Capline Reversal -- Full Capacity -- January 11, 2021

Link here.

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EVs
Copper

Two Wells Coming Off The Confidential List Today -- April 25, 2019; Those Sanctions On Iran? Never Mind

Joe Biden: must have a busy day scheduled. Announced via video at oh-dark-thirty that he was running for president. I assume he was taking that 3:30 a.m. call.

Sanctions: all that talk about sanctions on Iran. Never mind. The Trump administration has found another loophole to exploit -- Iran can still export oil.

Pipelines: from realclearenergy yesterday -- America needs more oil and natural gas pipelines. 

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Back to the Bakken

Wells coming off the confidential list today --  Thursday, April 25, 2019: 77 wells for the month; 77 wells for the quarter

• 34310, drl, Crescent Point Energy, CPEUSC Bennie 9-20-17-157N-99W-LL TFH, Lone Tree Lake, no production data,
• 35323, SI/NC, MRO, Driftwood USA 41-17H, Reunion Bay, no production data,

Active rigs:

$66.10	4/25/2019	04/25/2018	04/25/2017	04/25/2016	04/25/2015
Active Rigs	62	63	49	26	84

RBN Energy: who will win the fight to deliver more light crude oil to Louisiana?

The competition among midstream companies to transport light, sweet U.S. crude to Louisiana refineries and to the Louisiana Offshore Oil Port (LOOP) is heating up. On April 1, Energy Transfer and Phillips 66 Partners finally started up the Lake Charles-to-St. James portion of their Bayou Bridge pipeline, which is designed to move light oil to the heart of Louisiana’s refining country. Two weeks later, Shell initiated an open season for newly available space on its Zydeco Pipeline from Houston to the St. James and Clovelly hubs, the latter of which can send crude to either local refineries or LOOP — the only Gulf Coast port currently able to fully load Very Large Crude Carriers (VLCCs). Then, earlier this week, Bayou Bridge’s co-owners launched an open season of their own, this one to gauge shipper interest in joint-tariff transportation service on certain connecting pipes that haul light crude from the Bakken, the Niobrara, the Cushing crude hub and the Permian. The fight for barrels doesn’t end there — don’t forget plans for the Capline reversal and the Seahorse, ACE and Swordfish pipelines, all of which also are targeting Louisiana refineries and/or the export market. Game on! Today, we update midstreamers’ efforts to transport more high-API-gravity oil to Louisiana refineries and LOOP.

Back in the Pre-Shale Era, U.S. crude oil production was on a decades-long decline, increasing volumes of foreign oil were being imported to fill the supply gap, and the general direction of flows on U.S. crude pipelines was northbound from the Gulf Coast to inland refineries. In the past 10 years or so, these trends and flows have been reversed: U.S. production is up sharply; crude imports to the U.S. are down (but leveling out); and crude is being pulled toward the Gulf Coast and its array of refineries and export terminals, not away from it. We’ve discussed this tectonic shift in oil-pipeline flows in a number of recent blogs, including ones focused on the Cushing and St. James crude hubs, on Permian takeaway capacity, and on new export capacity being developed along the Texas and Louisiana coasts.

An interesting sub-theme in all this is that while many Texas refineries and export terminals (e.g. Corpus Christi, Houston, and Beaumont/Port Arthur) now benefit from direct pipeline access to light, sweet crudes from a variety of U.S. shale plays, the availability of shale crude by pipeline to refineries and export docks in neighboring Louisiana has lagged. But that’s about to change as producers in the Bakken, the Niobrara’s Powder River and Denver-Julesburg (D-J) basins, the Permian and the Eagle Ford seek new outlets for their crude and midstream companies compete to provide the best pipeline access to a wide range of Bayou State destinations.

Responding To The Glut Of Light Oil -- February 7, 2019

Updates

Later, 8:46 p.m. CT: see first comment -- Very interesting... I wonder if the Capline ends at Patoka, IL? I believe the Dakota Access pipeline ends at Patoka, IL. Part of the reason for there was that's as high up the barges could come up the Mississipi and carry a full load.(down to Louisiana). Maybe Patoka is a hub of sorts.... the map: from RBN Energy --

 

Original Post

From January 11, 2019:

RBN Energy: will crude soon be flowing south on Capline?

