Enterprise Products Partners will continue some intrastate delivery of Murphy Oil USA Inc.’s diesel fuel on one of Enterprise’s pipelines, which was supposed to end supplies to several Arkansas locations on July 1.
The diesel will be transported as a result of a confidential settlement between Murphy Oil and Enterprise that occurred after Murphy Oil filed a lawsuit asking a federal court to prohibit Enterprise Products Partners from ending the shipment of diesel and jet fuel via pipeline.
As a result of the agreement, the lawsuit has been dismissed, said Rick Rainey, spokesman for Enterprise.
“It allows us to proceed with the discontinuation of interstate delivery of diesel and jet fuels,” he said. “Specifically, with the Murphy case the two sides have agreed to a settlement and to continue deliveries on the 20-inch line that traditionally carried gasoline.”
Rainey said he could not provide more information about continuing intrastate delivery of diesel fuel for Murphy because the agreement was confidential.
Barry Jeffery, spokesman for Murphy Oil of El Dorado, said he could not comment on the settlement with Enterprise.
“The suit has been dismissed and the parties have resolved their dispute,” he said.
In June, Murphy Oil filed a civil suit against Enterprise Products Partners of Houston and its affiliate, Enterprise TE Products PipelineCo., saying the companies were in breach of a 2006 agreement that said Enterprise would provide interstate pipeline service for Murphy Oil’s gasoline and diesel products.
Enterprise said in May it would end diesel and jet fuel pipeline delivery to El Dorado, North Little Rock and Jonesboro beginning July 1. A 14-day restraining order issued June 20 delayed Enterprise’s plan.
Enterprise plans to reverse the flow of its pipeline and ship ethane from the Marcellus-Utica shale in the Northeast to the Gulf Coast.
The company said demand has declined in the Arkansas markets it was serving because more crude oil is being refined in the U.S. and because natural-gas production has increased in the Northeast.
Enterprise was transporting diesel and jet fuel along a 14-inch pipeline from Beaumont, Texas, to El Dorado. In El Dorado, the pipeline increases to 16 inches for shipments going to Jonesboro and North Little Rock. The 16-inch line continues to Ohio.
Rainey said Enterprise is still making final deliveries on the 16-inch pipeline. When those deliveries are completed the company will “purge” the pipeline.
The company plans to be transporting ethane south by January, Rainey said.
The pipeline will continue to ship some of Murphy Oil’s product in a parallel, 20-inch line that primarily transported gasoline and some diesel fuel.
Before the suit was filed, the diesel fuel went to Murphy Oil’s terminal in Sedgwick, which supplies fuel in northeast Arkansas.
Enterprise has already said it would continue shipment of diesel to North Little Rock and Jonesboro via a refinery in El Dorado instead of through suppliers in Texas. The refinery is operated by Lion Oil Co., which is owned by Delek U.S. Holdings Inc., which has its U.S. headquarters in Tennessee.
Some concern has been raised about the refinery’s ability to meet the market demand for diesel fuel.
Keith Johnson, spokesman for Delek U.S. Holdings, said the company is “watching the changes and the market and this decision by Enterprise and will try to evaluate this decision.”
The Federal Energy Regulatory Commission has already accepted Enterprise’s plans, stating it didn’t have jurisdiction over the changes.
The commission was asked by several Arkansas companies, including Murphy Oil, to intervene.
In the f iling, Murphy Oil said it was against the pipeline change because the move would violate the 2006 agreement between the companies and that Murphy Oil was dependent on Enterprise to provide service of refined products from the Gulf Coast to the Midwest on the 20-inch line.
Business, Pages 21 on 07/30/2013