$388m in the pipeline

Kinder Morgan Energy Partners plans to invest approximately $388m to further expand the 550-mile CALNEV pipeline that runs from Colton, California to Las Vegas, Nevada.

Kinder Morgan Energy Partners plans to invest approximately $388m to further expand the 550-mile CALNEV pipeline system. CALNEV transports petrol, diesel and jet fuel from Los Angeles refineries and marine terminals through 14- and 8-inch diameter pipelines that originate in Colton, California, and extend to terminals in Barstow, California, and Las Vegas, Nevada.

The proposed expansion involves construction of a new 16-inch diameter pipeline from Colton to Las Vegas. System capacity would increase to approximately 200,000 barrels per day (bpd) upon completion of the new pipeline, and capacity could be increased as necessary to over 300,000bpd with the addition of pump stations.

The expansion is subject to environmental permitting, right-of-way acquisition and the receipt of approvals from the Federal Energy Regulatory Commission (FERC) authorising rates that are economic to CALNEV. Environmental permitting and right-of-way acquisition is expected to take 24 to 30 months with construction anticipated to be completed within nine months thereafter. Start-up of the new pipeline is scheduled for late 2009 or early 2010, assuming all necessary environmental approvals and rate determinations are obtained.

This major expansion project is in addition to three capital upgrades on the CALNEV system that were previously announced this year. Two projects will increase the capacity of the pipeline system to 156,000bpd when completed, and the third involves construction of additional tanks that will increase petrol storage at Las Vegas by 26 percent and diesel storage by 20 percent.

‘Combined, the approximately $413m in expansion projects will allow CALNEV to meet the refined petroleum products requirements of the Las Vegas metropolitan market for many years to come,’ said Tom Bannigan, president of KMP’s Products Pipelines group. ‘Upon completion, these expansion projects are expected to be immediately accretive to distributable cash available to KMP unitholders.’

The new 16-inch diameter pipeline will parallel existing utility corridors between Colton and Las Vegas to minimise environmental impacts. It will transport petrol and diesel, as well as military jet fuel for Nellis Air Force Base. The existing 14-inch diameter pipeline will be dedicated to commercial jet fuel service for McCarran International Airport and any future commercial airports planned for the Las Vegas market. The 8-inch diameter pipeline that currently serves McCarran International Airport would be purged and held for future service.