The Houston crude oil hub has become busier over the last few months, and if one or more proposals to build a deepwater export terminal nearby capable of fully loading a Very Large Crude Carrier (VLCC) cross the finish line, it could become the hub supplying them. That could push Permian Basin oil flows on Houston-bound pipelines higher at the expense of flows to Nederland and Corpus Christi. In today’s RBN blog, the third in a series, we will examine the latest Permian oil flows to Houston and how that could change if and when a deepwater project comes online.
Before we dive in, let’s revisit some of the key points in the previous blogs in this series. As we detailed in our first blog, Texas Hold ’Em, crude oil output in the Permian is now averaging 6.3 MMb/d, up about 600 Mb/d from year-ago levels and 800 Mb/d from May 2022. While there is still sufficient capacity for crude to exit the basin, capacity on pipelines that reach the U.S. Gulf Coast (USGC) — the most desirable market since it’s home to half the nation’s refining capacity and nearly all export terminals — is around 6.4 MMb/d. That’s not much higher than current Permian production. And as the most economic routes fill up, Permian crude will increasingly move along less-economic routes to less-desirable markets.
Next, in Corpus Christi Bay, we turned our attention to the Corpus Christi market. Permian pipelines serving the hub are running nearly at capacity and that explains why two midstream companies — Enbridge and EPIC Midstream — are responding with plans to boost the capacities of their respective pipelines from the Permian to refineries and export terminals in the Corpus area. But, as with Houston, the situation is complicated because potential shippers may be wary of the possibility that one or more deepwater export facilities will advance to commercial operations. In that blog we discussed how these projects could reroute flows and impact Corpus Christi. Today, we’ll address what’s in store for Houston.
Figure 1. U.S. Gulf Coast Crude Oil Export Terminals. Source: RBN
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