Phillips 66 and Kinder announced Monday what is known as an open season on their proposed Western Gateway Pipeline, during which bids are solicited from shippers that would reserve space on the conduit for moving fuels. The bidding window will close on Dec. 19, Phillips 66 wrote in the statement.
The Western Gateway project would involve building a new line between Borger, Texas, where Phillips 66 operates a refinery, and Phoenix. Meanwhile, the flow on Kinder’s existing California-to-Arizona pipe known as SFPP will be reversed so more fuel can flow to the Golden State.
Phillips 66 also plans to reverse the flow on the Gold Pipeline that carries supplies from Texas to the St. Louis region so Midwest fuel can move west. The refiner operates fuel-making plants along the Gold Pipeline route including in Ponca City, Oklahoma, and the St. Louis suburb of Wood River, Illinois.
Kinder has eyed similar projects in the past, proposing in 2013 the Freedom Pipeline that would have carried oil from West Texas to California. But that proposal was ultimately shelved after receiving anemic interest from potential shippers.
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