Longhorn

Permian producers have enjoyed an abundance of outbound options since the pandemic, with egress capacity surpassing production. While a significant amount of capacity remains available, not all routes have proven equal in the eyes of the market, with Corpus Christi and Houston the most sought-after destinations for Permian crude. In today’s RBN blog, we’ll explore why ONEOK’s BridgeTex Pipeline is the only conduit serving the Houston market that still has room to take on additional volumes — although it appears to be quickly nearing full capacity. 

The great Texas philosopher Matthew McConaughey once said, “I don’t want to just revolve. I want to evolve.” Few pieces of crude oil infrastructure embody that spirit of adaptation quite like ONEOK’s Longhorn Pipeline. Starting out as a Houston-bound conduit for Permian crude, Longhorn later reversed its flow and started moving refined products, then — at just the right time, in the early days of the Permian’s Shale Era rebirth — flipped back to eastbound crude service. In today’s RBN blog, we’ll detail the pipeline’s evolution and its critical role in moving Permian oil to the Gulf Coast market.

A new light sweet crude oil trading market is developing in Houston at the Magellan Midstream Partners East Houston terminal – delivery point for that company’s Longhorn and BridgeTex (50/50 owned with Plains All American) pipelines delivering crude from the Permian Basin. Light sweet crude from the Permian is also known as West Texas Intermediate (WTI) the domestic U.S. benchmark crude - widely traded at Cushing, OK where it underpins the CME NYMEX futures contract.  Today we review the developing market and the price relationships that underpin it.

Permian Basin crude producers are currently churning out over 1.5 MMb/d of crude from a basin that has produced oil since the 1920’s but is the center of a recent renaissance. With new production comes new demand for takeaway capacity and between January 2013 and the end of 2015, about 1 million barrels of new pipeline has been constructed or will come online directed towards Houston, Nederland and Corpus Christi, TX. About a dozen new gathering systems are being constructed to help get new production from the wellhead to the larger takeaway pipelines. Today we continue our series on new Permian gathering infrastructure.