The reversal of the Seaway was completed, but the expansion from 150,000 bbls/d to 400,000 bbls/d was delayed until 4Q13 (although there are hints that the expansion may be back on track sooner).
It now appears that even with the Seaway reversal, the glut will persist. Remember: there are at least three major fields now in production contributing to the glut: the Permian (west Texas), the Eagle Ford (south/southeast Texas), and the Bakken. Not far behind (?): the Niobrara and the Mississippi Lime.
The operators of the nation's largest pipeline, the Capline, running from Louisiana to Illinois, have announced they will reverse the flow of this pipeline. They had originally planned not to reverse the flow when it was announced the flow of the Seaway pipeline would be reversed.
Today, at Bloomberg:
- WTI: $96
- Brent: $115
The Bakken/WTI spread at Clearbrook, MN, has narrowed from $3.25 to $3.15. [WTI at $96, means Bakken at Clearbrook is about $93.]
I tried connecting the decision to reverse the flow of the Capline (this is a reversal in itself) with the reality that the Keystone XL is not likely to be approved, but I can't connect the two. But as long as I've mentioned it, I might as well complete the thought: killing the Keystone XL will be seen as a plus for the domestic US oil industry. There is so much oil coming out of the mid-continent, any more oil from Canada just couldn't be handled right now. At least that's my two cents worth. So, why are we still importing oil if there is so much oil being produced by the US? Part of the reason has to do with the type of oil US refineries are configured to use. Again, I'm way beyond my understanding of the oil industry, but that's my two cents worth.
