Magellan Midstream

Corpus Christi has emerged as an important crude refining and distribution market hub for Eagle Ford and Permian Basin crude and lease condensate. Corpus has a lot going for it: it’s close to--and well-connected by pipeline with--the Eagle Ford, it has new and potentially growing connections with Permian; and Corpus and its environs boast considerable crude/condensate storage, refining and processing capacity, as well as one of the nation’s busiest ports. Today we continue our review of Eagle Ford crude/condensate pipelines feeding Corpus including Kinder Morgan, NuStar, Magellan and Harvest pipelines.

Crude production in the Niobrara shale formation is focused on two areas, the Denver-Julesburg (DJ) Basin in Northeast Colorado and the Powder River Basin (PRB) in Wyoming. Production has expanded in both basins (current output is about 435 Mb/d according to the Energy Information Administration) but much of the recent volume growth has come from the DJ basin. Expectations as recently as last year that production would expand to over 700 Mb/d in the next 4 years have been tempered by the crude price crash. A couple of large pipeline projects prompted last year by those production expectations have been cancelled since but others are still being built. Today we assess crude takeaway infrastructure in the DJ basin.

The major re-plumbing of the U.S. crude pipeline distribution network to get 4 MMb/d of new domestic production as well as incremental Canadian barrels delivered to refineries is getting close to completion. The price crash and an expected slow down in production will almost certainly slow the pace of infrastructure development. The result is likely to be intensified competition between rival midstream companies and industry consolidation. Today we look at the larger implications of a small pipeline project in Houston.

Since the start of 2013 Corpus Christi marine terminal facilities have increased crude and condensate storage by 10 MMBbl and throughput capacity from 225 Mb/d to nearly 1 MMb/d. Upwards of 700 Mb/d is leaving the Port of Corpus Christi by barge and tanker – most of it headed along the Gulf Coast to Houston or Louisiana. Waterborne traffic congestion in Corpus is already limiting terminal throughput but the potential for increased exports of condensate and refined products from planned condensate splitters suggest the traffic will get worse soon. Today we survey current Corpus terminal facilities.