Kinder Morgan Announces Southern California Renewable Diesel Hub Project

Member Updates , Port Bureau News ,

Kinder Morgan, Inc. (“KMI”) announced the receipt of the necessary commercial commitments to move forward with the permitting and construction of a renewable diesel hub in Southern California. Once constructed, the Southern California renewable diesel hub will enable customers to aggregate renewable diesel batches (R99) in the Los Angeles area and move them on SFPP, L.P.’s pipeline system to the high demand markets in Colton (inland Empire) and Mission Valley (San Diego), California, creating up to 20,000 barrels per day (“bpd”) of blended diesel throughput capacity at its truck racks with the ability to expand in the future. This Southern California renewable diesel hub, and the previously announced Northern California renewable diesel hub, collectively represent an investment by KMI of over $50 million in the distribution of renewable fuels in California, just over half of which was contemplated in the 2022 budget.

“We are pleased to be constructing these hub projects to expand our renewable diesel handling capabilities,” said KMI’s president of Products Pipelines Dax Sanders. “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.” Both projects are supported by long-term customer contracts and are expected to be placed in service in the first quarter of 2023. Capacity is limited and available on a first-come, first-serve basis.

Upon completion, the Southern California hub will be the first of its kind in the United States to transport batches of renewable diesel by pipeline with no resulting loss of product to transmix – a process designed to enable customers to avoid the loss of the valuable California renewable tax credits, including the Low Carbon Fuel Standard (“LCFS”) credits. The buildout of the Southern California hub consists of three components. At the Carson Terminal in the Port of Los Angeles, KMI is creating community renewable storage capacity with connectivity to both the SFPP pipeline system and the Carson Terminal truck rack. At the Colton Terminal, modifications will create a new dedicated renewable diesel terminal. The renewable diesel will be delivered by the existing 16-inch SFPP pipeline segment from Watson to Colton. The terminal, designed to allow customers to blend their renewable diesel with biodiesel and CARB diesel to desired blends at the truck rack, is expected to accommodate up to 15,000 bpd of blended diesel throughput with expandability up to 20,000 bpd. Lastly, certain storage and truck rack capacity at KMI’s Mission Valley Terminal will be transitioned to enable up to 5,000 bpd of renewable diesel throughput.