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From Here to There to You - Enbridge's Heavy- and Light-Oil 'Supersystems' to Texas's Gulf Coast

In small steps and giant leaps, Enbridge has been building out two “supersystems” for transporting crude oil to refineries and the company’s own export terminals along Texas’s Gulf Coast, one moving heavy crude all the way from Alberta’s oil sands to the Houston area and the other shuttling light oil from the Permian to Enbridge’s massive terminal in Ingleside on the north side of Corpus Christi Bay. There’s nothing quite like it — first, an unbroken series of pipelines from Western Canada to Enbridge’s tank farm in Cushing, OK, (via the Midwest) and from there to Freeport, TX, on the twin Seaway pipelines; and second, the Gray Oak and Cactus II pipes from West Texas to the U.S.’s #1 crude export terminal. And the midstream giant is far from done. New projects and expansions are in the works, as we discuss in today’s RBN blog.

We’ll begin with a few relevant facts. First, the U.S. produces far more light crude oil than its refineries can economically process — the same is true for Canada regarding heavy crude. Second, crude supply that is surplus to domestic demand needs to be exported — for the U.S. that means loading oil onto tankers, and for Canada it largely means piping crude south to the U.S., with some of those volumes sent to refineries in the Midwest/Great Plains and most of the rest headed for the Gulf Coast, either for use by refineries there or for “re-export.” And third, the Permian and the Alberta oil sands are by far the leading production areas — and the fastest-growing — in the U.S. and Canada, respectively, and given the Permian’s relative proximity to Gulf Coast ports (not to mention the demand for its light crude in some overseas markets) it’s only logical that a good bit of West Texas’s output is shipped overseas.

All that helps to explain why Enbridge, one of North America’s largest midstream companies, has been focusing so much of its attention — and capital — on facilitating the transport of increasing volumes of crude oil from Western Canada and the Permian to Texas’s Gulf Coast and the loading of significant shares of that crude onto ships. Next, we’ll look at Enbridge’s existing crude oil pipeline, storage, and export assets, particularly those relating to the delivery of Western Canadian and Permian crude to Texas’s Gulf Coast, as well as what the company is planning to make its two oil supersystems even bigger and more efficient.

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