US oil major ExxonMobil has lodged a formal objection to Colonial Pipeline’s proposed amendments to its fuel shipping terms.
The oil giant’s filing with the Federal Energy Regulatory Commission (FERC) warns of potential adverse effects on shippers and consumers.
Go deeper with GlobalData
Colonial Pipeline, operator of a crucial 5,500-mile (8,851km) fuel artery from the US Gulf Coast to the East Coast, has sought FERC approval to alter its gasoline shipping process.
The proposed changes include ceasing simultaneous shipments of different gasoline grades and reduction of the variety of grades transported.
Colonial Pipeline contends that the overhaul will enable more efficient fuel transportation by streamlining operations and reducing delays, benefitting shippers, the public and the pipeline itself, according to a company spokesperson.
Despite Colonial’s assurances, several shippers have expressed concerns, with some preparing to challenge the proposals, as reported by Reuters.
They argue that the changes would severely hamper the gasoline supply chain’s efficiency and negatively impact their fuel supply economics.
ExxonMobil’s filing specifically criticises the proposed termination of certain gasoline grades and the potential cost increases due to new gasoline specifications for pipeline entry.
Furthermore, ExxonMobil contends that while shippers are restricted to supplying higher-cost gasoline grades, Colonial Pipeline seeks permission to blend and supply lower-cost grades at destination markets. “Only Colonial benefits from this proposal,” ExxonMobil stated.
A Colonial spokesperson stated that the changes would boost pipeline capacity, gasoline supply and system efficiency while reducing operational stress.
Colonial added: “If minor fluctuations occur as other parties in the supply chain seek to protect their margins, we would expect such impacts to be limited to a small number of markets for a short part of the year.”
Colonial Pipeline plans to submit a formal response to ExxonMobil’s protest with the FERC.
