Zydeco Pipeline

The competition among midstream companies to transport light, sweet U.S. crude to Louisiana refineries and to the Louisiana Offshore Oil Port (LOOP) is heating up. On April 1, Energy Transfer and Phillips 66 Partners finally started up the Lake Charles-to-St. James portion of their Bayou Bridge pipeline, which is designed to move light oil to the heart of Louisiana’s refining country. Two weeks later, Shell initiated an open season for newly available space on its Zydeco Pipeline from Houston to the St. James and Clovelly hubs, the latter of which can send crude to either local refineries or LOOP — the only Gulf Coast port currently able to fully load Very Large Crude Carriers (VLCCs). Then, earlier this week, Bayou Bridge’s co-owners launched an open season of their own, this one to gauge shipper interest in joint-tariff transportation service on certain connecting pipes that haul light crude from the Bakken, the Niobrara, the Cushing crude hub and the Permian. The fight for barrels doesn’t end there — don’t forget plans for the Capline reversal and the Seahorse, ACE and Swordfish pipelines, all of which also are targeting Louisiana refineries and/or the export market. Game on! Today, we update midstreamers’ efforts to transport more high-API-gravity oil to Louisiana refineries and LOOP.

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.