Crude Flood

There’s been a lot of talk--and angst—this summer and early fall about the flood of crude oil headed to the Houston area from the Eagle Ford, the Permian Basin and other burgeoning oil-production regions. The angst seems worst for crude producers, who rightly wonder whether Houston’s looming shortfall of storage capacity will further disrupt crude oil logistics, contribute to more downward pressure on crude prices, or worse.  Understanding what’s ahead requires an in-depth look at the changing crude flows into Houston and that is precisely the subject of RBN Energy’s latest drill-down report. In today’s blog, we provide highlights of the report, which is available for download by RBN Backstage Pass holders, and discuss how the shift from waterborne to pipeline delivery of crude already is affecting the market.

Throughout the three year-long disruption of the US crude oil distribution system caused by rising domestic and Canadian production trying to find a path through the Midwest, the Seaway pipeline reversal project has been a market bellwether of progress to unwind the congestion. In 2Q 2014 the final phase will come online - opening up an additional 450 Mb/d capacity between Cushing and Houston. As the Seaway project has been built out, the crude surplus in the Midwest appears to have moved to the Gulf Coast. Today we detail the impact of Seaway Phase 3 on Gulf Coast crude supplies.