Colonial Pipeline Eyes Expansion

The busiest US fuel pipeline might expand jet fuel deliveries to respond to growing demand in the home of country music.


Shippers on Colonial Pipeline Company, which carries as much as 1.37 million barrels a day of fuel from the Houston area to North Carolina, have had to pay a premium for access to the international airport in Nashville, Tennessee.


Airlines serving the city could shave off a significant portion of their fuel costs with the added service.


“We are probably going to start looking at the opportunity to deliver more volume there to the extent it goes beyond our capability right now,” Colonial Chief Executive Officer Joe Blount said in an interview in Kentucky.


A 150-mile Colonial offshoot carrying diesel and jet fuel from Atlanta to Nashville has been full nearly every week this year, according to an online Colonial database.


Airlines purchasing jet fuel were paying as much as 8 extra cents per gallon to get access earlier this year.


“We are working with a lot of gasoline retailers in the Nashville area,” Mr Blount said on the side-lines of an energy conference. “I would assume that we will also be working with existing airline shippers who want more capacity.”


Winter Outlook

So far, the closing of the East Coast’s largest refinery, Philadelphia Energy Solutions LLC, has not translated into more business for Colonial, mainly because of cheaper barrels coming into New York Harbour from Europe.


That may change as winter comes around.


“We will see what happens in the winter-time when the product remains in Europe and whether we pick up that load,” Mr Blount said. “As we head into the fourth quarter, we should see some upside coming out of at least the current closing of the PES refinery.”


While Colonial has been slow to take advantage of the oil export boom which has been created by an explosive growth in shale drilling, Mr Blount said it is not too late to start now.


“If we can participate in that through a build or a joint venture, then we are going to do that,” the CEO said. “I don’t think it’s too late, but we don’t want to let it get further away from us than perhaps it has.”


Source: Rigzone