HARRISBURG, Pa. —A coalition of Pennsylvania fuel retailers and suppliers are fighting the latest effort to change the flow of a major pipeline that runs through the state.
In 2016, Houston-based Buckeye Partners LP asked Pennsylvania’s Public Utility Commission (PUC) to approve plans to reverse the flow of part of the 350-mile-long Laurel pipeline. Refiners in Philadelphia have used the pipeline, which runs from Philadelphia in the east to Pittsburgh in the west, to carry fuel and heating oil across the state. Buckeye wanted to reverse the flow of the western portion of the pipeline to move west to east, to bring fuel into Pennsylvania from Midwest refineries. It argued that the Laurel pipeline was operating below capacity because the market is shifting toward cheaper Midwestern refiners for supply, and that the reversal would help lower gasoline prices in the state.
But fuel retailers including Altoona, Pa.-based Sheetz Inc. and Pittsburgh-based Giant Eagle Inc. protested the plan, arguing the pipeline reversal could reduce supply from Philadelphia and increase wholesale prices in the western part of the state.
In 2018, the PUC rejected Buckeye Partners’ plans, concluding that the reversal could harm consumers and Pennsylvania’s two refineries on the East Coast. But Buckeye is now taking a different tack: In April, it asked the Federal Energy Regulatory Commission (FERC) to approve making a section of the Laurel pipeline bidirectional so it could ship west to east to Altoona, and east to west to Pittsburgh.
Buckeye hopes to begin bidirectional service by mid-2019.
“We are pleased to move forward on this important project, which will enhance market competition through bidirectional service,” said Robert Malecky, president of Buckeye’s domestic pipelines and terminals. “The scheduled tests will ensure the new service on Laurel—which maintains current east-to-west deliveries while providing Pennsylvania consumers with more access to lower-cost, American-produced fuels from the Midwest—begins safely and efficiently.”
On April 23, a coalition of fuel retailers, including Sheetz and Giant Eagle, as well as distributor Guttman Energy, Lucknow-Highspire Terminals and refiners Monroe Energy and Philadelphia Energy Solutions Refining and Marketing, filed a formal protest with FERC opposing the proposed bidirectional service plans. The coalition argued that western Pennsylvania businesses and consumers benefit because fuel suppliers can source the lowest cost fuel from either the East Coast or Midwest. By making the Laurel pipeline bidirectional, Buckeye could ship fuel from the Midwest into western Pennsylvania at higher tariff rates, which would benefit Midwest refineries while preventing lower-priced fuels from the East Coast from reaching the western part of the state, they said.
The coalition says Buckeye has appealed the PUC’s rejection of its original reversal plans. “Buckeye’s ultimate goal remains to limit or completely cut off western Pennsylvania from accessing gasoline manufactured on the East Coast, which is cheaper the majority of the year,” the coalition alleged.
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