Several gasoline and distillate shippers are gearing up to fight Colonial Pipeline's newest proposed tariff, saying a revised version will still squash competition and curb access to the critical artery that moves millions of barrels per day to the U.S. Northeast from the Gulf Coast.
York River Fuels LLC, a New York Harbor marketer affiliated with Western Refining Inc, said in a regulatory filing on Nov. 19 that a key provision in the tariff would shut out many small shippers while favoring bigger ones like refiners that routinely ship hundreds of thousands of barrels every year.
Castleton Commodities International and World Fuel Services Corp, also have asked the Federal Energy Regulatory Commission to allow them to submit arguments.
Colonial, which has been full for more than three years, allocates space based on shipper history, or how many barrels shippers regularly move in 72 cycles each year. Those that move at least an average of 18,750 barrels per cycle are "regular" shippers and qualify for consistent space.
Shippers that move less can get the same status by transferring their shipper histories to each other.
The tariff would prohibit small or intermittent shippers from transferring their shipper histories on Colonial back and forth to ensure consistent access to the pipeline.
Colonial's new tariff would eliminate that practice, leaving smaller shippers to vie for the 10 percent of space available to non-regular shippers in a lottery. Colonial revised an earlier proposal - which FERC halted - to cut the minimum to 11,250 from 18,750 barrels, but retained the prohibition on transferring shipper histories.
York gave its history to another company as per a contract in 2012 based on past practice of unfettered shipper history transfers. The new tariff would prevent that company from giving it back when their contract runs out, York said.
In addition, to reach regular status via the lottery shippers would have to win space for 55 of the total cycles, York said.
"Achieving that result would be equivalent to winning the World Series of Poker," the company said.
Colonial said it would file a response with FERC. The company wants the agency to approve the new tariff as of Dec. 4.
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