Buckeye

It’s safe to say that Permian producers had a good Christmas. Sure, their stock prices may be off a bit and their rig counts are down. But the absolute prices they are paid for their crude oil are up by almost $20/bbl versus this time in December 2018, and the price spreads between the Permian and neighboring markets have significantly narrowed as a result. What’s driving this change? There are a variety of factors at play, but chief among them is the new pipeline infrastructure that has helped lift Permian producers’ oil price realizations. Today, we check in on the status of one of the major new pipelines that have contributed to the seismic shift in the Permian oil market this year.

Despite last month’s much-publicized start-up of two new crude oil pipelines from the Permian Basin to the Gulf Coast — Plains All American’s Cactus II and EPIC Crude Holding’s EPIC Pipeline — tangible evidence of how much crude is actually moving on those pipelines has been hard to come by. That’s because crude oil pipelines don’t post daily flow data, like some natural gas pipelines do, and shipper volumes are a closely held secret that often only becomes available long after the fact. However, Cactus II and EPIC both deliver into the Corpus Christi, TX, market area, where a number of export facilities have been waiting to move Permian barrels out into the global market. We’ve been keeping a close eye on Corpus-area docks and have noticed a significant increase in export volumes over the last few days — a clear indication that Permian crude on Cactus II and EPIC has broken through to the global market. Today, we detail a recent rise in Corpus Christi oil export volumes driven by new supply from the Permian Basin.

It’s no secret by now that Permian oil markets have struggled over the last two years as nagging takeaway-pipeline constraints put a damper on production growth and, at times, hammered pricing in the basin. Like the Houston Astros’ opponents in the AL West, though, the days are numbered now for Permian oil market constraints, as two new large-diameter pipelines from West Texas to Corpus Christi will be in-service by the end of the month. One of those pipes, Plains All American’s Cactus II, is set to enter service this week. Today, we assess the potential implications of the latest Permian long-haul pipeline expansion, and introduce RBN’s new weekly publication, Crude Oil Permian!

By the early 2020s, crude oil flows from the Permian to Corpus Christi are likely to increase by at least several hundred thousand barrels a day and may well rise by more than one million barrels a day. That can only happen, though, if new pipeline capacity is in place to move crude from West Texas to the coast and if enough crude-related infrastructure — storage, distribution pipelines, marine docks, etc. — is developed in Corpus to receive, move and load all that oil. Docks and ship-channel depth are particularly important; the bigger the vessels that Corpus marine terminals can handle, the more competitive Permian crude will be in far-away markets like Asia. Today we continue our series on the build-out of crude infrastructure in South Texas’s largest port and consider Corpus’s ability to load Suezmax-class vessels and maybe even Very Large Crude Carriers (VLCCs).

Most of the gasoline, diesel, heating oil and jet fuel consumed in the U.S. East Coast region is piped in via long-distance pipelines from Gulf Coast refineries, but substantial amounts are moved in by ship—either from the Gulf Coast by Jones Act vessels or from overseas. These shipped-in volumes then need to make their way from port to consumer. Today we continue our examination of how transportation fuels and heating oil are delivered to East Coast users with a look at the ports and connecting pipelines that help move these critically important fuels.

Several large deep-water terminals located strategically on Caribbean islands play an important role in the international fuel oil trade. These terminals can berth larger vessels than most Gulf Coast ports – making them ideal staging points for transshipment of ocean bound cargoes coming and going from Europe, Asia or Latin America. With its recent acquisition of the Hess East Coast terminal assets, Buckeye looks set to become a dominant player in the Caribbean terminal and storage market. Today we conclude a two-part survey of Caribbean fuel terminals.