Posted on 06/03/2013 5:19:13 AM PDT by thackney
Kinder Morgan Energy Partners LP said Friday it has cancelled plans for the $2 billion Freedom pipeline, a conduit that would have brought a direct stream of West Texas crude to refiners on the U.S. West Coast.
The cancellation underscores the growing difficulty pipeline companies are having in selling new large-scale projects as oil producers and refiners increasingly rely on railroads to ship crude around. Once seen as temporary necessities to deliver oil from emerging oil-producing regions in Alberta, Texas and North Dakota, railcars have become a permanent fixture of the North American energy landscape because they allow refiners more diversity of supply.
This trend means that pipeline giants like Kinder Morgan will have to focus on smaller pipeline projects and branch out into other transportation segments, said Darren Horowitz, analyst at Raymond James.
"It's probably the smaller-scale, smaller-scope projects getting built, not the multi-year, billion dollar type projects," Mr. Horowitz said.
Kinder Morgan Energy Partners first pitched the 277,000 barrel-a-day pipeline in April, hoping to woo West Coast refiners dependent on more expensive oil shipped in from Russia, Ecuador and about a dozen other countries. Refiners in the fuel-hungry California market are eager to buy the same cheaper domestic crude that is already benefiting their competitors in the Midwest and Gulf Coast.
But Valero Energy Corp., Tesoro Corp. and others operating on the West Coast turned Kinder Morgan's proposal down, saying railcars gave them more flexibility....
(Excerpt) Read more at rigzone.com ...
I just worked a job for Kinder Morgan at the Saint Louis river terminal..
Oil has intrinsic value ~ passengers have to be subsidized.
Bet Willie Green is despondent.
And Warren Buffett is smiling this morning.
The biggest rail tanker fleet is BNR owned by Soro’s Hathaway Corp.
my bad...Warren Buffett...
I was with KM when they purchased the Slay holdings; what a “cluster”! Did they ever bring down the stacks on that powerhouse?
I don’t know, I’m in NDT, we get in and get out..
I also suspect resistance from job-adverse hippies and job-killing California environmental regulations played a role.
More business for the Obama booster, Warren Buffet. Saying that, TX should not send any more of its oil or gas to CA. Let them do without, since they are so worried about the environment.
More business for railroads. And my Union Pacific stock will continue to rise.
Texas should sell their oil to whoever pays them the best price. And if thats CA, so be it.
That’s just one major derailment away from being banned.
It’s all in the “spin”.
If Kinder Morgan had claimed that their oil pipeline was REALLY a tunnel for a high speed trains, then California would be throwing billions of taxpayer dollars at the project...
With the amount of shale oil already in California, this could be purely a sound strategic decision.
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