Questar

Plato may have said it, Shakespeare wrote about it, and anyone who has engaged in a friendly debate about the best classic car, hunting rifle, or wristwatch knows it to be true: beauty lies in the eye of the beholder. Of course, not everyone sees value the same way, or value in the same things. That’s at the heart of the dispute over the recently announced acquisition of Questar Pipeline LLC by Southwest Gas Holdings. The prospective buyer sees Questar as a picture-perfect addition, while an activist investor sees it as a butt-ugly mistake. In today’s RBN blog, we continue an examination of the Southwest Gas/Questar deal with a look at Questar’s relationship with its local distribution companies, potential competition with the nearby Kern River Pipeline, and challenges Questar may face in serving power generators and direct industrial load.

A recent proposal from Questar could bring part of a pipeline that once shipped crude to Long Beach from Four Corners in the 1950’s back into service. Questar plans to convert the western segment of its Southern Trails pipeline to crude and rename it the Inland California Express. The pipeline origin would be a rail load terminal in Central California from where crude would flow to Long Beach refineries with over 1 MMb/d capacity. The Questar proposal will likely attract support from shippers in the Rockies as well as Western Canada but still be a stretch for crude loaded onto railcars in the Permian. Today we review the proposal.