GlobalData: U.S. Pipeline Startups In Q3 2014 Will Ease Crude Prices/Displace Imports

October 2014, Vol. 241, No. 10

The Flanagan South and Seaway Twin Pipeline startups will soon begin transporting incremental volumes of heavy sour and light sweet crude oil to Gulf Coast refineries, putting downward pressure on U.S. crude prices and displacing imports, said an analyst with research and consulting firm GlobalData.

Carmine Rositano, GlobalData’s managing analyst covering Downstream Oil & Gas, said Enbridge is near completion of its $2.6 billion Flanagan South Pipeline which will connect to its main Canadian export pipeline in Illinois and move 600,000 bpd of Canadian and North Dakota crude oil from Illinois to Cushing, OK.

Rositano said: “The Flanagan South Pipeline is designed to increase throughput capacity to 800,000 bpd with more pumping-power enhancements, transporting steadily rising volumes of both Canadian oil sands and U.S. unconventional oil.

“In addition, Enbridge and Enterprise Product Partners are in a 50-50% joint venture building the Seaway Twin Oil Pipeline, which will move 400,000 bpd of crude oil from Cushing to Houston, where it can be shipped to refineries along the Texas Gulf Coast.”
According to GlobalData, the increase in heavy sour crude oil volumes from Canada, arriving via the new pipeline connection to the Gulf Coast, will reduce imports of heavy sour crude oil, primarily from Venezuela, Ecuador and Colombia, as well as the Middle East.

Rositano added: “The increase in crude volumes into the Gulf Coast will also put price pressure on U.S. crude oil production, especially in offshore areas.
“Oil production in the Gulf of Mexico is forecast to increase in 2015-16, driven by a series of projects, including LLOG’s Delta House, ExxonMobil’s Julia, Shell’s Stones, and Anadarko’s Heidelberg, which combined will add over an estimated 100,000 bpd.”