Midcon refiners will pressure USAC: Update
The company is seeking pipeline access to move refined products and NGLs out of its midcontinent system to the New York Harbor.
"I think, long-term, as refined products find their way more and more to the east coast, that midcon refiners will probably put some pressure on east coast refineries as well," Heminger said.
Threats to east coast refining have traditionally come from the south, with the massive US Gulf Coast refining complex operating at a competitive advantage. Pennsylvania and New Jersey refineries teetered near closure in 2012 as a lack of access to cheap crudes left several operating at a loss.
A growing, more lucrative export market, as well as pipeline constraints accessing the New York Harbor from that coast, have somewhat turned the Gulf coast attention away from adding barrels to the New York Harbor.
But now landlocked midcontinent refiners need new destinations for high refining rates fed by cheap North American crude. Refiners in the region have this year consistently set new ten-year highs for crude processing, with the exception of maintenance-induced lows in October.
Finished motor gasoline shipments out of the Gulf coast into the midcontinent have slowed to a trickle over the past two years, and motor gasoline blending components have also begun to fall.
Midcontinent refiners have already crept into areas traditionally served by Gulf coast facilities, including northeast Texas. And two pipeline projects — Sunoco Logistics' 85,000 b/d Allegheny Access pipeline and Buckeye Products' Partners own pipeline network — have increased access from Ohio into the Pittsburgh, Pennsylvania, market.
From there, several pipelines, including Buckeye's own underutilized Laurel pipeline, could be reversed to reach the New York Harbor market, Heminger said.
"We've already gone a great deal into the western Pennsylvania, Pittsburgh market," Heminger said. "I think you'll see us go further."
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