RBN Energy: PADD 1 refiners fight to keep Laurel Pipeline flowing west.
... for years they relied almost exclusively on waterborne imported crude for feedstock and therefore had little or no competitive advantage over their European refined-product rivals.
Then, when the Great Recession of 2008 whacked East Coast demand for motor fuels, PADD 1 refining margins suffered and a number of refineries there were shut down.
Then there was shale, and at first it was a godsend — midstream companies and some PADD 1 refineries developed supply networks to move then relatively cheap Bakken crude by rail to the East Coast, giving them a feedstock-price edge over their international competitors.
But by 2015-16, several factors (among them, the build-out of pipeline infrastructure to relieve Midwest congestion, the oil price crash and the end of the ban on most U.S. oil exports) combined to make most crude-by-rail deliveries uneconomic and put PADD 1 refineries back where they were pre-shale — or worse.
This spring, all eyes — especially those of refinery owners in PADD 1 — are on the controversial second phase of Buckeye’s plan, which (if approved by the Pennsylvania Public Utilities Commission, or PUC) would reverse the western portion of its existing Laurel Pipeline and allow midwestern gasoline and diesel to flow as far east as Eldorado, PA, near Altoona, in the middle of the state.
Laurel is a nearly 60-year-old pipeline system that moves refined products west from the Philadelphia area (starting in Eagle Point, NJ) to near the Pennsylvania/Ohio line west of Pittsburgh. The pipe is about 350 miles long, and its diameter ramps down from 24 inches to 12 inches as Laurel moves west; according to Buckeye’s pipeline-reversal filing with the PUC; in the 12 months ended October 31, 2016, westbound flows on the pipe averaged 230 Mb/d.Graphic at the link.