NEW YORK (Reuters) - A Pennsylvania judge on Thursday urged the state’s public utility commission to reject Buckeye Partners LP’s proposal to reverse the western portion of a 350-mile (560-km) product pipeline that extends from Philadelphia to Pittsburgh.
Pennsylvania Administrative Law Judge Eranda Vero’s action represented a setback for Buckeye and its efforts to reverse the Laurel Pipeline in the Pittsburgh region to move refined products eastward, which would offer Midwest refiners led by Marathon Petroleum greater access to western Pennsylvania.
The state’s Public Utility Commission has the final say on reversal, but the judge’s recommendation carries significant weight.
“While we are still reviewing the decision, and we appreciate the administrative law judge’s consideration of our proposal which will create important benefits for Pennsylvania consumers, we respectfully disagree with her conclusion,” Buckeye said in statement.
Philadelphia-area refiners such Philadelphia Energy Solutions and Delta Air Lines subsidiary Monroe Energy opposed the reversal, saying it would harm their business and lead to closures. They argued it would take away a key market and cause fuel price spikes in western Pennsylvania.
“We commend the judge’s well-reasoned decision. The only winners of a Laurel reversal would be Buckeye and out-of-state refineries,” a coalition of groups, including Philadelphia-area refiners, said in a statement.
Vero said Buckeye failed to prove that the pipeline was underutilized and that consumers would be uninjured, among other issues.
“Laurel has overstated the overall impact of the decrease on the use of the pipeline section in question,” the judge wrote.
The judge also rejected Buckeye’s argument that the company did not need state approval to reverse the line.
Midwest refiners such as Marathon and Husky Energy have invested billions of dollars in recent years to take advantage of cheaper Canadian crude. These refiners were hoping to extend their ability to deliver products deeper into Pennsylvania, opening the door for a full reversal all the way to Philadelphia.
Reporting by Jarrett Renshaw; Editing by Will Dunham