Southbound - What's Ahead for the Recently Reversed Capline Crude Oil Pipeline?

It's been almost a year since the co-owners of the massive Capline crude oil pipeline initiated southbound service between Patoka, IL, and St. James, LA, on what for a half-century had been a northbound conduit. How’s it working out? So far, so good, it seems. As expected, for the first several months the volumes of heavy Canadian crude oil flowing down the 632-mile, 40-inch-diameter pipeline to the St. James hub were modest. Since June, however, Capline has been offering a temporary incentive rate to attract more heavy oil, and starting December 1 it’s also been offering a temporary buck-a-barrel rate for light oil too. In today’s RBN blog, we discuss the latest Capline developments, the challenges associated with batching heavy and light crude on such a big pipe, and the prospects for much higher flows.

As we said a year and a half ago in our four-part Part of the Plan blog series on the then-impending Capline reversal, ​the pipeline was a gamechanger when it first became operational in August 1968 in that it enabled large volumes of imported oil and offshore Gulf of Mexico (GOM) production to be transported north to a slew of refineries in the Midwest. The northbound pipeline’s capacity (which ramped up to 1.2 MMb/d by the mid-1980s) was highly utilized for many years, but by the early 2010s the Midwest refineries connected to the Patoka hub had gained access to the increasing volumes of crude available from Western Canada and the Bakken. As a result, they simply didn’t need Capline’s northbound flows as much as they used to, and volumes on the pipe slowed to less than half, then less than a third and finally just a sliver of its capacity before northbound ceased in late 2018.

Finally, in August 2019, Capline’s co-owners — Plains All American (with a ~54% ownership interest), Marathon Petroleum Corp. (MPC; ~33%) and BP (~13%) — announced that they had sanctioned the Capline reversal project, with plans to feed crude into the pipeline at two primary points: the Patoka hub and in northern Mississippi, the latter at a proposed interconnection between Capline and an extension of Plains and Valero Energy’s Diamond Pipeline from Cushing, OK, to Memphis. Plans for the Diamond extension from Memphis to the Capline interconnect fell through, though, leaving Capline to focus (at least initially) on flowing only heavy oil south from Patoka.

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