Pennsylvania utilities commission sets hearing for Laurel Pipe Line expansion

The Pennsylvania Public Utilities Commission (PaPUC) has ordered a hearing into the expansion of the Laurel Pipe Line further into east into the state, overruling the preliminary objections by pipeline, according to an April 21 filing on their website.

The order puts the matter in the hands of the state rather than the Federal Energy Regulatory Commission (FERC), allowing US Atlantic Coast refiners, retailers and terminal operators to move forward in Pennsylvania with their effort to stop expansion of the pipeline, which is owned by Buckeye Partners.

Buckeye Partners, operator of the Laurel Pipe Line, is looking to increase the eastern flow of refined products from Midwest refiners into the US Atlantic Coast, hoping for a repeat of the 2019 decision which allowed it to reverse the flow of part of the pipeline.

Buckeye's rationale is that increased Midwestern flows will increase competition and lower prices for Pennsylvania consumers, and give Midwest refiners access to the key oil pricing hub of the New York Harbor.

This is disputed by Monroe Energy, PBF Energy, Lucknow-Highspire Terminals and retail operator Sheetz Inc.

Monroe Energy, owner of the 190,000 b/d Trainer, Pennsylvania, refinery, makes gasoline that is compatible with the needs of consumers in Western Pennsylvania, using the Laurel Pipe Line to transport the products to these markets.

Fears are that the Midwest refiners will use the increased access to the USAC when the arb works for them, leaving open the possibility of some refined product shortages if there is a need further west along the pipeline.

The Laurel Pipe Line carries gasoline, diesel, and jet from Eagle Point, New Jersey, outside of Philadelphia, west across Pennsylvania to near Pittsburgh. Parent Buckeye operates refined products pipelines in the Midwest, connecting to refineries in Detroit, Ohio, and the Chicago-area which are looking to increase market share by moving their product east into the US Atlantic Coast.

Pennsylvania pipeline jurisdiction

The April 21 order was issued by PaPUC Administrative Law Judge Eranda Vero, who was also the judge involved in the initial Laurel Pipe Line reversal decision back in 2019.

Vero at that time initially had ruled against the pipeline reversal, denying the pipeline's application to change direction of part of the pipeline from east-to-west to bidirectional, only to write a recommended decision stipulated as part of the 2019 settlement.

The 2019 settlement resolved both PaPUC and FERC proceedings and permitted Buckeye to begin shipping refined products from Coraopolis, Pennsylvania, near Pittsburgh, east to Eldorado, Pennsylvania, under certain conditions, with guaranteed availability of 120,000 b/d of east-to-west capacity through 2026.

It also gave Buckeye the ability change its Laurel Pipe Line service in the future. Buckeye on Dec. 20, 2024, filed with FERC requesting a declaratory order asking that "Buckeye's planned implementation of the next phase—Phase 3—of its Michigan/Ohio Pipeline Expansion Project (referred to herein as the "Broadway" project) is consistent with Commission practice as to the interstate rates and terms of service for shippers utilizing the Phase 3 capacity and with the settlement approved by the Commission on September 26, 2019..." citing the terms under which the two earlier phases of the Broadway project were implemented.

Buckeye said it is looking to bring Phase 3 capacity into interstate transportation service after filing its tariff with 30-day notice, with the expectation that a decision will be made by July 31, 2025.

Buckeye wants to increase incremental capacity on the almost 400-mile refined product Laurel Pipe Line by 80,000 b/d from Michigan, Ohio, and western Pennsylvania to delivery points in eastern Pennsylvania and Upstate New York.

Buckeye has disputed whether or not a PUC decision to proceed is necessary. In its Feb. 5 filing with FERC, Buckeye said "the Phase 3 project is in no way contrary to rules and practices of the PaPUC and does not require its approval to proceed."

However, on Feb. 10, the PaPUC filed with FERC to hold Buckeye's petition "in abeyance until the conclusion of a concurrent and related proceeding pending before the PA PUC," assigning in March ALJ Vero to the case.

No date has been released for the hearing.