The possibility of reversing the flow on Capline — the U.S.’s largest northbound crude oil pipeline — has been discussed for a number of years now. Finally, it may be on the horizon. The three owners of Louisiana-to-Illinois pipeline announced last week that this month they plan to initiate a binding open season for a reversed Capline system that would enable southbound flows starting in the third quarter of 2020 — only a year and a half from now. And, as we discuss in today’s blog, reversing Capline’s direction could open up new crude-slate possibilities for Louisiana refineries and boost crude exports out of the Bayou State.

Today, it is announced that the Capline will be reversed in September, 2020. Link here.

The reversed Capline is expected to be "available for service" to carry light, sweet crude by September 2020, allowing North American crudes to flow more easily to eastern US Gulf Coast refineries, an executive said Thursday.

This is the third story in less than three weeks regarding how the US oil sector will deal with all that light oil. Slowly but surely. Another great story.

The first story: Chevron to expand a Gulf Coast refinery to deal with light oil.

The second story: ExxonMobil to increase light oil refining capacity along the Gulf Coast in conjunction with a new one-million Permian pipeline (partner with Qater).

This third story: reversing the Capline to get all that light oil to the northeast.

Huge News For Louisiana -- It Simply Never Quits -- RBN Energy -- January 11, 2019

WTI/Brent: the string of unbroken advances continues.

Wells coming off the confidential list today -- Friday, January 11, 2018:

• 34648, SI/NC, WPX, Lead Woman 23-14HQ, Spotted Horn; could be a big well; see this post.
• 34647, 3,165, WPX, Lead Woman 23-14HA, Spotted Horn; t12/18; cum 25K over 28 days; frack data not available at NDIC yet;
• 33749, 1,521, Oasis, Crane Federal 5300 34-27 12B, 35 stages; 9.9 million lbs, small/medium/mesh, Willow Creek; t7/18; cum 110K 11/18;
• 31774, 5,058, Bruin, Fort Berthold 151-94-26B-35-15H, 4 sections, 55 stages; 14.4 million lbs, Antelope-Sanish; a staggering well; t7/18; cum 294K 11/18; 

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
SANISH	11-2018	19	23718	23701	16934	27753	15030	12602
SANISH	10-2018	31	62285	62233	55956	86428	56123	30017
SANISH	9-2018	30	50357	50881	55448	68944	53380	15111
SANISH	8-2018	31	96045	96183	70073	92539	72538	19688
SANISH	7-2018	22	61234	60338	83791	82493	16676	65537

Active rigs:

$52.59	1/11/2019	01/11/2018	01/11/2017	01/11/2016	01/11/2015
Active Rigs	66	54	36	55	167

RBN Energy: will crude soon be flowing south on Capline?

The possibility of reversing the flow on Capline — the U.S.’s largest northbound crude oil pipeline — has been discussed for a number of years now. Finally, it may be on the horizon. The three owners of Louisiana-to-Illinois pipeline announced last week that this month they plan to initiate a binding open season for a reversed Capline system that would enable southbound flows starting in the third quarter of 2020 — only a year and a half from now. And, as we discuss in today’s blog, reversing Capline’s direction could open up new crude-slate possibilities for Louisiana refineries and boost crude exports out of the Bayou State. Later: Capline will be reversed in September, 2020; link here.

Active Rigs Hold Steady At 61; WTI Up A Bit -- March 6, 2018

US oil pipelines pivot south: shale surges. From Financial Times. This is quite an incredible story.

In 1967 the Capline pipeline began shuttling imported and Gulf coast crude northwards from Louisiana to Illinois, where it was dispensed to Midwestern refineries. Now, its volumes drying up, Capline’s owners have proposed flipping the 1.2m b/d conduit to flow south instead of north, permitting inland crude to reach the coast.

The new BridgeTex, Permian Express and Cactus pipelines now stretch from west Texas oilfields to ports and refineries in coastal Corpus Christi and Houston. Additional pipeline systems able to handle more than 2.1m b/d are planned or under construction, according to RBN Energy, a research company. Workers are clearing a path for the Epic pipeline, which will stretch 700 miles from the booming Permian Basin to Corpus Christi. National oil companies from Asia are among the confirmed shippers on the line.Please use the sharing tools found via the email icon at the top of articles.

