Magellan Midstream Partners LP is considering the creation of a new pipeline to transport petroleum products to the Little Rock market - a market left open earlier this year after Enterprise Products Partners ceased shipment on one of its pipelines.
Magellan wants to build a 12-inch pipeline that would run about 160 miles from Fort Smith to Little Rock. The pipeline could carry 75,000 barrels of gasoline, diesel fuel and jet fuel per day.
“We’re responding to a market need,” said Bruce Heine, spokesman for the Tulsa-based company. “Changes in other pipeline systems serving the Little Rock market has allowed us to respond to that need.”
Magellan said it started a program Monday to assess customer interest in the project. Interested parties, which include refiners, traders and marketers, have until 5 p.m. on Oct. 16 to submit binding commitments, Heine said.
“Once that date closes, we will make an assessment,” Heine said.
If there is enough interest, the pipeline, which will cost between $250 million and $300million, could be operational in the third quarter of 2015.
Heine said the construction of the pipeline would create about 750 jobs and provide additional energy security to the state.
“We’re not only connected to Gulf Coast refiners, but we are connected to refiners in Oklahoma and Kansas as well,” he said. “That’s a big benefit. That means additional security in supply.”
Magellan’s project comes after Enterprise Products Partners LP closed a pipeline that delivered diesel and jet fuel to El Dorado, North Little Rock and Jonesboro.
The Houston-based company plans to reverse the flow of its pipeline and start transporting ethane from the Northeast to the Gulf Coast in the first quarter of 2014, Enterprise spokesman Rick Rainey said.
The company has said it stopped delivery to Arkansas because the demand for fuel declined.
Previously, Enterprise transported diesel and jet fuel in a 14-inch pipeline from Beaumont, Texas, to El Dorado, where the line increases to 16 inches for shipments to Jonesboro and North Little Rock. The 16-inch pipeline continues on to Ohio.
Enterprise has not abandoned fuel delivery in Arkansas; it will continue to use a 20-inch intrastate pipeline to ship diesel fuel because of a deal between Enterprise and Murphy Oil USA Inc.
The deal was reached after Murphy Oil USA sued to stop Enterprise from ending fuel shipments, saying the move would put Enterprise in breach of a 2006 contract to provide pipeline service.
Little Rock Air Force Base in Jacksonville relies on up to 10 tank trucks a day from Shreveport as a result of the Enterprise decision to end aviation fuel shipments.
Delivering fuel by truck instead of by pipeline adds about 10.5 cents per gallon to the price, the Defense Logistics Agency Energy said earlier this year. The base contracts its fuel from the agency.
Heine said Magellan’s new pipeline could potentially serve the Air Force base.
“We are looking at a possibility of a connection to the Air Force base,” he said. “Having a system of this nature in service will help reduce the truck traffic in the area.”
Business, Pages 25 on 09/18/2013
Print Headline: Pipeline builder studies LR fuel route