Pipeline proposal benefits unclear
Change would make Eldorado end of line for petroleum projects
A proposed change of direction in a pipeline could bring cheaper fuel to the Altoona area, but some feel the opposite could be true for the western part of the state.
The Laurel Pipeline Co. and its general partner, Buckeye Partners, are proposing changes that would make Eldorado the end of the line for petroleum projects flowing both from the Philadelphia area and Midwest refineries.
Currently, gasoline, jet fuel and heating oil flows west through the Laurel Pipeline, from origin points in the Philadelphia area to points in western Pennsylvania. But market conditions prompted Laurel Pipeline and Buckeye Partners to propose a change to the Public Utility Commission.
The companies would like to end westbound shipments at Eldorado and switch the direction of the pipeline west of here to bring petroleum products eastbound from the Midwest. But it’s nebulous who ultimately will benefit: Pennsylvania consumers or Midwest petroleum companies.
Laurel and Buckeye claims both will win. Laurel’s application with the PUC states the reversal would provide central Pennsylvania increased access to “generally lower-priced Midwestern gasoline and petroleum products. … This change in direction will provide ongoing access to lower wholesale commodity prices for gasoline and other petroleum products to consumers in Western and Central Pennsylvania.”
However, Sheetz Inc., other businesses and state representatives foresee a higher retail cost of gasoline as a result of the reversal, as it would end supply from the East and give Midwestern refineries a monopoly over western Pennsylvania.
If approved by the PUC, the reversal would mean ending eastern Pennsylvania refineries’ supply to several current delivery points west of Eldorado.
Eldorado is currently one of 14 delivery points along the pipeline that stretches across the state. To the west of Eldorado are delivery points at Greensburg, Delmont, Pittsburgh, Neville Island, Coraopolis, Tioga and the Pittsburgh Airport that would no longer be supplied from eastern Pennsylvania refineries.
After the reversal, which is slated for completion in 2018, deliveries west of Eldorado would only be supplied from origin points from Ohio and Michigan refineries.
Higher prices feared
Legislators representing the Pittsburgh area foresee the pipeline reversal eliminating supply options for petroleum retailers, resulting in higher prices not just for Pittsburgh but for Altoona, as well.
“They are not reversing the pipeline to increase supply to Altoona; they are reversing it to bypass Altoona. That’s my opinion,” Rep. John Maher, R-Allegheny County, said.
Laurel’s application to the PUC states the impetus for the reversal is driven by refineries in the Midwest wanting to push their glut of petroleum into the East, but opponents are skeptical about promises that it will result in lower-cost petroleum for central and western Pennsylvania consumers.
Executives at Marathon Petroleum, which operates refineries in Ohio and Michigan, have clearly stated their ultimate goal is to access the larger Philadelphia and coastal market to manage midcontinent refiners’ winter doldrums.
“First, we are looking to Altoona, but yes, eventually I would see it going all the way to the East Coast,” Marathon Petroleum Senior Vice President Mike Palmer said for a business news bulletin.
Marathon is the third-largest refiner in the United States and the largest in the Midwest.
“The delivery capacity of petroleum products to Pittsburgh area destinations and to the Altoona and State College area is proposed to increase by a total of approximately 1.6 million gallons per day,” David Boone, spokesman of Buckeye Partners, wrote in an email.
Businesses have concerns about how much money those petroleum products will actually cost.
Altoona-based Sheetz Inc. taps into the pipeline and has submitted a protest to the proposed reversal. United with Sheetz on that front are Giant Eagle, Sunoco and Gulf.
Currently, greater Pittsburgh fuel retailers are able to buy petroleum products flowing from two directions. They choose depending on which is cheapest.
They have Midwest pipeline access as well as the current Laurel pipeline, which provides products from southeast Pennsylvania refineries. But only the Laurel pipeline supplies Pittsburgh from in-state refineries in the East, and the reversal would end that supply.
Sheetz and legislators filing comments with the PUC argue that reversing any portion or all of the pipeline would eliminate market competition in Pittsburgh and restrict southeastern Pennsylvania refineries’ ability to distribute their products to western Pennsylvania.
“The seriously adverse and reasonably foreseeable consequences of such abandonment of service to the Pittsburgh area starts with higher costs to consumers and businesses small and large,” Maher wrote to the PUC.
Trucking volumes would rise
The reversal is essentially an abandonment of services to Pittsburgh, opponents argue. And they say trucking petroleum from Altoona to Pittsburgh would not be economical, and at times it would be impossible.
“Potential alternatives to move fuel over the highways may result in additional congestion on our already busy roadways, increasing wear and tear and causing additional strain on our infrastructure,” Senate Environmental Resources and Energy Committee Majority Chairman Sen. Gene Yaw, R-Bradford, wrote in a letter to the PUC.
Maher said proponents of the reversal have said hundreds of added trucks per day would be traversing state roads through Altoona.
“Proponents of the reversal say 430 trucks a day to deliver fuel from Altoona would be a good thing. I don’t have to tell you about roads,” he said.
The Laurel-Buckeye application to the PUC calls Eldorado a “destination point.” According to the company’s application, destination points are generally tank farms and truck racks where distributors pick up and deliver petroleum to end users, which are primarily service stations and some bulk fuel oil terminals.
“Currently, we have no plans to build a tank farm (in Altoona),” wrote Boone, “There are other petroleum terminals in the Altoona area that receive product off the Laurel Pipe Line.”
Sunoco Logistics taps into the Buckeye system and owns a tank farm at Sugar Run Road in Allegheny Township where it stores the product it receives from the pipeline.
Trucking petroleum to Pittsburgh from Altoona would not be an option at all during the summer, according to Sunoco filings with the PUC because gasoline delivered to Altoona in the summer months does not meet Pittsburgh’s summer month specifications required by the state for “Reid Vapor Pressure.”
At the eastern end of the state, Philadelphia senators and members of the House of Representatives stress the setback their refineries would see if they lost the western Pennsylvania market.
“These refineries employ well over 1,000 people and support a massive number of indirect jobs. The Commonwealth of PA made large investments over the past few years to ensure these employers stay in business. It would be troubling to allow a pipeline reversal that would threaten all of that hard work and investment,” wrote Rep. Stephen Barrar, R-Chester County.
Legislators requested that the Buckeye proposal be referred to an administrative law judge for a full hearing so that all parties may discuss in detail the wide-ranging concerns.
Altoona hearing requested
About four public hearings could be scheduled, with Buckeye wanting specifically to hold a hearing in Altoona, said Clean Air Council attorney Logan Welde. Other hearings would be set for Philadelphia, Pittsburgh and Harrisburg.
The Clean Air Council is keeping an eye on the project with a focus on environmental impact and property rights.
Specifically, the council’s concerns are whether the proposed reversal is in the public interest, whether equipment or pumping stations will be required along the route in order to reverse the flow, and the impact on people who live near the pipeline if additional equipment is installed.
“Requests that seem small turn out to have a larger public impact later on. That’s why we are taking a look at this,” said Alex Bomstein, litigation attorney for the Council.
Bomstein sees similarities between the Laurel Pipeline plan and Sunoco’s Mariner East II pipeline project, which last year was embroiled in eminent domain issues.
Boone said there is no need to exercise eminent domain for the Laurel Pipeline reversal.
“The Laurel reversal project involves reversing the direction of an existing pipeline and thus eminent domain would not apply,” Boone wrote in an email.
Welde said the communities potentially affected by the reversal should pay attention.
“Obviously the company wants to get it done quickly,” Welde said. “Groups like ours want to proceed with caution.”
Mirror Staff Writer Russ O’Reilly is at 946-7435.