“If you were sitting in Riyadh or in Moscow and you were looking at some country grabbing 2m barrels a day in market share in one year, it might make you wonder about what you’re doing,” [an analyst] adds. (US exports of crude oil and petroleum products climbed more than 1.7m b/d between December 2016 and December 2017 to a record 7.3m b/d.)

Much more at the link.

Posted earlier: Saudi Arabia cuts price on its oil. Trying to re-grab market share. Good old "free markets." From Bloomberg via Rigzone:

Saudi Arabia cut pricing for Arab Light crude to Asia for the first time in eight months, a sign that the world’s largest oil exporter is fighting harder for sales in its biggest market.

State-owned Saudi Arabian Oil Co. lowered its official selling price for Arab Light crude for April shipment by 55 cents to $1.10 a barrel more than the Middle East benchmark, the company said Monday in an emailed statement. It’s the first cut since August. Aramco had raised its January pricing to the highest since 2014 and kept it there for the next two months. The producer, known as Saudi Aramco, was expected to lower pricing by 45 cents a barrel, according to a Bloomberg survey.

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Back to the Bakken

"Arctic" rigs:

$63.13↑	3/6/2018	03/06/2017	03/06/2016	03/06/2015	03/06/2014
Active Rigs	61	44	35	114	191

RBN Energy: rising Canadian production, takeaway constraints and WCS price discounts, part 6.

We Lost Internet Last Night -- Still Down This Morning -- Blogging From McDonald's -- Will Be Awhile Before I Get Caught Up -- November 2, 2017

Our internet at home is still down, and apparently the problem is spreading again this morning in the Dallas area, from downdetector:

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Back To Business

Active rigs:

$54.21	11/2/2017	11/02/2016	11/02/2015	11/02/2014	11/02/2013
Active Rigs	53	35	69	193	181

RBN Energy: the rationale for reversing the crude oil flow on the Capline.

The three co-owners of the 1.2-MMb/d Capline Pipeline from St. James, LA, to Patoka, IL, have begun assessing whether there is sufficient shipper interest in reversing the flow of one of the U.S.’s largest crude oil pipelines in the early 2020s.

There are good reasons both for ending Capline’s long run as a northbound-flowing pipe and for repurposing the pipeline to help transport heavy western Canadian oil and other crudes south to refineries in eastern Louisiana and Mississippi and to export markets.

But there also are logical questions to ask, such as why Capline’s owners envision sending only 300 Mb/d south on the pipe, and why they don’t see the reversal occurring for five years. Today, we examine the forces behind Capline’s possible reversal and the benefits that flipping the pipe’s direction might provide.

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The Sports Page

From RBN Energy today (same link as above):

The Astros’ 5-1 win last night in the seventh game of the 2017 World Series capped off an incredible year for the team, and provided a welcome boost to the Houston area, parts of which are still recovering from the devastating effects of Hurricane Harvey. Houston Strong! The Astros accomplished a lot in the post-season. For one, they became the first Major League Baseball (MLB) team to win a pennant in both the National League (in 2005) and the American League (a couple of weeks ago). For another, in their 10^th-inning, 13-12 win in Game 5 on Sunday, the Astros became the first team in World Series history to have five different players hit homers. (Game 2 wasn’t bad either!) In many ways it was inevitable — or at least not very surprising — that the Astros and the Dodgers would end up in the World Series this year. After all, both teams had won more than 100 games during the regular season, a feat that only seven other teams have accomplished so far this century.

GDP; Majors Report Earnings Today -- October 27, 2017

Most incredible headline of the day. There were a lot of incredible headlines today but this one may simply be the most incredible. Remember: Amazon is a mature company. Its earnings growth should be leveling off. And then this headline: Amazon revenue rises 34%. Say what? That's absolutely amazing. Here's the link to the WSJ story. And the headline just below that one over at the Drudge Report: UPS ramps up spending to keep up with online shoppers. UPS drives through our apartment complex daily, stopping at no less than five units -- on slow days. I order something from Amazon and it arrives 1.5 days later. I actually have to request Amazon to delay shipping so I don't have Uber drivers looking for my address on dark and stormy nights. Pretty soon it appears folks will be able to order opioids through Amazon using bitcoin.

