Colonial Pipeline Pushes FERC to Revisit Blocked Gasoline Flow Adjustments
The company says the revisions would enhance safety and capacity across its 5,500-mile fuel network, while shippers including ExxonMobil and bp argue the move could hurt margins.
(Reuters) — The Colonial Pipeline on Wednesday requested the U.S. Federal Energy Regulatory Commission reconsider its earlier decision rejecting changes proposed by the company to the way the largest U.S. fuel conduit handles gasoline shipments.
The company asserted the regulator had erred in a Nov. 3 order blocking Colonial from modifying delivery specifications, ending overlapping shipments of different grades of gasoline, and discontinuing shipments of so-called "Grade 5" gasoline sold in some Northeastern states during the winter.
Colonial says the changes are part of its efforts to mitigate wear and tear of the over 60-year-old pipeline system, improve safety and efficiency. The changes will also help the company move more gasoline to markets that need it, the company said.
However, a group of Colonial shippers, including oil majors Exxon Mobil and bp, had protested the proposed changes, arguing they would harm their businesses by shifting blending margins away from them to Colonial.
FERC, siding with the protesting shippers, ruled last month that Colonial had failed to show its proposal was just and reasonable. The regulator also found Colonial's plan would impose additional costs on shippers, degrade the quality of gasoline they move through the pipeline without compensating them, and create an undue advantage for Colonial.
In its request for a rehearing, Colonial said that a separate proposal by the company, eliminating shipments of M grade and V grade gasoline in the Midwest, was approved by FERC.
Since that filing went into effect on April 1, Colonial has realized 3.6 million barrels of incremental capacity, it said. Capacity benefits from the proposal that FERC rejected would be similar, while safety, integrity and operational benefits will be even bigger, Colonial said.
The United States is the world's largest gasoline consumer, and last week burnt over 8.3 million barrels of the motor fuel on a daily basis.