Wednesday, May 23, 2012

Counting the Barrels of Oil Leaving Cushing (EPD; ENB)

The Seaway pipeline had historically carried oil from Texas to Cushing Oklahoma. Last week the flow was reversed.
In addition to relieving the full-up storage tanks in Oklahoma the reversal will eventually narrow the spread between Brent and WTI. This is a big deal.
Among other impacts Light Louisiana Sweet went to a discount against Brent and refiners may have more oil than they know what to do with. Southeastern gasoline prices should drop while Midwestern prices will rise.

From Platt's The Barrel blog:
Genscape, a company whose many activities include flying around Cushing, Oklahoma and figuring out from the sky how much oil is in the ocean of storage tanks there, has been taking a look at the Seaway Pipeline.
In a webinar held Tuesday morning, Genscape's Abudi Zein (full disclosure: a former Platts colleague) reviewed some of the many pictures his company has taken from the air or from satellite imagery over the 800 kilometers of the just-reversed Seaway Pipeline between Cushing and Freeport, Texas.

One of the things that Genscape has spent a lot of time looking at are the pumping stations being worked on down the line. Zein pointed out that the line flows from as much as 300 meters above sea level down to zero elevation at Freeport, so gravity is a contributing factor in pushing oil through the line.

But it's not all gravity; the pumps do matter. And furthermore, Zein said the combination of how many are in use and what type of crude is flowing down the line will impact Seaway's  capacity.

Genscape as of yet does not have any indication that Seaway has started to utilize the first major pumping station, at Colbert, Oklahoma. It is able to monitor the power flow into a pumping station, and that is a sign whether it's operating. But still, "as we turn the pumps on, we can see through the model what the total flow is going to be," Zein said.

The number of pumps in use is significant when combined with the type of oil going through the line, because the line will be able to carry a greater quantity of lighter crudes such as WTI or a WTI look-alike than it can carry of heavier Western Canadian Select (WCS). So according to Genscape calculations, if Seaway is using one pump at Cushing, it can move 150,000 b/d of WTI. That figure was cited by the Seaway operators--Enbridge and Enterprise Partners--as the initial flow. A second pump brings capacity up to 200,000 b/d, 220,000 b/d for three pumps, and 250,000 b/d for four pumps....MORE