Colonial Pipeline responds to protests over proposed gasoline shipment changes

By Shariq Khan

NEW YORK (Reuters) - The Colonial Pipeline on Monday asked the U.S. Federal Energy Regulatory Commission to reject shippers' protests over proposed changes to how it moves gasoline, arguing that the modifications are in line with industry practices and within Colonial's authority.

Oil majors Exxon Mobil, Chevron Corp and BP Plc, among others, filed protest notices with FERC last week after Colonial sought the regulator's approval to stop shipping different grades of gasoline at the same time and to reduce the total number of grades it moves on the pipeline.

The companies, which ship gasoline from the U.S. Gulf Coast refining hub to consumer markets along the country's East Coast on the 5,500-mile (8,851 km) Colonial system, cited potential harm to shippers and consumers in order to boost Colonial profits.

Colonial rejected the arguments, saying they were driven by the protesting shippers' focus on their own economics. It said the proposed changes will allow it to ship up to 10,000 barrels a day more gasoline on its main gasoline pipeline, which almost always runs full, benefiting both shippers and consumers.

It also said shipping fewer grades and ending overlapping shipments will reduce slowdowns and shutdowns on its pipeline segments, reducing stress on the system and the risk of mechanical failures.

"The changes that Colonial seeks to implement through the Filing, which are squarely within its legal authority to make and consistent with industry practice, will enhance pipeline integrity and reliability and create more capacity for shippers," Colonial said in its filing.

The pipeline operator agreed with the shippers' argument that the changes allow it to increase its own fuel-blending operations. However, it said that FERC has made it clear that blending is not under the regulator's jurisdiction.

(Reporting by Shariq Khan in New York; Editing by Nia Williams)