Colonial Pipeline Company's recent proposed changes to RVP specifications would impact shipping logistics this fall, with additional changes - including adjustments to conventional gasoline shipments - that could take effect even sooner, around early March.

The pipeline, which transports refined products originating in Houston and runs through the southern and eastern U.S. before terminating in Linden, N.J., has proposed multiple adjustments and has been in the process of seeking feedback from shippers since changes were first announced in late December.

Beginning in this fall, Colonial proposed that only one RVP specification would be allowed per product, per cycle. By contrast, Colonial currently offers several overlapping cycles throughout the year, during which more than one RVP is permitted.

The RVPs available to be shipped would also be adjusted, with 15-lb. RVP products no longer being transported on the system via fungible deliveries.

Some changes would begin even sooner than fall. One such change would be adjusted service for regular conventional gasoline (M grade) and premium conventional gasoline (V grade).

Colonial noted that volumes for these fully hydrocarbon products have decreased as markets have adapted to the Renewable Fuels Standard. The company's data indicates that 15 million bbl of M-grade (regular gasoline) and 3 million bbl of V-grade (premium gasoline) were lifted in 2023, compared to 334 million bbl of CBOB lifted in 2023.

In response, Colonial has proposed allowing only segregated batches of M- and V- grade to be delivered upstream of Meridian, Miss. Downstream of Meridian, and including Meridian itself, fungible deliveries would continue to be allowed in all current delivery locations. According to Colonial's informational guidelines, segregated batches of specialty products require dedicated assets and special handling, are subject to approval by Colonial, may require use of buffer material and may be subject to an additional fee, when compared to fungible batches.

Among other changes, RVP for gasoline will have to meet neat and blended testing requirements at origin. At delivery, product specifications, including RVP, would have to meet applicable laws and regulations at the time and place of delivery.

These M- and V- grade changes, as well as the adjustments to testing requirements, were originally proposed to take place 30 days after Colonial's tariff filing, which is expected in late January. In a Frequently Asked Questions document released on Monday, Colonial noted that it has received feedback from shippers that more time would be beneficial, and that Colonial is considering this.

In that same FAQ document, Colonial addressed the question of how shippers will know what RVP to expect at their destination. Colonial noted that the product delivered will be compliant with applicable laws and regulations at the time and place of delivery. The company added that it is considering providing a destination RVP calendar in addition to the origin RVP calendar that is currently provided.

Additional FAQs focused on barrels which may not be delivering to an end terminal, but which may be intended for a different destination or to be shipped on a connecting carrier with different RVP requirements. Colonial noted that shippers will need to independently assess whether the product may be transported to other locations and/or take connecting carriers' specifications into account. The company said it will strive to coordinate with connecting carriers to avoid any confusion or interruption of service following these changes.

Colonial said that these changes are being proposed in an effort to increase capacity, enhance operations, improve lifting schedule performance and align with common industry practices.

In a statement, Colonial said it "is planning to make changes to certain tariff provisions governing gasoline product specifications in an effort to increase capacity for shippers as well as streamline and enhance operational and maintenance opportunities on our system. It is not uncommon for pipelines to update tariff provisions to better align with operational considerations, shipper trends, and tariff provisions of other pipelines in the industry. We are communicating these changes to our shipper community and receiving their feedback prior to any FERC filing."

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Rachel Stroud-Goodrich, rstroud-goodrich@opisnet.com; Editing by Cory Wilchek, cwilchek@opisnet.com and Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

January 14, 2025 16:36 ET (21:36 GMT)

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