Wow, wow, wow. Making American great, huh? How about this. Forecast, 2.7% by some; 2.5% others. GDP for 3Q17 came in at 3.0%. Despite the hurricanes, the US economy unexpectedly  -- there's that word used again by the mainstream media -- maintained a brisk pace of growth. 

Never saw this coming: CVS Health looking to buy Aetna. Story everywhere; no link.

CVX: misses

• earnings: $1.03 vs 68 cents a year earlier but excluding one-time earnings, earned 85 cents vs 98 cents forecast (I call that a mixed report; not so much a miss)
• production jumped 8 percent to 2.7 million boepd (not sure why headline said "Chevron profit misses estimates on output decline)
• average sales price per bbl $42 this quarter vs $37 a year ago
• cash flow: $14.3 billion compared with $9.0 billion one year ago

XOM: beats

• earnings: 93 cents vs 87 cents; storm cut earnings by another 4 cents
• revenue beat: $66.165 billion vs $63.389 billion

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Explanation escapes me. Why is wind energy the one entity not taxed in North Dakota? This is not about "liking" or "not liking" wind energy. It's about fairness. From The Dickinson Press:

Death and taxes may be certainties in life, but the wind seems to be above them both—yet the question of taxing the wind remains contentious for North Dakota legislators.

"The state does not collect a tax on wind generation of electricity. It does on coal, we have a tax on oil ... that's the question. Wind has come under fire. Some don't like wind," Sen. Rich Wardner, R-District 37 said at a town hall meeting this week in Dickinson.

Wardner, who serves on the Energy Development and Transmission committee, said that the realities of the energy market and the lack of real revenue-generation tend to make him lean against implementing any tax on wind-generated energy in the state. [Explain to me again how wind energy survives without generating revenue? Oh, that's right. For investors in wind, it's not about revenue.)

Active rigs:

$52.57→	10/27/2017	10/27/2016	10/27/2015	10/27/2014	10/27/2013
Active Rigs	53	35	68	195	182

RBN Energy: in with a new crude oil pipeline and maybe out with another.

Over the past few years, rising production in the Canadian oil sands and U.S. shale plays such as the Bakken, Permian and Eagle Ford has given refiners new options for sourcing their crude, causing changes in oil pipeline utilization and prompting the development of new pipelines — or the reversal of existing pipes.

A prime example of all this is playing out in Memphis, TN, where a Valero Energy refinery will be shifting from mostly U.S. Gulf Coast-sourced light crude to light crude that will flow in on the new Diamond Pipeline from the Cushing, OK, crude storage hub.

Valero’s change in crude sourcing will be yet another blow to the 1.2-MMb/d Capline Pipeline, which for decades has moved crude north from the Gulf Coast to Patoka, IL, and other points along the way, including western Tennessee. Today, we look at the thinking and economics behind Valero’s plan and at the latest news on Capline.

Not exactly what we expected, the fox guarding the hen house: from Bloomberg --

Saudi Arabia’s stock exchange is gunning for the exclusive right to list shares of oil giant Aramco and will compete with other bourses seeking a piece of what could be the world’s biggest initial public offering, the head of the Saudi exchange said.

The kingdom plans next year to sell a stake in Saudi Arabian Oil Co., as the world’s biggest oil exporter is known formally, and exchanges in London and New York are among those vying for a role.

Note exactly what we expected, the fox inside the hen house: from Bloomberg:

Iraq’s North Oil Co. is working with the Kurdish Kar Group to resume pumping at two disputed oil fields that halted output after government troops recaptured them from Kurdish forces, according to two people with knowledge of the situation.

Bai Hassan and Avana oil fields are still not exporting since forces of the central government in Baghdad overtook areas in Kirkuk province from Kurdish troops last week, said the people, who asked not to be identified because the matter isn’t public. The fields had been pumping an estimated 275,000 barrels a day before the Iraqi offensive.

