Pipeline Cycle

The Colonial System is the largest refined products pipeline in the U.S. and delivers as much as 2.7 MMb/d from Gulf Coast refineries to destinations up the East Coast as far as New York. The southern section of the pipeline has been running full for over three years – leading Colonial to apportion space to shippers. A desire to gain shipper support to expand the pipeline led Colonial to propose new tariff clauses limiting trading practices that have developed around apportionment such as the sale of shipper history. Earlier this month (December 3, 2015) the Federal Energy Regulatory Commission (FERC) postponed the latest Colonial tariff proposal pending a user conference to resolve differences between the pipeline and shippers on these issues. Today we explain the oddities of line space and shipper history trading.

While recent analysis has raised concerns crude oil pipelines are running half empty the opposite is true for many of the nations’ refined product distribution pipes. Take the huge Colonial Pipeline system that delivers as much as 2.7 MMb/d of refined products from Gulf Coast refineries to destinations up the East Coast as far as New York. The southern stretch of the pipeline from Pasadena near Houston to Greensboro, NC has been running full since 2012 - meaning that shipper volumes are subject to rationing or apportionment. Today we start a two-part series explaining why the Colonial pipeline is so congested and how it operates.