OREANDA-NEWS. Colonial Pipeline remains reluctant to dust off shelved expansion plans for its massive and long-constrained pipeline system moving products from the US Gulf coast to the New York Harbor market.

A lack of capacity on the 5,500-mile (8,851km) pipeline system from Gulf coast refiners to the northeast has frustrated both long-standing and new market participants. It has also spawned an unusual side trade for products in the markets Colonial connects and, critics say, increased prices for consumers.

But Colonial representatives speaking on proposed new tariffs at a hearing today before the Federal Energy Regulatory Commission (FERC) were blunt on the role of new pipeline capacity.

Expansion would not "be the likely outcome of this proceeding," lawyers representing Colonial said.

Colonial Pipeline this week offered no details beyond confirmation it had solicited interest in previously-discussed expansion on its system.

The company in 2013 said it was considering a 100,000 b/d to 600,000 b/d expansion on its Line 3 pipeline system between Greensboro, North Carolina, and Linden, New Jersey. The expansion would have followed a run of quick, comparatively inexpensive adjustments to scheduling and pumping systems across the pipeline system that added 160,000 b/d of capacity over two years to the section between Greensboro and New Jersey. Similar work in 2013 added 100,000 b/d of capacity to Line 1, its gasoline-bearing line connecting Pasadena to Greensboro, and 75,000 b/d to Line 2, its distillates-bearing twin.

But the larger Line 3 expansion never moved forward. Projects completed in 2013 demanded just a fraction of the cost of new pipeline construction, executives said at the time. New pipeline construction would cost billions.

"We had 22pc and 23pc of capacity added at less than 5pc of the cost" of a new build, chief financial officer David Doudna said in 2013.

The expansion project is joined on the shelf by plans foran 800,000 b/d twin pipeline for existing right of way between Baton Rouge, Louisiana, and Greensboro the company proposed in 2006 and then delayed in 2009. Colonial proposed and won rate approval from the FERC for the southern pipeline after noting its line was allocated 25pc of the time in 2004.

Allocations have only intensified and interest in the pipeline has grown. The number of companies interested in moving barrels across Colonial rose by 70 since 2013 and long-time shippers determined to maintain their valuable access to the pipeline chafed at the increased competition. Trades in so-called line space — offsetting deals at injection and delivery points on the Colonial system — emerged as shippers managed an intractable infrastructure situation. Shippers unable to secure space through Colonial use this secondary market to acquire product where they need it. Those seeking to preserve as much of their access to the pipeline as possible sell space. Shippers lacking space on the line paid a premium through such secondary trades for 60pc of 2015, based on Argus assessments.

Shippers and other stakeholders have to file initial comments on the revised Colonial proposal by 8 April, while a deadline for more expanded comments is 22 April.