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Closing Colonial’s Line 25 Could Have Major Impact

Virginia Petroleum, Convenience and Grocery Association explains the potential negative effects on the state.

Tags: Pipelines

October 31, 2017

​RICHMOND, Va. – In August, the Colonial Pipeline Company announced plans to discontinue service on Line 25, which delivers gasoline and ULSD to the Roanoke, Virginia, market from Colonial’s main pipelines at Mitchell Junction (Columbia, VA). The company says on its website that service will continue until approximately September 2018, at which point the line will cease to operate.

Colonial says that service on Line 25 will be discontinued due to concerns regarding the condition of the pipeline’s long-term viability. Since March 2017, the line has been running at reduced flow rates and will continue to do so until decommissioning is complete. Line 25 is approximately 90 miles in length. For the first seven months of this year January-July), the line transported approximately 7 million barrels of refined products, per Colonial.

The Virginia Petroleum, Convenience and Grocery Association (VPCGA) is expressing its concern that closing Line 25 will present significant issues for its members and customers in the southern and southwestern part of the state, as well as Tennessee, West Virginia and Ohio. Mike O’Connor, president of VPCGA, shared the following impact statement with NACS:

Should Line 25 close, VPCGA estimates that fuel marketers will have to pick up product from terminals in Greensboro, North Carolina, or Richmond, Virginia. Although the Plantation pipeline currently delivers product to Roanoke, the line is now near full capacity.

Closing Line 25 would also impact fuel prices at the pump. VPCGA says that it’s more economical to move petroleum products through the pipeline than transport via roadways. Depending on the ultimate destination of the product, the association anticipates that the added freight charges would be between 3 to 6 cents per gallon, and require extended delivery distances on about 170 additional tanker trips per day into the region. This decision would likely have the effect of transferring the increased costs onto distributors and their customers. VPCGA also stresses that existing customers in Richmond and Greensboro have priority, and marketers loading from those racks may experience supply disruptions.

In terms of economic impact, closing Line 25 will impact local property and business licenses and taxes, state withholding, and the ripple effect of lost business in the area as terminal employees lose their jobs. Environmental reviews and, if needed, remediation will take place at each site, which is a laborious and expensive process. Higher prices for gasoline and diesel because of higher freight charges will impact household budgets as well.

Latest Developments
On October 27, U.S. Reps. Bob Goodlatte (R-VA), Morgan Griffith (R-VA) and Tom Garrett (R-VA), wrote to Neil Chatterjee, chairman of the Federal Energy Regulatory Commission (FERC), requesting that the agency work on regulatory options and infrastructure upgrades that might alleviate the planned closure of Line 25.

“Given the potential negative effects of the pipeline [Line 25] closure on our constituents and the gasoline supply for the Roanoke region, we would like FERC to provide to our offices any federal regulatory options for ways to work with Colonial on infrastructure upgrades that might prevent or alleviate their planned closure,” the Virginia representatives wrote.

O’Connor says that this a positive development in an uphill effort. VPCGA is representing its members on Capitol Hill by meeting with Virginia Sens. Mark Warner and Tim Kaine and their staffs to brief them on the issue and ask for their assistance. 

The Colonial Pipeline Company is a privately held company, but it is regulated primarily by FERC, the Virginia State Corporation and other state of Virginia agencies. VPCGA is suggesting its members contact their members of Congress, local and state legislators to voice their concerns about the many negative impacts closing Line 25 would have on their business, employees and customers, as well as Southwest and Southside Virginia.