Chevron has issued a notice to shippers that its Empire terminal in Louisiana won’t accept crude nominated for delivery to Crescent Midstream’s Bonefish Pipeline as its unplanned outage following a leak nears its one-month mark.
The Empire facility is the delivery point for many pipes connected to oil fields in the Gulf of Mexico (GOM). In a statement, Chevron said its Empire Terminal is operating and accepting shipments from the GOM. There are connections available to points further north. The barrels arriving at Empire are typically traded as Heavy Louisiana Sweet (HLS) and South Louisiana Intermediate (SLI) crudes. HLS is sold for domestic refining and exports.
The grade is also used as a blendstock to create a lookalike for Light Louisiana Sweet crude, known commonly as blended LLS. The blended LLS crude trades alongside pure LLS that emerges from oil fields in the GOM. Since the Bonefish pipe leak, some LLS buyers have purchased neat LLS oil coming directly from designated fields in the Gulf of Mexico via the Ship Shoal pipeline which delivers into St. James, Louisiana, hub.
The Chevron Empire terminal however does ship HLS crude coming in from offshore fields to demand centers via MOEM, Cal-Ky and Shell Delta pipelines. HLS barrels are also being loaded onto barges at Empire terminal for shipment to refiners in Louisiana.
The Bonefish system was shut July 27 after a leak from the system’s pump station in Raceland, Louisiana, with some crude finding its way into Bayou LaFourche. Physical HLS prices had, for some weeks, traded at a premium to Nymex oil futures following the spill, but have since sunk back to discounts vs WTI.
