A proposed plan by Houston-based Enterprise Products Partners to cease providing jet fuel by pipeline to Little Rock and Jonesboro has business and political leaders looking for supply alternatives and methods to halt the July 1 cutoff date.

Enterprise has filed a request with the Federal Energy Regulatory Commission to end the distribution of ultra-low sulfur diesel used by the trucking industry and commercial jet fuel.

Company officials say decline in product demand and the high cost to maintain the pipeline have made it necessary to close the “Enterprise TE Products” pipeline.

“In light of the continued decline in volumes nominated by shippers for movement on the Enterprise TE Products pipeline to the various destination points served by the pipeline, as well as the substantial capital expenditures that it faces in order to maintain certain services, Enterprise TE Products Pipeline Company LLC has determined that it is no longer commercially feasible to continue” the pipeline operation, Enterprise noted in its FERC filing.

In a recent filing with the U.S. Securities and Exchange Commission, Enterprise provided some financial detail on the pipeline operations.

“Revenues earned by our TE Products Pipeline from the transportation of refined products and NGLs decreased $36.5 million year-to-year primarily due to a 26 MBPD (thousand barrels per day) decrease in NGL volumes delivered to Northeast U.S. markets and a 44 MBPD decrease in refined products volumes delivered to Midwest U.S. markets,” Enterprise noted in the Form 10-K filed March 1.

In the first quarter of 2013, Enterprise reported that pipeline volumes in its refined products business were 545 MBPD, down from the 559 MPBD for the first quarter of 2012.

Closing the pipeline would force commercial and private operators at the Bill and Hillary Clinton National Airport (Little Rock) to truck fuel in from more distant terminals. The same problem would be faced by the U.S. Air Force base at Jacksonville. The Association of Oil Pipelines reports that trucking products for 300 miles could cost 20 to 30 cents a barrel compared with four cents for a barrel shipped on a pipeline, according to this report [1] from Reuters.

The office of Arkansas Attorney General Dustin McDaniel has appealed to FERC to reject or delay the Enterprise plan.

“The proposed cessation of transportation service for the identified fuels would have a significant, damaging effect on the markets in Arkansas that are currently served by Enterprise,” noted the filing from the AG’s office. “Changes in, or cessation of, the supply patterns for these fuels has a direct impact on the commerce, industry, and consumer welfare of Arkansans, interests that are represented by the AAG as of concern to the general public.”

A delay would allow more time to investigate the impact of closing the pipeline, according to the AG’s request.

“If the Tariff Filing is not rejected, the Commission should suspend the filing for the full seven months in order to investigate the basis for the claims made in support and any related claims,” noted the AG request.

Bob East, chairman of the Arkansas Aerospace Alliance, said closing the pipeline will boost costs for aviation interests in central Arkansas. The commercial airports in Fort Smith and Northwest Arkansas are not supplied by the Enterprise pipeline.

“The alliance is deeply concerned about the potential negative impact a jet fuel shortage could mean to business aviation companies and air terminal operators in the state,” East said in a statement. “Supply constraints could also force Arkansas end-users like the Clinton National Airport and Little Rock Air Force Base to see a dramatic increase in costs. Moving forward, we will continue to watch the issue as it develops and provide support for our aviation community.”

Lane Kidd, president of the Arkansas Trucking Association, does not anticipate a problem for the trucking industry if the pipeline is closed.

“The Enterprise Corporation decision will affect the local fuel supply market here but won’t have a dramatic impact on the overall trucking industry simply because the industry is not dependent on fueling right here in central Arkansas. The nature of our business is interstate commerce with trucks refueling across the country and companies will adjust accordingly, fueling in places other than central Arkansas if in fact, the prices here escalate dramatically due to the Enterprise decision,” Kidd explained in a statement.

Enterprise Products Partners is one of the largest publicly traded partnerships and one of the largest North American providers of energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. The partnership’s assets include approximately 50,000 miles of onshore and offshore pipelines; 200 million barrels of storage capacity for NGLs, petrochemicals, refined products and crude oil; and 14 billion cubic feet of natural gas storage capacity.

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The City Wire Staff

The City Wire Staff

The City Wire, a content partner with Talk Business & Politics, is a media company that covers business, politics and culture in the Fort Smith and Northwest Arkansas regions of the state. Read online at TheCityWire.com or follow on Twitter: @TheCityWire.