Sinclair, Holly to build fuel pipeline

Holly Corp., a refinery and fuel-terminal operator in the Western U.S., said Monday it has agreed to join closely held Sinclair Transportation Co. in building an oil-products pipeline from Salt Lake City to Las Vegas.

The pipeline and associated terminals are expected to cost $300 million, Dallas-based Holly said in a statement. Holly Energy Partners LP, a limited partnership in which Holly has a 45 percent interest and is general partner, will operate the pipeline.

The project, expected to be completed in late 2008, will provide an alternate source of gasoline and other refined oil products to Las Vegas, which currently relies on Southern California for its fuel, Holly Chief Executive Officer Matthew Clifton said in the statement.

The project includes two terminals, in Cedar City and North Las Vegas.

"Las Vegas is one of the fastest-growing regions in the United States," said Ann Kohler, an analyst at Caris & Co. in New York who rates Holly shares a buy and owns none. "They are looking to put product in a product-short market."

The 12-inch pipeline will have an initial capacity of 62,000 barrels per day, expandable to 120,000 barrels.

Holly Energy Partners will have an option to acquire Holly's 75 percent stake in the project after it's completed, according to the statement.

Holly Corp. operates a refinery in Woods Cross.

Shares of Holly rose $1.48 to $79.30 in New York Stock Exchange composite trading Monday after touching a record $79.66 earlier in the session. The stock has more than tripled in value over the past two years.