Colonial Pipeline Co. is offering discounts to shippers willing to make a commitment of as much as 10 years on its main lines carrying refined product from Houston to North Carolina.
Open season, a time when a company accepts bids for future space on a line, began today and is expected to last until Oct. 28 for Lines 1 and 2, the company said today in a shipping bulletin. The company will also consider open-ended contracts beyond that, said Steve Baker, a company spokesman.
Colonial is offering the discount as an incentive to secure longer-term certainty and improve allocations along the two lines. A company allocates shipments when demand exceeds a line’s capacity.
“This is an opportunity to commit volumes, improve allocation and get a discount for the term of the contract,” Baker, who is based in Alpharetta, Georgia, said by phone. “Today, they’re paying the rate that everybody pays.”
Terms of the discount and ways to improve allocation will be discussed with shippers over the next 45 days, Baker said.
“We’ve been on allocation for a number of years now so this is a way to improve that for committed shippers,” he said.
Line 1, the company’s main gasoline line, has a capacity of about 1.5 million barrels a day. Line 2 can move more than 1 million barrels of distillate a day. Both originate in Houston and carry product to Greensboro in North Carolina.
The Colonial system includes 5,500 miles of pipelines originating in Houston and ending in Linden, New Jersey, on the New York harbor. The company says it transports approximately 100 million gallons of fuels a day.
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