WTI Down To $46.60; To Test $45 Again? End Of Driving Season Looms -- August 17, 2107

Active rigs:

$46.60↓	8/17/2017	08/17/2016	08/17/2015	08/17/2014	08/17/2013
Active Rigs	54	32	74	194	183

RBN Energy: are the Capline Pipeline and LOOP about to enter a new era? A must-read.

The stars may finally be aligning for two related crude oil infrastructure projects that, if undertaken, would provide an important new pathway to overseas markets for Bakken, western Canadian and other North American crude. The first would involve reversing the Capline Pipeline, which was built to transport crude north from the U.S. Gulf Coast to Midwest refiners.

The second would make modest physical changes to the Louisiana Offshore Oil Port — better known as LOOP — to allow the crude import facility off the Bayou State coast to load crude onto ships, including Very Large Crude Carriers (VLCCs). Today we look at the new infrastructure and market forces that may finally spur Capline’s reversal and lead imports-focused LOOP to enable exports.

CLR To Sell 80,000 Non-Core Assets In The Bakken -- August 18, 2016

Updates

August 23, 2016: it appears the Rainbow Project is included in the CLR sale.
 
August 21, 2016: A reader asks a very interesting question, see first comment at this post:

How do I find out if the Rainbow Project was sold by Continental resources in this last sale of 80,000 acres for $222 million.

The Rainbow Project was mentioned at the blog at this link: http://themilliondollarway.blogspot.com/2013/04/samson-oil-and-gas-to-acquire-net-1225.html.

There was also a note on the Rainbow Project at this link: http://www.oilandgas360.com/samson-oil-and-gas-limited-deal-with-slawson-exploration/.

According to Business Wire, The Rainbow Project is located in Sections 17, 18, 19 and 20 in T158N R98W.

Personal comment: if this is the area under discussion, it certainly seems like an area that CLR might sell.
Perhaps a reader might have an answer. Unless one has "inside information" or "unique access" to the buyer or seller, my hunch is that the answer to the question will be somewhat difficult to find in the short run. Within a few weeks, we should start seeing transfer of wells from CLR to another operator. 

Original Post 

CLR to sell 80,000 net mineral acres in the Bakken for $222 million.  About $2,750/acre. Enough cash to complete 70 wells. Each completed well will produce at least 100,000 bbls in first six months. At $30/bbl, about $210 million at the wellhead. My own back-of-the-envelope calculations. Others will have different numbers. Because there's only a gazillion different assumptions and methods to do the calculations.

Active rigs:

	8/18/2016	08/18/2015	08/18/2014	08/18/2013	08/18/2012
Active Rigs	33	74	193	183	199

RBN Energy: new crude oil pipeline from hubs to refineries. Another nice data point: even short inter-state pipelines can cost upwards of $2 million / mile.

In recent years, Valero has invested more than $200 million on changes that allow the Home of the Blues refinery (our nickname for it, not Valero’s) to process more light sweet oils like those readily available from Cushing, the “pipeline crossroads of the world” and the planet’s largest crude oil storage and distribution hub. 

The Valero refinery currently gets the majority of its crude from the St. James, LA hub via Capline, a 1.2-MMb/d (but lately very underutilized) pipeline that moves crude north from St. James to Patoka, IL; crude bound for Memphis hops off Capline in Collierville, TN, then flows west on Valero’s 52-mile, 210-Mb/d Collierville Pipeline. 

The question for Valero became, why source crude from St. James (a smaller hub that receives heavier Gulf of Mexico and imported crude, as well as lighter oil –– by rail –– from North Dakota) when you could access the much larger, more liquid hub at Cushing –– and the wider variety of lower-cost light crudes available there? 

As we said in our first look at Diamond two years ago, to take advantage of what for a while were big discounts for Bakken crude, Valero was moving significant volumes of North Dakota oil by rail to St. James, and from there via Capline and Collierville to Memphis, a round-about and (as Bakken differentials to Louisiana Light Sweet withered away) increasingly expensive delivery approach (then estimated at more than $15/bbl  from Bakken to St. James to Memphis). 

