06 June 2012 20:32 [Source: ICIS news]
HOUSTON (ICIS)--The Seaway Pipeline delivered the first shipment of crude oil to the US Gulf on Wednesday, Enterprise Products and Enbridge said.
The two companies make up the joint venture that own the pipeline.
The oil arrived at the Jones Creek facility near Freeport, Texas, the companies said. The shipment marks the pipeline's first delivery from the oversupplied Cushing hub in Oklahoma.
Since oil began flowing through the pipeline, volumes have steadily increased towards its capacity of 150,000 bbl/day, the companies said. Work is on schedule to expand the capacity to 400,000 bbl/day by the first quarter.
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, 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 crudes exceeded $20/bbl in mid September.
By mid-day, the gap was about $15/bbl.
Additional reporting by Anna Matherne and Sheena Martin
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