Viewpoint: Capline throughput set to drop in 2016
OREANDA-NEWS. December 24, 2015. Light crude from North Dakota and western Canada shipped on Enbridge's 300,000 b/d Southern Access Extension (SAX) pipeline could displace more than 110,000 b/d of domestic crude shipped on the 1.2mn b/d Capline pipeline to Patoka, Illinois.
Throughput on Capline, which runs from St James, Louisiana, to Patoka, averaged between 311,889 b/d and 323,636 b/d during the first nine months of 2015. Of that total, between 112,618 b/d and 124,365 b/d reached the Patoka storage hub, which is also the terminus of SAX.
In the first nine months of 2015, 161,306 b/d of domestic crude shipped on Capline went to Valero's 190,000 b/d refinery in Memphis, Tennessee, according to filings at the Federal Energy Regulatory Commission (FERC).
Meanwhile37,960 b/d of Saudi crude moved on Capline to Marathon Petroleum — almost entirely to its 240,000 b/d refinery in Catlettsburg, Kentucky — according to data from the Energy Information Administration (EIA).
SAX, which originates in Flanagan, Illinois, will give anchor shipper Marathon Petroleum greater access to light crude from North Dakota and western Canada.
Enbridge has throughput commitments for 90pc of SAX's capacity, but the line can replace Capline domestic crude shipments to Patoka even if it runs at 38-41pc of nameplate capacity.
As SAX begins service in January and the economics of Bakken moving to the Atlantic coast remain poor, the Atlantic coast could provide an outlet for Gulf coast crude backed out of Capline.
Bakken prices climbed as demand for the light crude from North Dakota and western Canada increased ahead of the start-up of SAX and Line 9 — a second 300,000 b/d Enbridge line that in December began shipping mostly light crude from Sarnia, Ontario, to Montreal, Quebec.
High Bakken prices and a narrow WTI/Brent spread have eroded the arbitrage to rail the North Dakota shale crude to the Atlantic coast. The prompt WTI/Brent spread has averaged just \\$2.45/bl in December to-date, the narrowest average spread since January 2015.
The five-week moving average of BNSF petroleum car loadings has remained below 9,000 since the week ending 23 October. It had remained above 9,000 since the week ending 1 February 2013.
BNSF serves numerous rail loading facilities in North Dakota and Wyoming.
While volumes of crude by rail to the Atlantic coast declined, domestic waterborne movements climbed. East coast receipts of crude oil by marine vessel from the US Gulf coast climbed in September to 2.287mn bl, the highest level since December 2013, according to EIA data.
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