This Diamond is no zirconium –– that is, it’s not cheap (an estimated $900 million). But when it finally comes online (in late 2017, a year later than originally scheduled due to permitting delays), the pipeline will enable Valero to receive Bakken, Denver-Julesburg, Permian, Anadarko and other light crudes from the Cushing hub for far less per barrel.

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Nigeria: A Loss Of 750,000 BOPD; Highest Since 2009

From the EIA today:

Crude oil production disruptions in Nigeria reached 750,000 barrels per day (b/d) in May 2016, the highest level since at least January 2009. The increased disruptions come as militants continue to focus attacks on oil and natural gas infrastructure in the West African region. Nigeria is a member of the Organization of the Petroleum Exporting Countries (OPEC) and was Africa's largest oil producer until Angola's oil production surpassed Nigeria's earlier this year. --- EIA

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Jobs: jobless claims at 262,000 vs 265,0000. That's a decrease of 4,000 from previous week. 

Claims have now been below 300,000, a threshold associated with a strong labor market, for 76 straight weeks. That is the longest such stretch since 1973, when the labor market was much smaller. 

You have to scroll well down into the article to see this buried near the end: "The four-week moving average increased 7,750 between the July and August survey periods, suggesting another month of strong job gains."

In Massachusetts, it was reported today that the unemployment rate has dropped to 4.1% -- the lowest in 15 years. There are some good things happening out there. 

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For Newbies -- A Reminder

For some great graphics of the Bakken, see Mike Filloon's most recent contribution at SeekingAlpha.

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The Market

I see that SolarCity is restructuring.  Cutting CEO pay to $1 is a stunt; even Steve Jobs understood how that could be turned into a great deal.

Closing: it looks like the market will finish fairly flat, up about 8 points, but that's better than being down 8 points. NYSE:

• new highs: 162, a huge increase from the opening; add EOG (a huge whoop); ONEOK (a huge whoop); Tenaris (wow); and, yes, XLNX did trade at a new high; but it's not on the NYSE (I forgot, that's why I had not seen it among the new highs)
• new lows: 8

Mid-day trading: the Dow 30 has turned negative, down 24 points. NYSE:

• new highs: 140, a huge increase from the opening; add Schlumberger (a huge whoop);
• new lows: 5; add Ruby Tuesday

Opening: Futures indicated a "down" market, but in fact, the market is up a bit on the opening. Up about 11 points at 10:00 a.m. Central Time.  NYSE:

• new highs: 66, including -- BRKB (a big whoop); CLR (wow); Enerplus (another wow); WPX (a big whoop); XLNX for some reason is not listed -- it is clearly trading at its 52-week high, though it may have hit this number before; it's all-time high (excluding the bubble back in 2000 - 2001) was around $53.84; currently at $52.63.
• new lows: 2 

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WMT

It's interesting to follow Wal-Mart over the years. If there is one thing they seem to have done well is minimize stepping in their own poop over "politically-correct" issues. In the "politically-correct" issues -- like minimum wages -- they've managed those minefields with finesse. (I know no one agrees with me; that's fine.)

What makes me think about this is Target. Among all the big-box stores they seemed to have stepped in it repeatedly.

It began with their response to the credit card breach back in 2013. It could have happened to any other retailer (but it didn't; not in the same sense, coming after Black Friday; by a retailer that seemed least likely to have such a breach) but what made it worse, was the way Target handled it.

Now, we have the self-imposed PR disaster regarding their bathrooms. How in the world does a big box store get more stories written about their bathrooms than their earnings? Remember the brouhaha over Wal-Mart announcing several store closures and then said it had to do with substandard plumbing in their bathrooms. That story had no legs; it did not last. But the Target story continues.

Today, the first headline: Target will install single stall bathrooms in all their stores. That sounds pretty good.

But then this headline, over the The Christian Science Monitor: Target to expand single-stall restrooms without budging on bathroom policy. Of course, now that they've gotten themselves into this situation, it's not easy to get out. Target now has a third option: a private bathroom for those who feel uncomfortable using the traditional bathroom facilities.

Interestingly, most Target stores already had private bathrooms: 1,797 stores. This new initiative only affects 297 stores, and the headlines continue.

