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(Adds year pipe may be operational in sixth paragraph.)

(Bloomberg) — Kinder Morgan Inc., the world’s largest pipeline company by market value, is proposing a link that would give the ultra light oil from Texas fields a second path out of the country.
The Houston-based company is marketing a pipeline that would be capable of carrying 200,000 barrels a day of oil and 100,000 of ultra light crude known as condensate to central California from Texas, Tom Martin, president of Kinder Morgan’s gas pipelines, said in a presentation on Wednesday. From there the condensate could move to Asia, where petrochemical plants are boosting demand for lighter oil.
Condensate has emerged as one of the few exceptions to a four-decade ban that keeps most crude from leaving the country. Federal regulators have been issuing rulings since last year allowing companies to send the processed oil abroad from the Gulf Coast.
The proposal is a resurrection of Kinder’s previous plan to carry oil west from Wink, Texas, near Odessa in the Permian Basin. That project failed to attract interest because California’s refineries are designed to run heavier crudes such as Alaska North Slope.
“What we’re looking at now is adding facilities in the Wink area that would create an ANS-type quality crude to batch out to the West Coast as well as condensate for potential export purposes,” Martin said. “And it seems to be getting more interest from the refiners out west.”

Converting Pipelines

The bulk of Kinder’s Freedom pipeline would involve converting existing natural gas lines into pipes that can handle oil. The project may require some new lines that extend the company’s network in California and Texas and the construction of tanks at receipt and delivery points. The system could be operational by 2019, according to Martin’s presentation on Wednesday.
Kinder gained the “support” of California the first time the pipeline was proposed, “which was a bit surprising but well-received,” Martin said.
The U.S. Commerce Department’s Bureau of Industry and Security issued guidelines last month establishing that condensate can be exported if it’s run through a distillation tower, which boils off volatile gases. The rules may boost crude supplies ready to be sold overseas to 1 million barrels a day by the end of 2015, according to Citigroup Inc.
As much as 1.5 million barrels of U.S. oil a day would be sent abroad should U.S. policy makers decide to do away with the ban on exports, Energy Information Administration chief Adam Sieminski said in December. The country was producing 9.21 million barrels a day last week, the most in at least three decades, EIA data show.
To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Dan Murtaugh in Houston at dmurtaugh@bloomberg.net To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Richard Stubbe, Margot Habiby