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Reuters, Published January 30 2014

Koch abandons plan for Bakken pipeline

HOUSTON - Koch Pipeline Co LP has abandoned plans to build a 250,000 barrels-per-day pipeline to move North Dakota Bakken crude to Illinois, a spokesman confirmed on Thursday.

"The project is no longer being pursued," spokesman Jake Reint said. He did not disclose why Koch canceled the project.

Last summer Koch had planned to launch a 45-day, non-binding open season to gauge shipper interest, to be followed by a binding open season if interest warranted. The company had not disclosed anything about the project beyond that announcement.

It is the second major Bakken pipeline project to be canceled. Lacking shipper interest prompted OKEOK Partners LP in November 2012 to shelve plans to build a 200,000 bpd pipeline to move Bakken oil to the U.S. crude futures hub in Cushing, Oklahoma.

Oil producers and shippers have instead relied increasingly on rail to move Bakken crude to markets, especially to refineries on the East and West coasts. Rail allows more flexibility to refiners seeking the best-priced crudes and shorter contracts, but has come under scrutiny because of accidents.

Koch's project would have bypassed Cushing for a different route to U.S. Gulf Coast refineries, possibly connecting to Energy Transfer Partners' 420,000 Eastern Gulf Crude Access Illinois-to-Louisiana pipeline.

The Energy Transfer Partners project involves converting a natural gas pipeline to crude, with start-up projected in 2015 or 2016.