By BEN LEFEBVRE
Kinder Morgan Energy Partners has canceled plans for a $2
billion pipeline that would have given refiners on the US West
Coast a direct stream of West Texas crude, the company said
Kinder Morgan's efforts to woo Valero, Tesoro and other West
Coast refiners to take oil from the proposed 277,000-bpd
Freedom pipeline ultimately failed after refiners decided
taking crude via railcar gave them more flexibility. The
pipeline company said it will switch its focus to crude-by-rail
projects in Texas and California.
"We did not receive enough interest for us to commit to
building the project at this time," said Mark
Kissel, Kinder Morgan Energy Partners' president of west region
gas pipelines. "We don't believe in the concept of build it and
they will come."
Kinder Morgan Energy Partners first proposed the Freedom
pipeline in April as a way to bring the growing supply of
light, sweet crude being produced in Texas to southern
California, an area dependent on more expensive oil shipped in
from Russia, Ecuador and more than a dozen other countries.
But refiners balked at the project, saying they preferred
rail's potential to bring crude oil from North Dakota, south
Texas and elsewhere depending on changing market conditions.
Shipping crude oil from the Bakken oil field in North Dakota
would cost almost the same as bringing west Texas crude oil via
Freedom and not tie refiners down to long-term pipeline
contracts, refiners said.
Valero, one of the largest independent refiners in the US,
is in the midst of a $30 million project to add rail capacity at its
170,000 bpd refinery in Benicia, Calif.
Tesoro, considered the biggest proponent of crude by rail,
announced last month a $100 million joint venture with freight
company Savage to bring an initial 120,000 bpd of crude from
the Bakken Shale in North Dakota to the company's West Coast
refineries by rail and barge.
Dow Jones Newswires