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John G. Edwards

Las Vegas Moving Closer to Fuel Linkup With Texas

16 August 2006

A Phoenix gasoline pipeline company says it is ready to take a $390 million project off the drawing boards and move a step closer to bringing low-cost Texas gasoline to Las Vegas.

Pacific Texas Pipeline Co. said it is seeking agreements from companies that want to ship gasoline, diesel or jet fuel over the proposed Pacific Texas Havasu Pipeline, which would run from Phoenix to Henderson.

The Havasu pipeline would connect to the Pacific Texas Products Pipeline, which will link Phoenix to gasoline supply lines at El Paso, Texas.

The two projects would cost a $840 million and would be built simultaneously.

Construction is expected to start by year's end and be completed in three years.

Pacific Texas said its project would reduce the cost of gasoline by providing Texas- area refineries as an alternative to California refineries, now the sole source of gasoline in Las Vegas.

Gasoline from Texas and surrounding states costs 10 to 25 cents per gallon less than California gasoline, Cecil Owens, chairman of Pacific Texas, said Monday in a statement.

The new pipeline also would enable wholesalers, large fuel users and refiners to ship gasoline to Las Vegas from refineries in Texas, Oklahoma, New Mexico and possibly Louisiana, Larry Ortega, Pacific Texas vice president of finance, said Tuesday.

The Havasu pipeline will make Southern Nevada less dependent on California refiners which typically get a large part of their crude oil supply from Alaska, Ortega said.

As a result of the leak in the BP pipeline from the Prudhoe Bay area of Alaska, California refiners have less oil to refine and will be refining "sour" crude oil that has high quantities of sulfur and produces less gasoline.

The BP pipeline shutdown is "going to make a big difference in gas prices in Las Vegas over the next six months," Ortega said.

Pacific Texas's pipeline would carry up to 108,000 barrels of fuel daily to Las Vegas in addition to 140,000 barrels daily over two pipelines that Kinder Morgan Energy Partners uses to ship fuel from Colton, Calif., near Los Angeles.

Southern Nevada's existing fuel pipelines from Colton are on pace to reach capacity within the next 12 months. Without new delivery methods, fuel shortages will soon follow as local jet and motor vehicle traffic grows an estimated 3 percent to 5 percent each year.

By building a new pipeline, Pacific Texas says it would provide Las Vegas with more protection in case an accident causes disruption of shipments over Kinder Morgan's Calnev Pipeline system.

The Pacific Texas pipeline would terminate on the south side of the Henderson Airport. The pipeline would connect at Phoenix to the Pacific Texas Products Pipeline that is proposed to bring fuel from El Paso, Texas. Pacific Texas intends to build the two pipelines at the same time.

Clark County's Blue-Ribbon Commission on Fuel Supply, which includes representatives of businesses, has been hearing proposals from Pacific Texas and three other pipeline companies.

Southwest Airlines is one of the businesses represented, but Southwest spokeswoman Paula Berg said: "It's really too early to comment."

Attempts to reach county Aviation Director Randall Walker and other committee members were unsuccessful.

At last month's meeting, fuel commission members expressed support for Pacific Texas' pipeline, although some questioned whether the company was capable of accomplishing its plans.

Separately, Kinder Morgan of Houston is building two 80,000 barrel tanks at Las Vegas, which it expects to complete in March. As part of the same $10 million project, Kinder Morgan increased the capacity of a 14-inch line so that it can carry 3,000 more barrels of gas daily.

The Houston company is designing improvements that will increase the pipeline capacity to 156,000 barrels daily and plans a new pipeline that would boost capacity to 220,000 barrels of fuel daily by 2010.

Dallas-based Holly Energy Partners proposes build a new pipeline from Salt Lake City. WesPac Pipelines of Newport Beach, Calif., wants to run a pipeline here by way Yuma, Ariz., and one of two deep-water ports in Mexico where foreign crude could be off-loaded to support an Arizona refinery.

All four proposals will be discussed Friday during August's scheduled fuel commission meeting. Members there do not believe all four pipelines will be built; they'll recommend the best one or two options to county leaders.

Gaming Wire writer Chris Jones and The Associated Press contributed to this report.

John G. Edwards
John G. Edwards