One of the most discussed and often misunderstood aspects of the midstream world is the pipeline open season. It is how midstreamers go out to the market to test shipper interest and lock in commercial commitments for new projects and can effectively determine whether a project will get built.
By mid-year, Enbridge plans to initiate an open season for long-term, firm capacity on its existing 2.8-MMb/d Mainline crude system from Western Canada to the U.S. Midwest starting in mid-2021. Securing a sure way for Western Canadian heavy-crude producers to export crude from the Alberta oil-sands region — combined with additional southbound pipeline capacity from the Midwest to the Gulf Coast, would give Texas and Louisiana refineries an alternative to using overseas imports and would boost crude volumes being shipped from existing and planned export terminals. Today, we conclude our series on the pipeline’s contracting plans with a look at the impact of a straight-shot, joint-tariff pipe as well as joint pipe-barge transportation solutions from the oil sands to the Gulf Coast.
Enbridge’s 2.8-MMb/d Mainline system from Alberta to the U.S. Midwest has been running close to full, as have the other crude oil pipelines out of Western Canada. The Mainline is a unicorn among these pipes, however, in that none of its capacity — zilch — is under long-term contract. Instead, under Enbridge’s almost nine-year-old Competitive Tolling Settlement (CTS), shippers each month submit nominations stating the volumes of crude they would like to transport the following month on various elements of the Mainline system, then hope they get what they need when the available capacity is divvied up. In an effort to give producers and refiners the pipeline-capacity certainty they say they want — and to optimize the efficiency of the Mainline’s operation — Enbridge has been working with shippers on a CTS-replacement plan that would commit as much as 90% of the capacity on the pipeline system to shippers who enter into long-term contracts. Today, we continue this blog series with a look at how the prospective “priority access” capacity-allocation system is shaping up, how it might affect planned pipeline projects, and how it may facilitate the transport of a lot more crude from Alberta to the U.S. Gulf Coast.
The proposed 400 Mb/d Shell Pipeline Company Westward Ho pipeline from St. James, LA to Nederland, TX was first touted in 2011 and initially expected to be in service by Q3 2015 but is now delayed at least until the end of 2017. The project is designed to replace the Shell Ho-Ho pipeline that used to ship crude from Louisiana to refineries on the Texas Gulf Coast until it was reversed in 2013. Westward Ho has struggled to attract shipper commitments to bring additional crude into the saturated Texas Gulf Coast market. Today we review the project’s rationale.
