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The Mississippi, She’s A-goin' Dry - Low Water Levels Pinch Midwest Condensate Takeaway

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.

The rapid run-up in U.S. crude oil, natural gas and NGL production through the 2010s put­­­ enormous pressure on the nation’s energy-related infrastructure. In what seemed like a flash, the Bakken in western North Dakota became a leading crude oil play, spurring the development of crude-by-rail terminals and takeaway pipelines. In the Marcellus/Utica, production growth made the Northeast self-sufficient in natural gas and resulted in a slew of pipeline reversals, expansions and greenfield projects to enable gas to flow west and south. And over the past five years or so, we’ve chronicled a phenomenal build-out of infrastructure within and out of the Permian, most of it designed to gather and process hydrocarbons in West Texas and southeastern New Mexico, and transport them to end-users and export markets along the Gulf Coast.

One of the most impressive — and comprehensive — infrastructure projects of the Shale Era was MPLX’s development of a condensate and NGL “purity product” pipeline-and-storage network in the Midwest. RBN estimates that the network now transports more than 30% of the condensate produced in the liquids-rich Marcellus/Utica play; the pipes also move much of the natural gasoline produced there and, more recently, a portion of the play’s isobutane as well. As important as this network is, however, Marcellus/Utica producers also depend on other means of transport to get these liquids to market, especially barges moving condensate down the Ohio and the Mississippi.

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