• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes Middle East on brink: Oil tankers attacked off Oman
  • 8 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 6 hours Here We Go: New York Lawmakers Pass Aggressive Law To Fight Climate Change
  • 2 hours The Inconvenient Truth Of Electric Cars
  • 5 hours Iran downs US drone. No military response . . Just Completely Destroy their Economy. Can Senator Kerry be tried for aiding enemy ?
  • 1 hour Oil Demand Needs to Halve: Equinor
  • 7 hours Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 9 hours Ireland To Ban New Petrol And Diesel Vehicles From 2030
  • 4 hours Solar Panels at 26 cents per watt
  • 10 hours NATO Article 5: Attack on one member is attack on all. Members all must come to defense . . . NOT facilitate financial transactions to circumvent and foil US Sanctions. Somebody please tell Angela.
  • 9 hours Is $60/Bbl WTI still considered a break even for Shale Oil
  • 2 hours The Plastics Problem
  • 10 hours Wonders of Shale - Gas, bringing investments and jobs to the US
  • 5 hours Section 232 Uranium
  • 3 hours Green vs. Coal: Bavaria Seeks Fast-Track German Coal Exit in Snub to Merkel Plan
  • 3 hours Huge UK Gas Discovery
  • 6 hours Hydrogen FTW... Some Day
Alt Text

OPEC’s No.2 Steps In To Replace Lost Iranian Oil

Iraq, OPEC’s no.2 oil producer…

Alt Text

Canada’s Oil Patch Faces Investor Exodus

Capital investment across Canada’s oil…

Alt Text

U.S. Total Oil Output Poised To Set New 2019 Record

US oil production keeps accelerating…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Trending Discussions

U.S. Oil Export Boom Boosts Pipeline Demand

The U.S. could add around 4 million barrels per day (mb/d) of additional supply in the coming years, and most of it will be shipped abroad, turning the U.S. into a major oil exporter.

Most of the new supply will come in the form of light sweet and ultra-light oil. But because refineries along the Gulf Coast are largely equipped to handle medium and heavy crude, the new production probably won’t find a home inside the U.S.

A new study from Wood Mackenzie predicts that only about 900,000 bpd of the additional supply will be taken up in the domestic market, leaving more than 3 mb/d for export should those aggressive production forecasts play out. Meanwhile, Bernstein Research was even more definitive, arguing that essentially all new additional supply will be shipped abroad.

Ultimately, the IEA forecasts that U.S. crude export capacity could hit nearly 5 mb/d by 2023.

WoodMac estimates that initially a lot of the exported crude will head to Europe, where refining values are high. However, U.S. oil will have to compete with crude coming from West Africa. Once the European market is saturated, U.S. shale oil will be rerouted to Asia. Hefty transportation costs to Asia will force U.S. shipments to be offered at a steep discount if they are to be competitive. Nevertheless, it seems likely that exports will steadily ratchet up.

However, the flood of new oil coming from the U.S. shale fields will require an overhaul of pipeline and export terminals along the Gulf Coast. The Permian Basin is expected to lead the way, adding around 2 mb/d of additional supply by 2023. Already, the basin is facing pipeline bottlenecks, forcing producers to wait to complete drilled wells.

(Click to enlarge)

But the midstream sector is scrambling to resolve the issues. Related: Shell Takes Major Steps Toward Energy Diversification

The Capline pipeline that runs from Louisiana to Illinois, and used to shuttle large volumes of imported oil north to Midwest refineries, has seen volumes plummet. Its owner is now looking to reverse the flow, sending Bakken crude to the Gulf Coast, either for refining or export.

As the FT notes, a flurry of other projects are also in the works. New pipelines – the BridgeTex, Permian Express and Cactus pipelines – have begun ferrying Permian oil to the coast of Texas in the past two years, erasing what had once been a steep discount for Midland crude relative to WTI due to the infrastructure bottlenecks.

But, with output in the Permian continuing to rise at a rapid clip, more capacity is needed. For instance, the Cactus pipeline network is set to add two more lines, expanding capacity from 390,000 bpd to 575,000 bpd. The lines run from the Permian to Corpus Christi, and the expansion is expected to come online by the end of next year.

Overall, an estimated 2.1 mb/d of midstream capacity is under construction, according to RBN Energy, and cited by the FT.

“Everybody wants to get to water,” Corey Prologo, director of North American oil trading at Trafigura, told the CERAWeek Conference on Tuesday, the FT reported. “All the current pipelines are getting filled out, which they previously weren’t.”

New export capacity along the coast will also be required. The recent upgrading of the Louisiana Offshore Oil Port (LOOP) has inaugurated a new era of U.S. exports, allowing very large crude carriers (VLCCs) to load up on U.S. shale to be shipped abroad. Related: Is The Sky The Limit For U.S. Shale?

Additional expansions to handle the surging shale supply are also in the offing. WoodMac says the port of Corpus Christi is the obvious next candidate for increases in shipments. The consultancy sees crude exports from Corpus Christi rising to 1 mb/d by 2020 and 2 mb/d by 2023.  

It all amounts to a radical reworking of the U.S.’ pipeline and export facilities, channeling oil that had once gone from the coast to the interior back in the other direction.

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • Jay Yerger on March 07 2018 said:
    You would never know it to look at the prices of pipeline stocks, like EPD, EEP, ETP, KMI. Haven't been lower for many years now. What gives?

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News