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This file photo shows pumping units at work in Kern County.

Shell wants to sell a pipeline connecting Kern County oilfields with Bay Area refineries, a move that probably wouldn't affect consumers in the near term but which could lead to changes for local oil producers.

Together with Shell's ongoing efforts to sell the 160,000-barrel-per-day Martinez refinery it owns near San Francisco, the move is another sign the company wants to exit California's oil industry. It sold its the Big West refinery on Rosedale Highway in 2005, the same year it negotiated to sell an oil pipeline from Ventura to Los Angeles County.

Shell's last remaining California pipeline, known as the San Pablo Bay Pipeline, is one of three connecting western Kern to Bay Area refineries. Lately it has carried about 140,000 barrels of oil per day some 200 miles underground roughly along Interstate 5.

Any sale of the asset would include gathering lines extending south from Belridge to Taft and east to Bakersfield, plus connection terminals and tank farms, including one near Meadows Field airport.

Shell had to replace 12 miles of the pipeline in northern California after ruptures were detected in 2015 and 2016.

Three companies viewed within the industry as likely bidders — Denver-based Crimson Pipeline LP, Houston-based Marathon Oil and Parsippany, N.J.-based PBF Energy — did not respond to requests for comment.

Local impacts

As a common-carrier pipeline, the asset may be used by any qualified oil producer willing to pay a charge set by the California Public Utilities Commission. Any buyer seeking to raise the fee level would first have to get the agency's approval, making it unlikely consumers would see a sudden jump in gas prices following a sale.

Also, because the current pipeline tariff amounts to only a few cents to move a gallon of oil hundreds of miles, any potential fee increase "is not a huge cost," said the California Energy Commission's senior fuel specialist, Gordon Schremp.

Still, Shell's efforts to sell the conduit may cause some unease in local oilfields, if only because they rely on the system to bring their product to market.

"There's three things that oil companies like," said Les Clark, owner of the Taft-based Independent Oil Producers Alliance, which represents small oil producers in regulatory affairs. "It's the pipelines and tanks and the refiners. That's where we send our oil. … All of those lead to the cash register."

Temecula oil marketer Bob Devine said he doesn't foresee any major changes in the event Shell sells the pipeline.

"Any crude that's moving now is likely going to continue to move in the same system in the same way it's moving now," he said. "Change of ownership would not change that."

If anything, a new owner might try to increase flow through the pipeline by adding truck terminals at local tank farms or extending Kern gathering lines, Devine said, adding that the San Pablo line is not currently running at capacity.

Shell's position

During the last two years, Shell has sold off a number of large international assets following its $54 billion acquisition of British-owned BG Group in 2016. It was unclear whether Shell's decision to sell its California pipeline system stemmed from the same effort to pay down debt to help cover the acquisition.

In response to a request by The Californian, Shell sent the following statement by email:

"Shell Pipeline Company LP has determined to market its California crude pipeline systems. This decision follows an extensive and thorough review and is a result of continued evaluation of its portfolio to optimize assets based on many different factors, including long term integrated value and future support to our longer-term objectives.

"During this marketing process, we will continue to operate the pipelines with the core values of commitment to people, safety and environment.”

John Cox can be reached at 661-395-7404. Follow him on Twitter: @TheThirdGraf.

(4) comments

mrdwm1

It's not just a pipeline. Shell, like numerous other businesses that were prominent in the building of California, decided that it was just no longer worth it to deal with the Green Weenies and brain-dead radicals who now dominate the California political culture.

byebyeCA

I worked in the oilfields of Kern for 33 years and saw almost every major company exit CA. When I left Chevron was the last hold out. Thank you Kern and oil companies for a wealthy living, and yes upon retiring I have also exited CA.

Citizen Kane

So we made a deal with UNION ...on the pipeline. And that whole ocean of oil under our feet. D. Plainview

Churchillis1

Yet another business smart enough to want out of California....

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