Federal regulators gave preliminary approval Thursday to a 248-mile, $400 million pipeline for motor and jet fuel that will boost supplies in the rapidly growing Las Vegas area.
The Federal Energy Regulatory Commission decided it will allow Kinder Morgan Energy Partners of Houston to set pipeline rates necessary to recover the cost of a 16-inch diameter line. Kinder Morgan plans to increase capacity on its Calnev pipeline to 200,000 barrels per day from 143,200 barrels per day. A barrel is the equivalent of 42 gallons.
The regulatory decision follows an announcement last week that Holly Corp. and affiliated Holly Energy Partners of Dallas plan to build the $300 million UNEV Pipeline from Salt Lake City. The UNEV line will carry 62,000 barrels per day and can be expanded to 120,000 barrels per day.
Kinder Morgan plans to complete its 16-inch line, which will follow the corridor used by two other Kinder Morgan lines, by 2010. Kinder Morgan’s existing Calnev line runs from Colton, Calif., near Los Angeles to a terminal in North Las Vegas.
Together, the Kinder Morgan and Holly projects could boost the capacity of jet, diesel and gasoline fuel pipelines to 420,000 barrels per day — a 193 percent increase from the current 143,200 barrels per day offered by the Kinder Morgan line.
Kinder Morgan earlier said its expansion will create more capacity than it projects for refined products in Southern Nevada by 2011, but the company expects future population and fuel demand to make the project cost efficient and necessary.
"This project is vital to the economy of Southern Nevada," FERC Commissioner Jon Wellinghoff said in a statement. "Without it, demand for fuel will outstrip supply in the next few years."
He was Nevada’s first consumer advocate and was an energy attorney based in Las Vegas before joining FERC.
A Kinder Morgan spokeswoman said the company does not want to comment until it receives a copy of the regulatory decision.
The federal regulatory body ruled that Kinder Morgan could recover the cost of its planned expansion, but Kinder Morgan still must seek federal approval for the specific rates it charges shippers.
Commission Chairman Joseph Kelliher said the decision in the Kinder Morgan case is similar to one it made in the Colonial Pipeline Co. case last year. "In both cases, the companies identified the need for substantial expansions of their systems to meet projected future demand," Kelliher said.