Less than two months after ONEOK unveiled plans for a big new refined products pipeline from El Paso to Phoenix, Phillips 66 and Kinder Morgan have proposed an even more extensive project of their own that would enable refined products flows from the St. Louis area to Southern California. The company’s newly proposed, 1,300-mile Western Gateway Pipeline — now the focus of a binding open season — would involve the construction of a greenfield pipeline from Borger, TX, to Phoenix and the reversal of part of Kinder’s existing SFPP pipeline system to move product west from Phoenix to Colton, CA. In today’s RBN blog, we’ll discuss the project and what’s driving the race to move more refined products west from PADDs 2 and 3 to PADD 5.
The Future of Fuels bi-annual report by RBN's Refined Fuels Analytics provides an in-depth analysis of the U.S. and global refinery industries, focusing on crude oil and fuel market dynamics, supply and demand, alternative fuels, refinery capacities, and price forecasts to help stakeholders navigate the evolving energy landscape.
Just after Labor Day — and fresh off its acquisition of refined-products-pipeline giant Magellan Midstream Partners — ONEOK said it planned to build the Sun Belt Connector. The 24-inch-diameter greenfield pipeline would run from El Paso to the Phoenix area and be connected to the company’s existing refined products pipeline system, allowing refined products to flow west to Arizona markets from refineries in Texas and Oklahoma. In initiating a binding open season that runs to November 7, ONEOK said the new pipe would have an initial capacity of 200 Mb/d when it comes online in mid-2029, and added that its capacity could be increased significantly if demand warrants.
We said then that the project made sense for three primary reasons:
- Arizona's demand for refined products is strong. Arizona has been among the fastest-growing states over the past 25 years, with the vast majority of its population growth (and demand for refined products) coming from the Phoenix and Tucson metropolitan areas. Total Arizona demand for refined products is expected to rise by about 10% over the next 10 years (from ~320 Mb/d to ~350 Mb/d), with gasoline and diesel demand staying flat (at ~190 Mb/d and ~90 Mb/d, respectively) and demand for jet fuel increasing from ~40 Mb/d to ~70 Mb/d by the second half of the 2030s.
- Southern California refinery output is declining. Virtually all of Arizona’s refined products supplies are piped in, just over half from Southern California via the 515-mile Kinder Morgan West Line from the Los Angeles area to Phoenix and just under half from refineries to the east via the 400-mile Kinder Morgan East Pipeline from El Paso to Tucson and Phoenix. But Southern California’s refinery capacity has been steadily declining and Phillips 66 plans to shut its 139-Mb/d Los Angeles refinery complex by the end of this year. Given the relatively high cost of either importing refined products into California or producing them in the state’s remaining refineries, there’s been a declining incentive to pipe gasoline, diesel and jet fuel east to Arizona.
- Refiners in PADDs 2 and 3 want more access to premium markets. At the same time, refiners in PADD 2 (Midwest/Great Plains) and PADD 3 (Gulf Coast/New Mexico) have access to lower-cost crude oil, have lower operating costs than their counterparts in California (PADD 5), and are seeking access to premium U.S. markets. Arizona (also in PADD 5) would appear to be a prime opportunity due to its steady growth and current half-dependence on refined products from Southern California. The only catch? The current pipeline network from West Texas to Arizona is maxed out.
ONEOK, which we recently described as one of the U.S.’s bolder, more aggressive midstream developers, may have made the first move, but Phillips 66 and Kinder Morgan are right on its tail. The two companies said October 20 they had initiated a binding open season for their Western Gateway Pipeline that will end December 19. If all goes to plan, the new system will be up and running “by 2029.”
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About the song
“Going to California” was written by Jimmy Page and Robert Plant, and appears as the third song on side two of Led Zeppelin’s fourth studio album, Led Zeppelin IV. The song features Page on acoustic guitar and John Paul Jones on mandolin, accompanied by Plant’s vocals. Page and Plant say the song (originally titled “Guide to California”) was inspired by Joni Mitchell, of whom both were fans. The acoustic folk music feel of the song contrasts nicely with the heavy blues rock grooves of the rest of the album. It was recorded, along with most of the album, at Headley Grange, a country house located in Hampshire, England. The Rolling Stones Mobile Studio was used for recording, with Andy Johns engineering and Jimmy Page producing.
Led Zeppelin IV was recorded between December 1970 and February 1971. It was released in November 1971 and went to #2 on the U.S. Billboard Top 200 Albums chart. It has been certified a staggering 24X Platinum by the Recording Industry Association of America. Personnel on the LP were: Robert Plant (vocals, harmonica), Jimmy Page (guitars, production), John Paul Jones (bass, keyboards, mandolin, recorder, synthesizer), and John Bonham (drums). The album won a Grammy Hall of Fame Award and has been on many lists of the greatest rock albums ever recorded. Two singles were released from the LP.
Led Zeppelin was an English rock band formed in London in 1968. It was made up of Jimmy Page, Robert Plant, John Paul Jones and John Bonham. They are one of the best-selling rock bands in history, with record sales estimated to be 300 million worldwide. The band has released nine studio albums, four live albums, 10 compilation albums, one EP and 19 singles and has won one American Music Award, five Grammy Awards and two Ivor Novello Awards. Led Zeppelin received Kennedy Center Honors and are members of the Rock and Roll Hall of Fame, the Grammy Hall of Fame and the U.K. Music Hall of Fame. Drummer John Bonham's untimely death in September 1980 at 32 led to the dissolution of the group. The band played a reunion concert with John Bonham’s son, Jason, on drums in London in December 2007. Page, Plant and Jones still record individually and tour with various solo and side projects to this day.
"About the Song" -- written by Mickey McMahan , RBN Director of Musicology
