Statement from Kinder Morgan regarding Palmetto Pipeline - WTOC-TV: Savannah, Beaufort, SC, News, Weather & Sports

Statement from Kinder Morgan regarding Palmetto Pipeline

Regarding direct benefits to Georgia, Kinder Morgan estimates that 50-60 percent of the pipeline capacity will transport refined products to consumers in the Augusta and Savannah areas. And the close proximity of Jacksonville, Florida (the third terminal market for Palmetto Pipeline) to coastal Georgia communities suggests that still additional product shipped through the Palmetto Pipeline will have an impact on markets in South Georgia such that as much as 80-90 percent of the product transported through the Palmetto Pipeline will ultimately enter Georgia markets. Palmetto's shippers will determine the ultimate destinations for products transported on the Palmetto Pipeline, however.

The Palmetto Pipeline will provide relief to pipeline-constrained northern Georgia, provide the first direct pipeline service into the Savannah market, and provide a much-needed additional source of supply to coastal Georgia through a destination point on the outskirts of Jacksonville. Pipelines are the safest mode of transportation to deliver products such as gasoline, jet fuel and diesel, the products that the Palmetto Pipeline is designed to transport. The increased volumes that the Palmetto Pipeline will deliver to terminal markets will foster competition with sources for petroleum products and serve to decrease prices for these products throughout the region. Beyond meeting this critical need, the pipeline will ensure that disruptive events do not interfere with the steady delivery of refined petroleum products to these markets. Georgia citizens have seen the impact that hurricanes in the Gulf of Mexico or along the Atlantic Coast, for instance, can have on the transportation of petroleum products through truck, rail or marine transport. The Palmetto Pipeline would provide a stable source of delivery for petroleum products uninterrupted by these events.

Georgia's need for the Palmetto Pipeline has been confirmed by the commitments Palmetto received to transport refined products through this pipeline. Before embarking on this project, Palmetto conducted an extended open season for its common carrier interstate pipeline, which allowed all interested parties the opportunity to contract for transportation service through the pipeline. After an 88-day period, held from August 4, 2014 to October 30, 2014, Palmetto received commitments either to ship, or pay for, a specified volume of products through the pipeline over a defined period. Shippers executed transportation services agreements and thereby committed to use the shipping capacity the pipeline would create. We are under confidentiality agreements with these customers, and cannot share more than this at this time. In fact, under FERC regulations, a new pipeline is directed to file their tariff, including the rate schedule, not more than 60 days but at least 30 days before the commencement of service.

It is important to note that none of the existing terminals in North Augusta, Savannah and Jacksonville are export terminals. In other words, the Palmetto Pipeline has been designed to provide transportation service from the Gulf Coast refineries to these market centers and no further. Particularly in light of the fact that the Gulf Coast refineries where products transported through the Palmetto Pipeline will originate have marine export capabilities, it would be uneconomic to transport product delivered to North Augusta, Savannah, and Jacksonville for export outside of the United States. To the extent any product is to be exported, it could be done more efficiently from the originating Gulf Coast refineries.

Palmetto is a wholly owned subsidiary of Kinder Morgan, Inc., a publicly traded entity on the New York Stock exchange and the largest energy infrastructure company in North America. Kinder Morgan is no stranger to Georgia. It is particularly attuned to the energy infrastructure needs of markets within the State. Kinder Morgan employs approximately 350 people in Georgia with a payroll of about $26 million, and Kinder Morgan pays approximately $16 million annually in state and local taxes. It operates more than 3,000 miles of pipelines and five terminals in Georgia. Its engineering and control centers for the existing Plantation Pipe Line and the proposed Palmetto project are located in Alpharetta, Georgia. The Palmetto Pipeline will enhance these strong Georgia connections even further, generating over 1200 temporary and permanent jobs and more than $14 million in state and local tax revenues once the project is complete.

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