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Aug. 19, 2006
Copyright © Las Vegas Review-Journal


Panel calls for pipeline

Commission calls for delivery line different from California route

By CHRIS JONES
GAMING WIRE

With limited time to form a wish list and an array of options still on the table, a sense of urgency surrounded members of Clark County's fuel commission as they gathered Friday in downtown Las Vegas.

But thanks to two hours of detailed discussion, the group ended its August meeting with a clearer focus on the methods it hopes will prevent Southern Nevada from soon enduring shortages of gasoline and jet fuel.

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Chief among those methods, said those on the 12-member panel of business and civic leaders, is the addition of a new pipeline large enough to supply the Las Vegas Valley's expanding fuel needs for the next two to three decades.

That preferred solution would connect the valley with an existing and stable source of refined fuel products, though it would not follow an existing pipeline route from refineries in the Los Angeles basin by way of Colton, Calif.

"In my business, redundancy is a key word," said Chief Master Sgt. Ray Campbell, who represents Nellis Air Force Base. "It should be a second source, something other than California."

At the request of Clark County Commission Chairman Rory Reid, the fuel commission was formed late last year to address the rapidly approaching limitations of the two pipelines Houston-based Kinder Morgan Energy Partners currently operates from Colton.

The commission's clock is ticking in more ways than one. As motor vehicle and jet traffic continues to rise locally, Southern Nevada's existing fuel pipelines are on pace to reach their 140,000 barrels per day limit by this time next year.

In addition, the committee is scheduled to make its recommendations to the County Commission sometime in November. That meant that the group would meet only twice more after Friday's meeting concluded.

"This is the 'magic happens' part of the process," moderator Lewis Michaelson of San Diego-based Katz & Associates said as he opened Friday's meeting.

The commission's call for a second fuel source could work against Kinder Morgan's proposed plan to build a $300 million to $400 million parallel pipeline from Colton, which it claims could boost the system's capacity to about 220,000 barrels per day by 2010.

Its desire for proven sources could also work against Dallas-based Holly Energy Partners, which wants to build a pipeline between Las Vegas and Salt Lake City supplied by oil from the Rocky Mountain region and Canada, and WesPac Pipelines of Newport Beach, Calif., which seeks to build a 16-inch pipeline to Las Vegas through Yuma, Ariz.

Commissioners debated on whether Rocky Mountain refineries would have the capacity to bring enough fuel to Las Vegas, while WesPac's proposal was deemed less appealing because it would require the addition of a new, and as-yet unfinanced, refinery in Southern Arizona.

That leaves Phoenix-based Pacific & Texas Pipeline & Transportation Co., which earlier this week said it's proceeding with plans to build an $840 million pipeline between Henderson and the Gulf Coast by way of Phoenix and El Paso, Texas.

The commission will likely recommend that one or more pipelines be added, though economic constraints would likely make more than one new connection "unrealistic," said Kevin Tourek, a Wynn Resorts Ltd. executive.

Other likely recommendations include calling for decreased fuel use, whether it's through the addition of more hybrid vehicles or carpool lanes; setting aside land for a second fuel terminal, this one at the valley's southern end; increasing local fuel storage capacity; and encouraging local and state leaders to proactively address likely concerns such as pipeline right-of-way issues or tax incentives to encourage pipeline development.

Near-term help could come from rail shipments. North Las Vegas-based Pan Western Transportation Specialists told the commission it is moving forward with its plan to import fuel here by train from refineries in the Gulf Coast.

The company is expanding its existing rail spur near Craig Road and Interstate 15 to better handle regularly scheduled fuel shipments. In April, Pan Western Vice President Mitchell Truman said a proposed depot could hold up to 60,000 gallons of fuel on site.

Five dedicated fuel trains per week would supply 200,000 more barrels of fuel every seven days, Truman said, adding that a rail-based fuel chain could potentially operate as soon as 2007 or 2008.

In addition, Kinder Morgan will spend $15 million to increase the Colton pipelines' daily capacity to 156,000 barrels.

Although the county cannot force private businesses to follow the commission's recommendations, government can promote such steps through tax incentives and other channels.

And John Haycock, chairman of Las Vegas-based Haycock Petroleum, said the commission should not assume that major oil companies have no interest in Southern Nevada's fuel needs.

"They have a dog in this fight. They're going to want to protect their investment," Haycock said, noting the many oil company-owned service stations around the Las Vegas Valley.


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