February 24, 2017 / 6:37 PM / 5 months ago

Snow, landowner, delay Utah pipeline repairs

3 Min Read

HOUSTON, Feb 24 (Reuters) - Refiners and pipeline shippers in the Salt Lake City area are facing new delays obtaining crude oil after a pipeline outage last week was followed by snow on Friday that made it difficult to deliver much-needed oil by truck.

Refiners such as Tesoro Corp and HollyFrontier have been using trucks to replenish oil supplies after Plains All American Pipeline took its Wahsatch pipeline down last week as a precaution after monitoring equipment detected an anomaly.

Last week, Plains said the line would be down for several days. On Tuesday, the pipeline operator sent a note to customers informing them construction and reactivation efforts would begin once it received final work authorizations.

The pipeline restart is being held up because a landowner will not allow Plains crews on a privately held ranch to make necessary repairs, three sources familiar with the situation said this week.

Representatives from Plains did not respond to repeated requests for comment.

The 16-inch Wahsatch pipeline can carry roughly 100,000 barrels per day of crude from locations near Evanston, Wyoming, to Salt Lake City refineries.

In the notice to shippers on Feb. 21, Plains said "coordination with landowners continues" and that it could complete construction in five to seven days once it receives final authorizations.

HollyFrontier's Woods Cross refinery is running at reduced rates of around 30,000 to 31,000 barrels per day, versus the high-30,000s, the company said during an earnings call this week.

Tesoro, which operates a 63,000 barrel-per-day refinery in Salt Lake City, resumed running on a reduced production schedule this week. The refinery was shut last week due to a combination of planned maintenance work and the pipeline shutdown.

Chevron operates a refinery in Salt Lake City, but it has not been impacted, the company said.

Chevron, Tesoro and HollyFrontier did not immediately respond to requests for comments on Friday.

The Utah Department of Transportation issued a road weather alert through Friday afternoon due to snow showers. The weather is making trucking operations around Salt Lake City difficult, two sources said.

Regular unleaded gas prices in Salt Lake City were averaging $2.31 a gallon on Friday, up from $2.243 a week ago, or about 3 percent, according to AAA. (Reporting by Liz Hampton and Erwin Seba in Houston; Editing by Dan Grebler)

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