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Move It On Over, Part 3 - Refined Product Price Spreads Spur Pipeline Projects in PADDs 2, 3 and 4

Refined product markets in the U.S. are constantly morphing. Over time, demand for gasoline and diesel rises or falls, refineries are shut down, and the price spread between products sold in neighboring regions widens or narrows. These changes can incentivize refiners and marketers to push into new areas — and encourage midstream companies to develop pipeline capacity to ease the flow of gasoline, diesel and jet fuel into newly attractive markets. Midstreamers have advanced a number of pipeline projects in the past few months to help move increasing volumes of products west across Texas to the Permian, the Great Plains and into the Rockies. In today’s RBN blog, we discuss these projects and what’s been driving their development.

Our goal in this blog series is to provide an overview of the U.S.’s major refined product pipelines and to describe how the network continues to be reworked — extended, expanded, repurposed and/or reversed — to reflect changing market dynamics. In Part 1 we looked at the big picture, discussing many of the large pipelines and pipeline systems that transport gasoline, diesel and jet fuel long distances from refineries to product terminals throughout the U.S. We noted that in addition to these long-haul, higher-volume pipelines, there are scores of shorter, lower-volume pipes that fan out from these lines to distribute refined products to terminals in smaller cities and towns. In most cases, gasoline and diesel are transported “the last mile” to service stations by truck. In Part 2, we discussed the changing market dynamics between the East Coast (PADD 1) and the Midwest (PADD 2), and the resulting increase in refined product pipeline capacity east across Pennsylvania.

Today, we’ll look at the market changes that have instigated a number of refined product pipeline projects in Texas and New Mexico (part of PADD 3/Gulf Coast), the Great Plains states (part of PADD 2) and the Rockies (PADD 4). We’ll begin with an overview of key changes affecting the supply of and demand for gasoline, diesel and jet fuel, and then discuss a few pipeline projects designed to help Texas and Great Plains refiners and markets take advantage of emerging opportunities.

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