17 May 2012 19:23 [Source: ICIS news]
HOUSTON (ICIS)--US-based mid-stream company Enterprise Products and Enbridge have finished reversing the flow of the Seaway oil pipeline, allowing crude to flow from the over-supplied storage hub in Cushing, Oklahoma, to the US Gulf coast, the nation's petrochemical hub, the companies said on Thursday.
The first flows of crude should happen by this weekend, the company said.
The reversal will initially provide 150,000 bbl/day of capacity, the companies said. That should rise to more than 400,000 bbl/day in the first quarter of 2013.
The reversal could reduce the price gap between West Texas Intermediate (WTI) crude and pricier crude grades used on the Gulf coast and east coast. WTI was discounted because it was trapped at the Cushing hub. Meanwhile, other crude grades, such as Louisiana light sweet crude, took pricing cues from the more expensive Brent crude.
The advent of shale oil also contributed to the supply glut for mid-western grades such as WTI.
Pipelines bring these grades into the Cushing oil hub in Oklahoma, but there is not enough outgoing pipeline capacity. Since refineries outside of the midwest cannot access the oil, the crude supplies are at a surplus. The price gap between the two exceeded $20/bbl in mid September.
By mid-day, WTI was trading at $92.95/bbl compared with $108.33/bbl for Brent, a difference of $15.38/bbl.Additional reporting by Bobbie Clark and Sheena Martin
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