Now What? Westshore Pipeline Closure Brings Many Questions for Petroleum

In April 2016, Westshore Pipeline announced the permanent closure of more than 100 miles of pipe in Northern Illinois and Wisconsin. The abrupt closure occurred after inspectors found “unique conditions that require additional inspections and analysis”, and this was after Westshore already invested in a significant amount of pipe replacement.

With the northern most point of the closure just minutes from the IGen office, our staff has had a unique perspective about its impact and follows the pipeline updates. This situation highlights many questions and challenges for the industry including how do we address an aging infrastructure, what alternatives are most efficient for petroleum transport, and how do we balance economics needs with environmental concerns.

Pipeline transport continues to be the most efficient and cost-effective means of petroleum transport in the United States. But like roads, bridges and railways, the pipeline system is aging. The closed section of Westshore Pipeline was installed more than 50 years ago and has undergone maintenance throughout its lifetime. If an organization decides to repair or replace aging lines, it is now under regulatory standards that are drastically different than when the pipeline was first installed. In addition, pipelines that were once laid in non-populated areas now may be part of residential districts as area communities continue to grow.

Currently, no new investors have expressed interest in taking over the closed pipeline, and the State of Wisconsin has not announced plans on the disposal or removal of the infrastructure. The State has relaxed several regulations to help fuel suppliers adjust to alternative transportation means. Most notably, tanker loads can haul at a heavier weight and their drivers can spend more time behind the wheel.

Tanker traffic has increased to help maintain supply levels throughout Wisconsin. In addition, barge traffic has increased into the Port of Green Bay. According to an article from S&P Global Platts, the Green Bay port now handles inbound barges of diesel and gasoline and has seen a reduction in petroleum exports.

Companies are adjusting to alternative transportation routes, which means different transactions and reporting needs. Our staff has been assisting clients as they navigate new form needs to ensure accurate documentation and tax reporting. We will continue to monitor the Westshore Pipeline situation and keep you informed on any updates.

Kurt Pigeon is the director of Forms and Electronic Filing development at IGen Fuels, LLC. (IGen). IGen develops software solutions geared toward motor fuel taxation and petroleum services.

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