It seems they would have been better off putting in private bathrooms in those 207 stores and making no public announcement. I doubt most folks choose their big box store based on corporate bathroom policies. Except when the headlines start appearing.

On another note, WMT earnings were out today and they were stellar.

One Reason Why WTI Is Falling (Among Many) -- June 1, 2016

Updates

June 29, 2016: the tanker is finally unloaded.
 

Original Post

 

Reuters is reporting:

Four tankers carrying over 2 million barrels of U.S. crude are stuck at sea and cannot discharge at a Caribbean terminal because Venezuela has not yet paid supplier BP.

The cargoes are part of a tender [Venezuela] awarded in March to BP and China Oil.

The deal was to import some 8 million barrels of West Texas Intermediate (WTI) crude so Venezuela could dilute its extra heavy crudes and feed its Caribbean refineries.

Tic, tic, tic. It looks like the government ran out of "other people's money."

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Update On Eastbound Flows From Houston To Storage/Distribution Hub At St James, LA

These are some data points from an RBN Energy blog earlier this week.

Three and a half years ago, per RBN Energy:

the flow-reversals of the Houston-to-Houma (LA) pipeline and a connecting pipeline between Houma and the mammoth crude storage complex in Clovelly, LA was part of a wholesale change in Gulf Coast pipeline infrastructure aimed at facilitating the flow of domestic crude to market from growing shale production basins in the Bakken, the Permian Basin and the Eagle Ford to Houston and from there, to the hub at St. James.  

More recently:

St. James (located on the Mississippi 60 miles upriver from the Big Easy) serves as a critical storage and distribution hub. It receives crude by pipeline, by barge and tanker, and by rail; it has more than 30 MMbbl of storage capacity; and it sends crude out to area refineries with a combined capacity of 2.6 MMb/d. St. James also feeds the 1.2 MMb/d Capline pipeline, which transports crude and condensates north to Patoka, IL (but which has been running at far less than full-capacity). Much as Taylor Swift, The Eagles and Dolly Parton each draw a wide range of fans, the St. James hub serves as an oil mixing bowl, receiving regionally produced crudes such as the Gulf Coast benchmark Light Louisiana Sweet (LLS), Heavy Louisiana Sweet (HLS), medium sour crude Mars (produced offshore in the Gulf of Mexico, or GOM), and West Texas Intermediate (WTI), as well as ultra light crude from the Eagle Ford (condensate) that is piped north through Capline, connecting through other Canadian pipes to Alberta for use as a diluent in heavy Western Canadian oil sands.

The game changer: the Zydeco reversal --

Enabled St James to receive piped-in deliveries of Bakken and other Midcontinent crudes

Archived; a great summary.

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Summer Reading

Papa: Hemingway In Key West, James McLendon, c. 2007. This is a keeper. I've read many, many biographies of Hemingway and his wives. When my daughter gave me this slim paperback I was not particularly ready to read it. I was pretty much "hemingwayed-out." But yesterday, I picked it up and started reading it. Super. It covers his "lost years," 1928 - 1940. I think folks who live in Key West or who have visited Key West would love this book.

For those who might be interested in the rich and famous of the first half of the 20th century, those who would have been jet setters had there been jets then, I cannot recommend Rhonda K. Garelick's Mademoiselle: Coco Chanel and the Pulse of History highly enough. This is an incredibly interesting and entertaining book. I stumbled upon this book while visiting the Dallas Museum of Art and the museum's presentation of La Pausa. Googling will fill in the details.

I have no desire to read any biographies of Winston Churchill but coincidentally The New York Review of Books had an article on two Winston Churchill biographies in its most recent issue. It would be interesting to see if much is written about Coco Chanel and Winston Churchill.

Update On Diamond Crude Oil Pipeline And How It Affects US Pipeline Routing, Infrastructure -- September 2, 2014

RBN Energy is reporting: northbound Capline crude oil flow may be living on borrowed time.

Two weeks ago (August 21, 2014) Plains All American announced their proposed “Diamond” crude pipeline project from Cushing, OK to Memphis, TN that will feed the Valero Memphis refinery starting in late 2016.

The new pipeline will provide more direct access from Cushing to supplies of the light sweet crude this refinery processes that are being produced these days in the Williston, Denver Julesburg, Permian and Anadarko basins.

