California’s demand for refined products is in the spotlight after Phillips 66 (PSX) and Kinder Morgan (KMI) launched a second open season for the Western Gateway Pipeline. The companies aims to lock in commitments for the remaining capacity while expanding the project’s commercial reach.
The latest open season, launched Jan. 16, follows a successful first open season in October that drew significant shipper interest and executed some firm commitments. The biggest change in the second round is new access to the Los Angeles market via KMI’s Santa Fe Pacific Pipeline (SFPP), along with additional origin points that broaden supply optionality.
East Daley Analytics covered the original open season for Western Gateway, outlining how Kinder Morgan would reverse the western leg of the SFPP system from Colton, CA to Phoenix, AZ. The reversal would enable east-to-west product flows into California, with additional connectivity into Las Vegas via KMI’s Calnev Pipeline. The project also would reverse the Gold Pipeline, which currently moves refined products from Borger, TX to St. Louis, to push volumes westward instead. The Gold Pipeline connects to PSX refineries in Borger; Ponca City, OK; and Wood River, IL, representing 700 Mb/d of combined capacity.
The shipper interest generated during the first open season appears to be a key driver behind the latest announcement. While the core route is unchanged, the second open season includes a few important commercial expansions. First, it adds direct access to the Los Angeles market via a joint tariff, supported by the planned reversal of one of KMI’s existing SFPP lines between Watson and Colton, CA. Second, the latest open season adds additional origin points, allowing for greater supply diversification and customer optionality. As outlined in the updated project language, Western Gateway Pipeline will be fed by supplies connected to Borger, as well as other origin points.
With competitive pressure rising from HF Sinclair’s and ONEOK’s competing refined products projects, Phillips 66 and Kinder Morgan appear focused on differentiating Western Gateway through a combination of multiple supply entry points and expanded market connectivity. Early shipper interest indicates Western Gateway is competitively positioned. If developed as proposed, the project could contribute to a longer-term shift in California supply toward domestic refined products and away from overseas imports. – Keland Rumsey Tickers: KMI, OKE, PSX.
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