Final Phase Of Seaway Pipeline Expanison To Come Online 2Q14

RBN Energy: update on the Seaway Pipeline Expansion -- and yes, this affects the Bakken.

Throughout the three year-long disruption of the US crude oil distribution system caused by rising domestic and Canadian production trying to find a path through the Midwest, the Seaway pipeline reversal project has been a market bellwether of progress to unwind the congestion. In 2Q 2014 the final phase will come online - opening up an additional 450 Mb/d capacity between Cushing and Houston. As the Seaway project has been built out, the crude surplus in the Midwest appears to have moved to the Gulf Coast. Today we detail the impact of Seaway Phase 3 on Gulf Coast crude supplies.

A bit more detail from the earlier snippet:

By the time that Seaway Phase 3 comes online during the second quarter of 2014, we will already have observed the impact of as much as 700 Mb/d of additional crude capacity coming online from Cushing to Port Arthur sometime in January via TransCandada’s Cushing Marketlink Pipeline (CMP). As we detailed in the previous episode in this series, the volume of crude flowing on CMP will be constrained by a lack of supplies at Cushing. We cited two reasons for that lack of supply- first continued delays in building the northern leg of the Keystone XL pipeline that was supposed to feed into CMP and second the limited pipeline capacity to deliver crude into Cushing from Chicago until the 585 Mb/d Enbridge Flanagan South project is completed in mid 2014. Without those pipeline links there is not enough crude flowing into Cushing to feed the 700 Mb/d CMP and the 450 Mb/d Seaway expansions.

But shippers on the Seaway expansion should be in better shape next year than their counterparts on the CMP. That is because the Seaway expansion comes online at the same time as the Flanagan South project and the two pipelines share a common owner in Enbridge. That means Seaway shippers should be able to secure adequate supplies of Canadian or Bakken crude at Cushing via Flanagan South. Their counterparts with commitments to ship crude on the CMP have no such connection to crude supplies from Canada or North Dakota until the Keystone XL northern section receives a Presidential permit and gets built – an event that may never happen - and if it does, will not be completed before 2016 at the earliest.