Pipe­lines planned amid high oil out­put

Houston Chronicle - - BUSINESS - By Jor­dan Blum and Rye Druzin

With a record amount of crude flow­ing from the na­tion’s shale fields, pipe­line com­pa­nies are con­tin­u­ing their wave of in­vest­ments to move oil from those plays to re­fin­ing and ex­port hubs along the Texas Gulf Coast.

The Hous­ton re­finer Phillips 66 said Fri­day that it is plan­ning two oil pipe­line sys­tems that would stretch from North Dakota and Ok­la­homa to the Texas Gulf Coast. Also, two pipe­line and stor­age com­pa­nies are ex­plor­ing build­ing a crude and con­den­sate pipe­line from Cush­ing, Okla., to Hous­ton.

Phillips 66 said its pro­posed Lib­erty Pipe­line would stretch from the Bakken For­ma­tion and the Rock­ies to Cor­pus Christi, pre­sum­ably to take oil from North Dakota, Wy­oming and Mon­tana to re­fin­ing and ex­port hubs along the Texas Gulf Coast.

The project, which would ship 350,000 bar­rels of a crude a day, is ten­ta­tively slated for com­ple­tion by the end of 2020. It would be built in a part­ner­ship with Wy-

om­ing-based Bridger Pipe­line.

Like­wise, Phillips 66 has sched­uled its planned Red Oak Pipe­line for com­ple­tion in late 2020. Red Oak would trek from the stor­age and trad­ing hub in Cush­ing to re­finer­ies and ports in Hous­ton, Beau­mont and Cor­pus Christi. The pipe­line would ship 400,000 bar­rels a day.

Phillips 66 has in­creas­ingly in­vested in the pipe­line sec­tor, where there’s more room for growth. Phillips 66’s pipe­line spinoff is cur­rently build­ing the Gray Oak oil pipe­line from West Texas’ boom­ing Per­mian Basin to Cor­pus Christi and Freeport. The com­pany said it is plan­ning to ex­pand the Gray Oak sys­tem with ad­di­tional ca­pac­ity and new ori­gin sta­tions through­out much of the Per­mian.

The pipe­line sys­tem is on track to be built by the end of 2019, but the ex­pan­sion will take un­til late 2020.

Mean­while, Mag­el­lan Mid­stream Part­ners of Tulsa, Okla., and Nav­i­ga­tor En­ergy Ser­vices of Dal­las an­nounced an open sea­son to gauge in­ter­est in a 500mile, 250,000-bar­rel-a-day pipe­line from Cush­ing to Hous­ton. The pipe­line would ter­mi­nate at Mag­el­lan’s ter­mi­nal in east Hous­ton, where oil and con­den­sate could be de­liv­ered to Hous­ton and Texas City re­finer­ies or to oil ex­port ter­mi­nals.

The oil and con­den­sate, which is an oil byprod­uct, would be sourced from the Rocky Moun­tains re­gion and North Dakota’s Bakken shale field.

If the pipe­line is built, it is ex­pected to come on­line by the end of 2020.

Mag­el­lan added that it is also eval­u­at­ing a pos­si­ble oil pipe­line from Hous­ton to Cor­pus Christi and a crude ex­port ter­mi­nal on Har­bor Is­land near Cor­pus Christi. The ex­port ter­mi­nal would be able to load Very Large Crude Car­ri­ers, or VLCCs, which ship­pers pre­fer be­cause of the cost sav­ings re­lated to the ships’ abil­ity to trans­port larger vol­umes.

The Port of Cor­pus Christi has teamed up with as­set man­ager The Car­lyle Group to de­velop a VLCC-ca­pa­ble oil ex­port ter­mi­nal on an­other part of Har­bor Is­land. Swiss com­modi­ties trader Trafigura has voiced in­ter­est in build­ing an off­shore VLCC-ca­pa­ble oil ex­port buoy. The Port of Cor­pus Christi op­poses the Trafigura plan and has not voiced an opin­ion on Mag­el­lan’s pos­si­ble ter­mi­nal.

Daniel Acker / Bloomberg

Two pipe­line and stor­age com­pa­nies may build crude and con­den­sate pipe­lines from Cush­ing, Okla., seen above, to Hous­ton.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.