The Enterprise Product Partners-operated 450,000 bpd Cushing, OK,-to-Jones Creek, TX, Seaway Twin crude pipeline remained down Wednesday after being shut on Aug. 11, following the shutdown of Enbridge Energy Partners’ 193,000 bpd Spearhead and 600,000 bpd Flanagan South pipelines.
Enbridge’s Flanagan, IL,-to-Cushing, Spearhead pipeline was also shut Aug. 11 following a crude oil spill in northern Missouri. Enbridge’s adjacent 600,000 bpd Flanagan South pipeline was also shut Aug. 11, likely as a precaution after a spill. While Enbridge expects Flanagan South to be restarted later today or Aug. 13, a timeline for Spearhead is unknown. Excavation on Spearhead is underway, and an investigation into the cause of the release has begun.
A large volume of crude capacity has been affected by the spill, nearly 1.25 MM bpd when taking all three pipelines into account. Additionally, the potential market impact could be exacerbated because all three pipelines are connected to the West Texas Intermediate (WTI) delivery point at Cushing. Flanagan South and Spearhead pipelines account for almost 26% of inbound Cushing pipeline flows.
Depending on the duration of the outage, these missing flows could have a substantial impact on Cushing storage levels. For every week that the pipelines are down, approximately 1.4mn bbls of oil will be drained from Cushing assuming other Cushing connected pipeline flow rates remain constant. Large stock draws could cause WTI prices to rise, and prices may not be able to overcome other bearish news currently in the market.
While the spill itself appears to have been minor, Enbridge confirmed that one barrel of crude has been recovered so far, a pause in operations on these two pipelines, which together represent more than 790,000 bpd of capacity, could have implications beyond the immediate spill. As news of the spill spread, the price of WTI reached $43.87/bbl, a $1.18/bbl increase from the previous day’s low.
Genscape reported that the Spearhead pipeline, which had been flowing at the 200,000 bpd level, initially showed decreased power consumption at the Rush and Caney pumping stations since about noon Aug. 11. Flanagan South pipeline, which shares a right-of-way with Spearhead, was shut after it had been flowing about 230,000 bpd. Decreased power consumption was first observed at Flanagan South’s Humboldt pumping station in Allen County, KS, beginning at 8:30 a.m., suggesting the spill may have occurred earlier that morning.
For the four weeks prior to the spill, incoming flow between Spearhead and Flanagan South averaged 410,000 bpd with outgoing flow on the shuttered Seaway Twin pipeline averaging 210,000 bpd during that same time frame.