WCS Houston, Maya prices parted ways in 2015

OREANDA-NEWS. March 29, 2016. Prices for Western Canadian Select (WCS) crude at Houston, Texas, diverged from the Mexican heavy sour grade Maya in 2015 as infrastructure expansions allowed more WCS volumes to reach the US Gulf coast.

Canadian infrastructure company Enbridge on 1 July expanded the capacity of Line 67 of its Mainline System - the primary conduit for Canadian crude to the US midcontinent - to 800,000 b/d. Canadian crude as a share of Texas imports below 24°API climbed to 18pc in 2015 from 8pc in 2014, while Maya's share during the same period fell to 34pc from 40pc.

Values for WCS at Houston and Gulf coast-delivered Maya diverged in 2015. The WCS discount to Light Louisiana Sweet (LLS) more than doubled to \\$14.43/bl on 24 August 2015 from \\$5.96/bl on 29 June. Maya, however, held a premium of more than \\$5/bl to WCS at Houston on 24 August. Its discount to LLS fell to \\$9.21/bl from \\$5.23/bl on 29 June.

WCS at Houston held an average discount of 66?/bl to Maya at the Gulf coast during April 2016 trade.

To reflect this shift, Argus will today begin formally assessing the value of WCS at Houston to bring transparency to the market for Canadian heavy crude at the Texas Gulf coast.

One of the reasons that Maya has remained stronger on the Gulf coast compared with WCS is the formula used to calculate its value. West Texas Sour (WTS), a grade priced at Midland, Texas, accounts for 40pc of Maya's calculated value. WTS strengthened last year when start-up of the Permian Express 2 pipeline eliminated a glut in Midland, allowing that crude to find an outlet at the Gulf and boosting prices.

Canadian crude reaches the Texas Gulf coast via the Enbridge-Enterprise joint venture Seaway and Seaway twin pipelines or TransCanada's 700,000 Marketlink pipeline.

The Seaway lines deliver to the Jones Creek terminal; Freeport, Texas; the Phillips 66 Sweeny refinery; Texas City, Texas; and the Enterprise Crude Houston (Echo) terminal in Houston, Texas.

Echo terminal connects to Enterprise's Houston Ship Channel Terminal (Oiltanking).

In addition, the Enterprise Seaway Beaumont line connects Echo to Sunoco Nederland, Phillips 66 Beaumont and Enterprise's Beaumont Marine West (BMW) terminal.

The Phillips 66 Beaumont terminal received 56,344 b/d of crude from Enterprise from February through December 2015, according to Texas Railroad Commission filings.

Marketlink delivers to the Sunoco Nederland terminal.

LyondelBasell's 268,000 b/d refinery (Houston Refining) in Houston, Texas, took 46,190 b/d of Canadian heavy crude in 2015. The company has committed space on Enbridge's Flanagan South Pipeline System (FSP).

Sunoco Nederland received 57,171 b/d of Canadian crude, while Motiva's 600,000 b/d refinery in Port Arthur, Texas, took 60,458 b/d, mostly via Sunoco Nederland.