Story by Reuters

Kinder Morgan Inc might export condensate as part of a resurrected plan to move Texas crude to Southern California via a converted natural gas pipeline, energy intelligence firm Genscape Inc reported in a blog post on Thursday.

The pipeline and storage company is in talks with potential shippers for its Freedom Pipeline project, Genscape said, citing Tom Dobson, project director of Kinder Morgan Pipelines.

It would be the first major crude pipeline from Texas into California, giving the Golden State access to cheaper inland crudes and cut dependence on more costly imports.

“We have always said that we will continue to look at this project and will build it if we get sufficient customer interest,” Kinder spokesman Richard Wheatley said in an email on Thursday. “This was discussion only, not a formal project announcement.”

The company shelved the $2 billion project in mid-2013 because of lack of interest, but revived it with an added proposal to export processed condensate from third-party California docks, Dobson told Genscape at an energy conference in Los Angeles on Wednesday.

The line, as discussed, would move 100,000 bpd of condensate and 200,000 bpd of blended crude from far West Texas to Emido, California, near Los Angeles-area refineries, Dobson said.

At least three companies – not including Kinder Morgan – are known to have received U.S. government approvals since September 2013 to export condensate, a very light form of crude. The rulings said condensate processed enough to qualify as a refined product could be exported without violating the decades-old U.S. crude export ban.

Light processing provided by stabilizers, which removes natural gas liquids, and other more sophisticated distillation units meet that threshold.

A fourth company, BHP Billiton Ltd, said it is moving forward with condensate exports without waiting for a ruling because the company is confident its minimal processing is satisfactory.

Wheatley had no immediate comment on whether Kinder Morgan is seeking a ruling.

Kinder Morgan’s plan, if approved, would include a new 150,000 bpd atmospheric topping unit that could produce processed condensate, as well as gasoil and residual fuel to blend with crude, Dobson said.

Export-bound condensate could then be shipped in batches separate from other crude blended to satisfy the requirements of California refineries built to run heavier oil, Dobson said.

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