US Exports Contingent Upon WTI-Brent Spread -- December 18, 2015

Active rigs:

	12/18/2015	12/18/2014	12/18/2013	12/18/2012	12/18/2011
Active Rigs	64	183	188	186	201

RBN Energy: the series continues -- updating Corpus Christi, Texas, part 4 -- December 18, 2015.

We don’t expect to see a flurry of U.S. crude shipments overseas following the expected lifting of the decades old U.S. ban on exports by Congress this week. That’s because the price spread between U.S. crude benchmark West Texas Intermediate (WTI) and international equivalent Brent is currently trading at less than $2/Bbl – providing no economic incentive to cover the freight cost of shipping U.S. crude abroad.

However, longer term the end of the export ban expands the market options for U.S. crude producers. In that context, well-developed pipeline connections between South Texas Eagle Ford oil and condensate production and the Port of Corpus Christi bode well for future export opportunities.

This is the fourth episode in our series on crude and condensate infrastructure to and within Corpus. Episode 1 provided a brief refresher course on what lease condensate is (an ultra-light form of crude oil with an API degrees gravity level of 45 or 50 or more) and discussed why condensate, with its lighter range of hydrocarbons, is generally less desirable to Gulf Coast refineries configured to process heavier crudes. The series opener also described the rapid rise of crude and condensate output in the Eagle Ford and the Permian, and noted that production from the two plays remains high despite the 2014 oil price collapse.

In Episode 2 we took a high-level look at how crude and condensate moves from the Eagle Ford and the Permian to Corpus (and from the Permian to Houston and Cushing, OK), then began a detailed review of pipelines to Corpus with a discussion of Plains All American’s (PAA) Cactus Pipeline from the Permian’s Delaware Basin to Gardendale, as well as PAA and Enterprise Products Partners’ Eagle Ford Joint Venture Pipeline from Gardendale to refineries in Three Rivers and Corpus Christi and to other markets via marine docks.

Our most recent entry, Episode 3, considered several pipelines that run from Gardendale to (or at least towards) Corpus, including Kinder Morgan and Magellan Midstream Partners’ Double Eagle Pipeline, NuStar Energy’s South Texas Crude Oil Pipeline System, and the Harvest Pipeline System co-owned by Hilcorp Energy and others. Today, we describe remaining pipelines to Corpus, and then discuss existing and planned refineries and splitters there.

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