Colonial Pipeline plans Texas export dock for gasoline, distillates

By Kristen Hays

HOUSTON, April 29 (Reuters) - Colonial Pipeline Co said on Friday it would build an export dock in southeast Texas, marking the largest U.S (Other OTC: UBGXF - news) . refined product pipeline system's first foray into infrastructure that will connect shippers to international markets.

The company said that it will build a new dock and storage tanks in Port Arthur, Texas - home to three major refineries - to help boost gasoline and diesel exports. Colonial expects to finish the project, which will accommodate Panamax (LSE: 0QF1.L - news) -sized vessels, by the spring of 2017.

Colonial has a barge dock at its storage facilities in Baton Rouge, Louisiana, but the Port Arthur project will be its first able to handle export vessels.

"There will be another way for our customers to compete in additional markets via Colonial," Chief Executive Tim Felt said in a statement.

Nearly a year ago, Colonial took its first step toward the project when the company bought Royal Dutch Shell (Xetra: A0ET6Q - news) 's 3.2 million-barrel interest in the 4 million-barrel Port Arthur Products Station, or PAPS, refined products storage terminal. Valero Energy Corp owns the remaining interest.

The terminal serves Motiva Enterprises' 603,000 barrels per day (bpd) Port Arthur refinery, the country's largest, as well as Valero's nearby 335,000 bpd plant and Total SA (Paris: FR0000120271 - news) 's 225,500 bpd refinery.

The dock and new tanks will give the Port Arthur refiners another avenue to export gasoline and distillates. Motiva's plant, for example, can export up to 100,000 bpd, but could use Colonial's terminal to export more, traders said.

At least initially, however, other refiners west of Port Arthur will not have access via Colonial to the dock.

Gasoline and distillates stored at PAPS can flow into Colonial's 5,500-mile (8,851 km) system that links the U.S. Gulf Coast to the Northeast. Fuels cannot flow from Colonial to PAPS.

Company spokesman Steve Baker declined to say whether Colonial was planning further work to open flows from the pipeline to the terminal. That would allow refiners in Houston, Texas City and Pasadena to ship barrels to Port Arthur for export as well. (Reporting by Kristen Hays, editing by G Crosse)