Saving All My Crude For You – Houston - The Flood is Upon Us

The current capacity of incoming crude pipelines into the Houston refining region is about 1.4 MMb/d. By the end of 2015 that will have more than doubled to 2.9 MMb/d. Add to these flows crude railed into new and developing unloading terminals as well as barges of Eagle Ford crude from Corpus Christi in south Texas and the prospects for congestion build up. Foreign waterborne imports into Houston are falling as pipelines supply more refineries but in the process a lot of floating storage flexibility is being lost. Today we describe the Houston crude distribution system that could be overwhelmed by the new flows.

In Part 1 of this series covering the changing crude storage situation at the Gulf Coast – home to 50 % of US refining capacity - we discussed how storage provides a buffer or slack in the distribution chain from wellhead to refinery. In Part 2 we began a deeper dive analysis of Houston area refineries to understand how important floating storage provided by waterborne crude imports can be. Our analysis showed that the typical imported waterborne barrel delivered to Houston refineries spent 17-20 days in transit. That floating storage period provides refiners with flexibility to withstand supply shocks such as refinery outages. We also calculated “storage days” for crude delivered to Gulf Coast region refineries at 32 in April 2014 - the same as the national average since 2011 but about 68 percent higher than other waterborne fed regions like PADD I (East Coast – 19 days) and 28 percent higher than PADD IV (West Coast – 25 days). In Part 3 we compared that 32 storage days for the Gulf Coast as a whole with Houston area refineries where working storage is roughly 21 days if refineries run at 95 percent of capacity and 22.5 days if refineries run at the 5 year average 89 percent of capacity. In this episode we take a closer look at crude flows into terminals in Houston.

Figure #1 shows a generalized overview of the pattern of crude flows into the Houston area that has evolved over the past two years. During that time, refinery capacity – just under 2.5 MMb/d - has barely changed at all, but refinery feedstocks have changed from largely waterborne flows of imports to increasing onshore supplies from US and Canadian sources. Not marked on the map, but also increasingly important are rail unload terminals and marine docks where incoming crude from the South Texas Eagle Ford Basin arrives via barge from Corpus Christi. Marked in yellow on the map are terminals located at the destination point of incoming pipelines and “junctions” along pipeline routes designed to route crude to specific refineries. We describe each of these terminals in more detail below.