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Chris Jones

Fuel Woes Prompt Panel to Address Effect on Southern Nevada Transportation

23 January 2006

A transportation crisis will soon plague Southern Nevada if demand for gasoline and jet fuel continues to outpace local pipeline capacity.

But there was no shortage of solutions offered Friday when local leaders discussed plans to preserve a perpetually plentiful pool of local petrol.

A specially appointed committee is starting to study recommendations it will eventually present to the County Commission. Possible measures to avert the fuel crunch discussed Friday included:

* Stockpiling fuel in new or existing depots during seasons when demand is low.

* Expanding or improving portions of existing underground pipelines.

* Eliminating the different fuel blends now used in Las Vegas and nearby communities, such as Laughlin and Mesquite.

Southern Nevada's gasoline comes primarily from a 14-inch pipeline that connects depots in Colton, Calif., to a fuel terminal Houston-based Kinder Morgan Energy Partners operates near Nellis Air Force Base. Tanker trucks fill up there and deliver gasoline products to service stations throughout the community.

An 8-inch pipeline brings jet fuel directly from Colton to McCarran International Airport, which can also draw directly from Kinder Morgan's North Las Vegas terminal using another 8-inch pipeline that runs beneath the Las Vegas Valley.

Both the 14-inch and 8-inch Cal-Nev pipelines from Colton are nearing their ultimate capacities, which prompted the panel's formation last summer. Shortages could arrive 18 months from now unless measures are taken.

McCarran has a five- to six-day reserve stored on-site, but storage tanks at Kinder Morgan's local depot are usually empty despite their 3 1/2-day capacity. And demand continues to grow.

Randall Walker, Clark County's aviation director, said oil companies favor a "just in time" inventory system that limits stored gasoline. Such a plan works when pipelines have excess capacity but can cripple a community should an interruption arise.

Tax incentives or some other financial motivation may be required to get oil companies to store fuel here, panelists said. Still, the storage idea was widely supported.

"Storage is probably the best short-term solution," said Chief Master Sgt. Ray Campbell, a panelist from Nellis Air Force Base. "That would kind of act like a shock absorber" when fuel demand increases.

Panelists on the committee, the Blue Ribbon Commission to Improve the Reliability of Southern Nevada's Fuel Supply, also discussed how to ensure their recommendations are fair to businesses in the fuel industry. Asking one gasoline manufacturer to ship product here by truck, for example, would put it at a disadvantage to a competitor that ships fuel using a less-expensive pipeline.

"You've got to have everybody buy in at some point to make this work," said Rob Myrben, vice president of fuel management for Southwest Airlines, the Dallas-based carrier that handles one-third of Las Vegas' annual air passengers.

John Haycock, chairman of Haycock Petroleum, suggested trucks or trains be limited to one fuel category, such as diesel. That would keep producers on a level field, and potentially expand the number of refineries the region could draw fuel from.

The Nevada Department of Transportation and Regional Transportation Commission of Southern Nevada may later be asked to inform the panel on ways the county can compliment their respective fuel conservation initiatives.

Long-term solutions include building a $400 million pipeline to Colton, or adding new pipeline routes connected to refineries in the Gulf Coast.