Phillips 66 and Kinder Morgan Launch Groundbreaking Fuel Pipeline Project

Phillips 66 and Kinder Morgan Inc. have announced plans for a new pipeline system that will deliver gasoline and other fuels to California, Arizona, and Nevada. This initiative aims to address the declining refining capacity in California, which has led to increased reliance on imported fuels, particularly gasoline. The project is set to enhance fuel supplies from regions as far away as the Midwest and is anticipated to be completed by 2029.

New Pipeline System Addresses Fuel Supply Issues

The Western Gateway Pipeline project will involve constructing a new pipeline connecting Borger, Texas, where Phillips 66 operates a refinery, to Phoenix, Arizona. Alongside this new infrastructure, existing conduits will have their flow reversed to facilitate greater fuel transport into California. Specifically, Kinder Morgan will reverse the flow on its California-to-Arizona pipeline, known as SFPP, allowing more fuel to reach the Golden State.

California has long struggled with limited access to fuel supplies due to its geographic isolation from major refining hubs located in the Gulf Coast and Midwest. As local refinery operations decrease, the state faces a growing threat of fuel shortages and rising prices at the pump. The closure of several California refineries, including Phillips 66’s facility in the Los Angeles area, has intensified concerns about fuel availability for motorists.

Bidding Process and Future Developments

On December 19, 2023, the bidding window will close for an open season announced by Phillips 66 and Kinder Morgan, during which shippers can reserve space on the new pipeline. This step is critical to gauging interest and ensuring sufficient capacity for transporting fuels. The project’s timing aligns with increasing demand due to the anticipated rise in fuel prices and supply challenges faced by consumers in California and neighboring states.

In addition to the Western Gateway Pipeline, Phillips 66 plans to reverse the flow on the Gold Pipeline, which currently transports supplies from Texas to the St. Louis area. This change will enable Midwest fuels to move westward, supplementing the supply chain further. Kinder Morgan has previously explored similar projects, such as the Freedom Pipeline proposed in 2013, but that initiative was eventually shelved due to insufficient demand.

As the California market becomes increasingly dependent on external fuel sources, the collaboration between Phillips 66 and Kinder Morgan represents a significant development in addressing the state’s energy needs. The impending changes in fuel logistics could reshape the landscape of fuel supply and pricing in the region.