For several years now, almost all the Permian’s incremental crude oil production has moved to export markets along the Gulf Coast. Due to new pipeline capacity and shipping cost advantages, Corpus Christi has enjoyed a disproportionate share of those volumes. But the market is shifting. Pipelines to Corpus are filling up, and that is pushing more oil to Houston for export — and to Beaumont for ExxonMobil’s new 250-Mb/d refinery expansion. Unless the pipes to Corpus expand their capacity, much more oil supply will be targeting Houston, with important implications for pipeline capacity, dock capacity, and regional price differentials. In today’s RBN blog, we explore these issues and what could throw a curveball into the whole Gulf Coast crude oil market.
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This is the third blog in our series about crude oil and product exports, where we’re looking at why barrels move where they do and what it means for U.S. producers, midstreamers, refiners, marketers, and exporters. In Calling the Shots, we asserted the importance of export flows to U.S. domestic crude markets, including flows to major destinations, how shipping costs drive those flows, and the impact of these factors on regional price spreads. Then, in Sooner or Later, we considered the increase in Corpus’s share of exports, which soared from 28% in 2018 to 60% in 2022. That analysis looked at volumes moving on individual pipes to Corpus and the dwindling available capacity on those pipes.
If it is not going to Corpus, Permian production has got to go somewhere, right? And increasingly, that is Houston. As shown in Figure 1, Houston-bound Permian volumes held steady at about 1.5 MMb/d from early 2019 through late 2021 — sagging a bit during the worst of COVID — then started taking off, rising to 2.3 MMb/d in November 2022 through January 2023. Most of the increase kicked in in late 2021 with the startup of Wink-to-Webster (W2W; blue layer in graph and blue line in map), although there was also an increase in flows starting in October 2020 as the Enterprise Midland‐to‐ECHO 3 pipe (M2E3; orange layer and line; undivided interest with W2W) pulled volumes away from the Enterprise Midland-to-Echo 1 & 2 pipes (M2E1/M2E2; brown layer and line). Volumes on Magellan’s BridgeTex and Longhorn systems (green and yellow layers and lines) have declined slightly. All those flow shifts make sense: Barrels tend to migrate to newer pipelines due to the minimum volume commitments (MVCs) on those recently contracted pipes.
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About the song
“Houston Bound” was written by Lightnin' Hopkins. The song is one of the several sides Lightnin’ Hopkins recorded for Bobby Robinson’s independent record label, Fire Records, in 1960. Fire Records also released sides by blues artists Elmore James, Buster Brown and Arthur Crudup around this same time. “Houston Bound” appears as the second song on Houston Bound, a Lightnin’ Hopkins CD compilation collection by Relic Records; the 24th song on The Remaining Titles, Volume I, 1950-1961, a CD compilation on Document Records; and the sixth song on side two of Bring Me My Shotgun, a vinyl compilation on Cleopatra Records. The song was produced by Bobby Robinson. Lightnin’ Hopkins’s vocals and guitar are all you hear on the song; he had no backup.
Lightnin’ Hopkins (Samuel John Hopkins) was an American country blues singer, songwriter, and guitarist based out of Houston. He was discovered while busking in Houston’s Third Ward by Lola Anne Collum, with the Los Angeles record label, Aladdin Records. Hopkins recorded his first sides as a sideman for Aladdin Records blues pianist Wilson Smith in 1946. By the mid-1950s Hopkins’s prodigious output of quality blues recordings as a solo artist had gained him a large following by blues afficionados. A lot of his songs are rooted in Texas geography and history — “Houston Bound,” “Rainy Day in Houston” and "I Was Down on Dowling Street” all give homage to Hopkins’s busking history in the Third Ward of H-Town. Hopkins released 43 studio albums, four live albums, 12 compilation albums, and several single releases on various labels over the years. He has a Grammy Lifetime Achievement Award and is a member of the Blues Foundation Hall of Fame. His Gibson J-160e guitar is on display at the Rock and Roll Hall of Fame — perhaps someday he will be inducted there. Hopkins died in Houston in January 1982.
