HF Sinclair (DINO) has thrown its hat in the ring to meet a looming refined products shortfall in California and the Southwest, but with a twist: The company is proposing a project through the Rocky Mountains.
On Oct. 29, DINO announced that it is evaluating a multi-phased expansion of a refined products line from the Rocky Mountains (PADD 4) to the West Coast (PADD 5). The project will compete with a growing list of proposals to move more refined products to California, Arizona and Nevada, including the Sun Belt Connector from ONEOK (OKE) and the Western Gateway Pipeline planned by Phillips 66 (PSX) and Kinder Morgan (KMI).
The Sinclair expansion would add 150 Mb/d of capacity over two phases to California and Nevada refined products markets.
In Phase 1, DINO plans to expand the Pioneer Pipeline from Sinclair, WY to Salt Lake City, UT and streamline the UNEV Pipeline from Salt Lake City to Las Vegas, NV (see pipeline map from DINO). The expansion would add 35 Mb/d of capacity with a target online date in 2028.
Phase 2 is a more complex project that would add the remaining 115 Mb/d of capacity. DINO proposes to further expand the Pioneer and UNEV pipelines, and build a lateral from Salt Lake City to Reno, NV. Finally, the company would expand and reverse the Medicine Bow Pipeline running between Denver, CO and Sinclair.
The project leverages DINO’s refinery and pipeline assets in PADD 4 to transport more products west. In contrast, the Sun Belt Connector and Western Gateway proposals would pull products from refineries in Texas and the Midcontinent region.
The three projects are competing to fill an expected supply shortfall in the West. California is steadily losing refining capacity as companies like PSX close refineries, curtailing volumes of gasoline, diesel and jet fuel that can be piped inland. At the same time, demand is increasing in Sun Belt states like Arizona and Nevada from economic growth and an influx of new residents.
If constructed, the Sinclair project will likely stimulate new demand for crude oil from the Denver-Julesburg, Uinta, Green River and Powder River basins, providing a broad lift to oil and gas operations in the Rockies. As competition heats up to move products west, DINO aims to capitalize on its existing pipeline infrastructure to meet the regional supply and demand imbalance. – Alec Gravelle Tickers: DINO, KMI, OKE, PSX.
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