(April 3, 2014 – Platts) Deja Vu: Can ETP’s proposed Dakota Access crude oil line win where others failed? (By: Bridget Hunsucker)
Last month, ETP issued a binding open season to assess interest in crude pipeline transportation from multiple receipt points in North Dakota to several Midwest and Gulf Coast refineries and terminals, including Sunoco Logistics Partners’ crude oil terminal in Nederland. ETP owns Sunoco Logistics.
Two pipelines are expected to make up the ETP Bakken-to-Gulf Coast system. The first leg in the system is the Dakota Access line (not to be confused with Koch’s cancelled Dakota Express), which will bring Bakken crude to Illinois. The second leg in the system is a pipeline being proposed by ETP subsidiary Energy Transfer Crude Oil Company to send crude from the Midwest to the Nederland terminal.
ETP is offering the option of a joint-tariff for shippers of the complete system. Though this second-leg pipeline is not identified in the notice as EGCAP, it’s likely it is one and the same.
RBN Energy analysts agree, saying in a recent note that “although the publicly released details of this new pipeline project are spartan as far as origin and destination go, it seems highly likely that the ETCO leg of the proposal… is none other than the existing ETP project now known as the Eastern Gulf Crude Access Pipeline.”
The 420,000 b/d EGCAP pipeline could also be expanded as part of the project, RBN said.
ETP’s plan brings up memories of Oneok’s halted 200,000 b/d Bakken Express Crude Express Pipeline project that would have sent Bakken crude to Cushing, Oklahoma. Oneok dropped plans for the project in late 2012 when the company couldn’t get commitments with shippers, who seemingly chose rail over pipe as the preferred transportation method.
Around that time, crude-by-rail gained pace as a takeaway alternative in the shale on a lack of available pipeline capacity. Shippers have also touted the flexibility of rail over pipeline.
On Wednesday, Enbridge’s President of Liquids Pipelines Guy Jarvis said that it’s difficult to secure long-term contracts for new crude pipelines in the Bakken.
There, more than 70% of production is moving on rail cars, according to the latest information available by the North Dakota Pipeline Authority. North Dakota production continues to grow while pipeline capacity is expected to lag until about 2016, Jarvis said during Enbridge Energy Partners Investors Day presentation that was webcast.
ETP’s proposed pipeline system would now compete with and offer an alternative to a similar pipeline system being set up by Enbridge Energy Partners.
“Our understanding of the attraction of this new pipeline proposal is that it offers Bakken shippers an alternative direct path to the Gulf Coast that does not use the Enbridge system,” RBN said in the note. “To that end, crude producers will benefit from the flexibility.”
Read the full story here: http://blogs.platts.com/2014/04/03/crude-oil-pipeline-bakken/
