The reversal of Shell’s Zydeco Pipeline (formerly Ho-Ho) in 2013 was a big deal. It enabled eastbound flows of a wide range of crude streams from the Houston area to the storage and distribution hub at St. James, LA and from there to a dozen nearby refineries. Soon, though, Zydeco (named for the region’s Creole music) was running full and shippers were competing for space, spurring midstream companies to consider further enhancements. New pipeline capacity being developed is planned to come online later this year and in 2017, but—with ever-changing market dynamics—will it all be necessary? In today’s blog, “Take the Long Way Home—Easing Crude Pipeline Constraints to St. James,” Housley Carr begins a series on new pipeline capacity to St. James, and whether it will meet (or exceed) market needs.
Since the Golden Oldies days of the RBN blogosphere, we’ve paid a lot of attention to how crude oil gets from where it’s produced to where it’s stored and (ultimately) refined because—to put it bluntly—there are few things more important in the world of U.S. hydrocarbons. And, thanks to geology, history and the grace of God, the epicenter of that world is the central Gulf Coast between Houston and New Orleans. As we first discussed in our Oh-Ho-Ho It’s Magic blog three and a half years ago, the flow-reversals of the Houston-to-Houma (LA) pipeline and a connecting pipeline between Houma and the mammoth crude storage complex in Clovelly, LA was part of a wholesale change in Gulf Coast pipeline infrastructure aimed at facilitating the flow of domestic crude to market from growing shale production basins in the Bakken, the Permian Basin and the Eagle Ford to Houston and from there, to the hub at St. James. As we said more recently in I Got Storage (I Feel Good), St. James (located on the Mississippi 60 miles upriver from the Big Easy) serves as a critical storage and distribution hub. It receives crude by pipeline, by barge and tanker, and by rail; it has more than 30 MMbbl of storage capacity; and it sends crude out to area refineries with a combined capacity of 2.6 MMb/d. St. James also feeds the 1.2 MMb/d Capline pipeline, which transports crude and condensates north to Patoka, IL (but which has been running at far less than full-capacity). Much as Taylor Swift, The Eagles and Dolly Parton each draw a wide range of fans, the St. James hub serves as an oil mixing bowl, receiving regionally produced crudes such as the Gulf Coast benchmark Light Louisiana Sweet (LLS), Heavy Louisiana Sweet (HLS), medium sour crude Mars (produced offshore in the Gulf of Mexico, or GOM), and West Texas Intermediate (WTI), as well as ultra light crude from the Eagle Ford (condensate) that is piped north through Capline, connecting through other Canadian pipes to Alberta for use as a diluent in heavy Western Canadian oil sands.
As we said, the Zydeco reversal was a game-changer. Zydeco (solid yellow line between Houston and Clovelly in Figure 1, plus the yellow-and-black dashed line between Houma and St. James) is the only crude pipeline system that runs directly from Texas’s Gulf Coast to St. James (another—the Bayou Bridge Pipeline—may well do the same soon, as we’ll get to a bit later). The Zydeco reversal has enabled St. James to receive piped-in deliveries of Bakken and other Midcontinent crudes (sent from Cushing, OK to Houston to St. James) as well as Permian and Eagle Ford crude (sent to Houston and then to St. James). One shortfall of Zydeco has been that while it can move up to 375 Mb/d through the 20- and 22-inch-diameter stretch of pipeline from Houston to Houma, Zydeco can move no more than 270 Mb/d over the narrower (18-inch-diameter) leg from Houma to St. James. Plans are under way to provide more pipeline access to St. James, and Figure 1 will help us describe two ongoing efforts that would help mitigate what has been a persistent deficit of needed pipeline capacity in the region.