Kinder Morgan authorizes renewable diesel hub in Southern California

Source: By Jordan Blum, S&P Global • Posted: Tuesday, February 8, 2022

Kinder Morgan said Feb. 7 it will build a renewable diesel hub in Southern California capable of moving 20,000 b/d with room to grow now that it has received sufficient contractual commitments.

The gas and refined products pipeline operator said the hub will be the first of its kind in the nation to transport batches of renewable diesel by pipeline. The project is designed to keep the diesel separate from other products during transport so customers do not lose access to the valuable California renewable tax credits, including the Low Carbon Fuel Standard (LCFS) credits.

Kinder Morgan also is developing a Northern California renewable diesel hub, and last year announced a partnership with Neste to convert existing facilities in Louisiana to store renewable diesel and renewable feedstocks.

The California projects will initially cost about $50 million and should enter service in early 2023, Kinder Morgan said. Multiple refiners, including Chevron and Phillips 66, are converting units at their California facilities to produce more renewable diesel fuel.

“We are pleased to be constructing these hub projects to expand our renewable diesel handling capabilities,” said Dax Sanders, president of Kinder Morgan’s products pipelines, in a statement. “As refineries are converting to renewable diesel, we believe this is an attractive opportunity to pivot to the energy fuels of the future in a manner that is consistent with our corporate goals and return criteria.”

Once built, Kinder Morgan said the Southern California renewable diesel hub will allow customers to aggregate renewable diesel batches (R99) in the Los Angeles area and move them on its Santa Fe Pacific Partners (SFPP) products pipeline to high-demand markets in Colton and Mission Valley, California.

Kinder Morgan said the buildout of the Southern California hub consists of three components. At the Carson terminal in the Port of Los Angeles, Kinder Morgan will create renewable storage capacity with connectivity to both the SFPP pipeline system and the Carson terminal truck rack.

At the Colton terminal in the inland Empire region east of Los Angeles, modifications will create a new dedicated renewable diesel terminal that will receive deliveries via the existing, 16-inch SFPP products pipeline segment to Colton. The terminal is designed to allow customers to blend their renewable diesel with biodiesel and CARB diesel to desired blends at the truck rack. The terminal will be able to accommodate 15,000 b/d with easy expansion potential to 20,000 b/d, Kinder Morgan said.

Some storage and truck rack capacity at Kinder Morgan’s Mission Valley terminal by San Diego will be repurposed for up to 5,000 b/d of renewable diesel volumes.

The announcement is the latest effort for Kinder Morgan to invest in renewable fuels.

Last year, Kinder Morgan bought Indianapolis-based Kinetrex Energy for $310 million, which included two domestic LNG production and fueling facilities, a 50% interest in a landfill renewable natural gas facility and three more RNG facilities.

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