Keystone XL's Southern Leg: An Update; Not Good News

I thought the Keystone XL southern leg (Cushing to the gulf coast) was to be on-line the first week in November, but then I had not seen anything.

Finally, Platts has an update: the once-southern leg of Keystone XL won't be at 100% next year.

TransCanada’s Cushing, Oklahoma, to Port Arthur-Nederland, Texas, and Gulf Coast Pipeline project is expected to operate at an average of 550,000 b/d in 2014, despite having a capacity of 700,000 b/d. The line is the southern tail of the original Keystone XL proposal.

Alex Pourbaix, the President for Energy and Oil Pipelines at TransCanada, said in the company’s third quarter conference call that because of the relative newness of the line, it won’t be able to operate at full capacity initially. Officials also said though that a “significant majority” of the barrels that are going to be moving down the line were under contractual commitments, rather than being planned spot barrels.

TransCanada officials also said that the first oil from the Cushing-Port Arthur-Nederland pipeline would reach the Gulf Coast before the end of this year, but they’ve been saying that all along.

But then this shocker:

“So when TransCanada says they expect 2014 throughput to be about 550,000 b/d, there should be no surprises,” said a Gulf Coast refiner. “More surprising is that the Gulf Coast Pipeline project [another project in addition to the Keystone XL southern leg] is not fully subscribed.”

This helps explain the WTI-Bakken spread.