Ohio River

Infrastructure constraints in the energy sector come in all shapes and sizes, and don’t think for a second that they only involve pipelines. For many producers of crude oil, refined products and other liquids, the Mississippi River is a critically important conduit for barging commodities to market. Lately though, water levels on sections of the river have been near historic lows, reducing both the volume of liquids that each barge can carry and the number of barges the Mississippi can handle. Among other things, the low water situation has been putting a squeeze on condensate producers in the “wet” Marcellus/Utica, who depend on barges to transport a significant portion of their superlight crude oil down the Ohio and Mississippi rivers to refineries and for blending into Light Louisiana Sweet (LLS). In today’s RBN blog, we discuss the situation.

While Energy Information Administration (EIA) estimates of crude-by-barge traffic between the Midwest and the Gulf Coast have fallen sharply in the past 18 months, shipments down the Ohio River to Texas and Louisiana refineries have increased threefold – peaking at just under 70 Mb/d in May 2015. Growing barge shipments have been accompanied by midstream investment in barge dock facilities – especially in Ohio. Today we discuss increased shipments of ultra light crude condensate to Gulf Coast refineries on the Ohio River.

The condensate potential of the Utica shale play in northeast Ohio continues to be talked up by producers drilling for oil there. Natural gas output in the Utica is doing pretty well on its own of course – part of the Appalachian Tsunami of production that includes the Marcellus play. Condensate in the Utica is still considerably less exciting with production topping out at 25 Mb/d in 2013 but fifty percent higher now (37 Mb/d in August 2014 according to the Energy Information Administration - EIA) as more processing infrastructure releases production from completed wells. Today we ponder prospects for shipping Utica production overseas.

Finding a home for growing condensate range material being produced in the Ohio Utica shale play involves local refinery deliveries as well as new transport routes to markets outside the region as far away as Canada. Midstream companies are busy developing infrastructure plans to gather both wellhead condensate and output from natural gas processing plants in the region. Today we detail MPLX and its sponsor Marathon Petroleum Corporation’s (MPC) recently announced Utica shale plans.