Published Saturday, September 16, 2000

Gas thirst could be quenched Pipeline might reduce flow of the state's gasoline to Arizona and even carry the Gulf Coast commodity into California, experts say By Mike Taugher TIMES STAFF WRITER

A 700-mile pipeline across Texas that is nearing final environmental approval could be the missing link that would allow California to import Gulf Coast gasoline over land.

In a recent letter to the Environmental Protection Agency, state energy officials urged approval of the Longhorn pipeline from Houston to El Paso, which would tie into a pipeline that continues to Phoenix.

"Supplying Arizona from the Gulf Coast could reduce Arizona's need to import California cleaner burning gasoline and could, in effect, add supply to the California market," state Energy Commission Chairman William J. Keese wrote last month.

Moreover, Keese added, if Arizona no longer needs gasoline from California's refineries, the flow in a pipeline that now moves gasoline from Los Angeles to Phoenix could be reversed. Such a move would create a continuous pipeline connection from Houston to Los Angeles.

The possibility of importing gasoline by pipeline is significant because California sits in relative isolation when it comes to gasoline.

The state's thirst for fuel depends to a great degree on gasoline produced by in-state refineries, and those refineries are barely able to keep up with demand.

Relatively small disruptions in refinery operations can result in disproportionately large price jumps. Energy experts believe the state's capacity to produce gasoline will soon be stretched so thin that gasoline prices will soar.

A bill awaiting action by Gov. Gray Davis would direct the California Energy Commission to study the feasibility of building a new pipeline, or use existing pipelines, to bring gasoline from the Gulf Coast.

The bill, AB 2098, sponsored by Assemblywoman Carole Migden, D-San Francisco, was one of three bills prompted by a report on gasoline prices this spring by Attorney General Bill Lockyer.

The second bill, also on Davis' desk, would authorize a study of the feasibility of creating a state-owned gasoline reserve. The reserve fuel could be released during supply disruptions to dampen price spikes.

The third bill died. It would have studied whether state-owned fleets could be powered with gasoline purchased from out of state.

"No one thing will provide you with immediate relief," said Lockyer spokeswoman Sandra Michioku. "These bills are some of the steps that were seen as necessary to help restore competition in the market and to address the question of supply. If we can increase supply, prices are likely to (stabilize) or at least not soar as high."

Although a new pipeline would likely cost about $1 million a mile, or nearly $1 billion from El Paso to Los Angeles, the possibility of using existing pipelines has intrigued some energy officials.

Other questions would be addressed in the study.

For example, will Gulf Coast refineries find it economical to produce and export gasoline that meets California's strict clean air laws? Can gasoline be moved more quickly and cheaper by pipeline than by marine tanker? And what is the likelihood that the owner of the Los Angeles-to-Phoenix pipeline would reverse that pipe's flow?

Earlier this month, George Frampton, a top environmental adviser to President Clinton, urged the EPA and the Department of Transportation to approve the Longhorn pipeline by next month.

Frampton said commitments made by the Longhorn pipeline's owner, including a commitment to not export MTBE-laden gasoline -- gasoline that includes a synthetic compound in an attempt to make gas burn cleaner -- ensured that activation of the already-built pipeline will not have significant environmental effects.

Longhorn spokesman Jackson Harrell, speaking from Dallas, said the pipeline could begin shipping fuel by the middle of next year.

"Gulf Coast gasoline has never had a significant pipeline through which it could get westward to west Texas," Harrell said. "It will relieve some of the pressure on California refineries from exporting so much supply to Arizona."

Whether the pipeline between Phoenix and Los Angeles would be reversed would depend on its owner, Kinder Morgan.

The Denver-based pipeline company told Lockyer's task force early this year it was unlikely to do so unless the Longhorn supplies are sufficient to meet Arizona's demand for gasoline and there is sufficient demand in California to guarantee reliable purchases between Phoenix and Los Angeles.

http://rd.yahoo.com/dailynews/knightridder/*http://www.contracostatimes.com/partners/nf/pipe_20000916.htm

-- Martin Thompson (mthom1927@aol.com), September 16, 2000