SALT LAKE CITY -- Two companies plan to build a 430-mile pipeline to move gasoline from refineries near Salt Lake City to Las Vegas, which gets most of its fuel trucked from southern California at higher prices, the Associated Press said.
Another pipeline terminal would be built at Cedar City to supply a fast-growing area of southwestern Utah.
Holly Corp. said the pipeline would prompt Salt Lake City-area refineries to expand, countering the tightening of supplies for northern Utah.
An association of gas [image-nocss] station owners, however, does not buy it. Our supply of gasoline is tight enough already without sending a whole bunch of our production down to Las Vegas, said John Hill, state director for the Utah Petroleum Marketers & Retailers Association. Without any increase in supply, I'm afraid that prices will just go up.
Dallas-based Holly, which operates a crude-oil refinery in Woods Cross, Utah, said Monday it would build the $300 million pipeline in a partnership with Sinclair Transportation Co. to move 120,000 barrels of gasoline, diesel and jet fuel every day.
Holly is discussing pipeline routes with the U.S. Bureau of Land Management and expects to win construction permits and build the pipeline by late 2008, said M. Neale Hickerson, a spokesperson for Holly Energy Partners LP, which would operate the pipeline.
Demand for gasoline in the Las Vegas market has been growing at a rate 2% to 3% higher than the national average, said Ann Kohler, an analyst at Caris & Co. They need to get additional supplies from somewhere, and it makes sense that Holly would want to fill that demand.
Demand for gasoline in northern Utah typically falls off in winter, when Utah's refineries could benefit from having another market, said David Blair, a senior vice president at Holly Energy Partners. The Salt Lake City-area refineries will have a reason to begin pulling off their shelves expansion plans that have been gathering dust, he said.
Blair predicted that refineries in Wyoming and Montana, which already pipe some refined petroleum into the Salt Lake valley, also would increase production.
In times of high demand, Holly and the other Salt Lake City-area refineries load gasoline into trucks bound for the Las Vegas area, an expensive and inefficient method, Hickerson said.
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