Presumably the Diamond pipeline will replace existing arrangements where crude is shipped up the Capline pipeline to Memphis. That development looks to be another nail in the coffin for the northbound Capline crude trunk route between St James and Patoka, IL. Today we discuss the proposal and its consequences for Capline.
This is another incredible story of how the Bakken is transforming the pipeline infrastructure across North America. 

Highly recommend folks save this article for future reference. RBN Energy generally archives their articles at a later date requiring a subscription to access.

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Cattle

Traveling cross-country from north Texas to North Dakota, I noted my observations regarding cattle on earlier posts. It was my impression that the cattle herds were larger.

The Dickinson Press is reporting:

While the U.S. continues to lose cattle, North Dakota is moving up to the head of the herd.

A U.S. Department of Agriculture study released in July revealed a nationwide cattle inventory of 95 million as of July 1. Those numbers were down 3 percent from the 2012 count of 97.8 million. This count was the lowest for July since the series began in 1973.

There was some good news for North Dakota. Producers expanded the state’s inventory to 943,000, the highest since 2005. This helped North Dakota jump in rank from the 13th producer of cattle to ninth.

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Notes to the Granddaughters

The most noticeable change in the Bakken this year compared to last year: the changing demographics. I've wrote about that several times during my most recent visit. It was truly heart-warming to see all the young women, the families, the couples, the children. It was the first time in my life that I really "saw/experienced" the "wheel of life."

Before the boom, the one constant in Williston was noting the aged population at the grocery stores, the coffee shops, at Wal-Mart.

During the first few years of the boom, one saw a new phenomenon: all these young, male workers coming up to the Bakken. 

But now, in the seventh year of the boom, children and lots of them. It was really heart-warming. It brought back a lot of memories from my own youth. The biggest memory: children don't complain about the weather or the "remoteness" of North Dakota. Generally, children are optimistic and having lots of fun, whatever they are doing. 

Coincidentally, my sister gave me a book that she had forgotten to give me 18 months earlier. A reader of the blog sent me a copy of The Muddy River Boys. Also at Amazon.com. Interestingly enough, someone actually mentioned it to me sometime ago, and I had forgotten all about it. At the link, look at the first comment. It's a must-read for those with nostalgic memories of North Dakota back in 1930 - 1960. The book covers the period, generally, from 1944 - 1948. If I recall, very little mention, if any, was made of WWII. 

Perhaps more later. It's time to pick up our granddaughters from school.

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Waiting for a Sonic to open in the Bakken

Prairie Biz is reporting:

FARGO, N.D. – The North Dakota State University football game wasn’t the only big event Fargoans experienced Saturday, as the area’s first Sonic Drive-in opened with some early fanfare.

The parking lot and stalls, where customers can order from their car, were full when the restaurant opened at 6 a.m. Cars were lined up for two blocks at times during the day, and even though it was a cool and windy morning, people sat outside.

There were so many cars, members of the Fargo Rotary Club were even on hand to help control the traffic flow.

The first 15 customers received free Sonic for a year.

Operators Will Reverse Flow of the Nation's Largest Pipeline

This is really, really cool (for me personally -- connecting dots of earlier posts).

First, this link, "diluent central", posted September 14, 2012:

Capline:

• tracks the Mississippi River from Louisiana to Patoka, IL
• largest continental US pipeline
• at 1/6th capacity; only pumping every other day due to glut from north
• if Utica shale pans out; under-utilization even worse
• shipping diluent back to Canada from as far away as the Eagle Ford
• Eagle Ford --> St James --> Capline --> Southern Lights (Enbridge)--> Alberta (Rusty Braziel, RBN Energy)
• considering increasing the flow of diluent to fill its empty pipes
• Capline had planned to reverse its north-south pipeline to south-north, BUT a reversal less likely now that Enbridge/EPD said they would double capacity of the competing Seaway Pipeline

That was then: the decision to reverse the flow of the nation's largest pipeline is now.

Now, over the weekend: the decision to reverse the flow:

Independent oil refiner and marketer Marathon Petroleum Corporation (MPC) is planning to reverse the Capline pipeline to transport oil from the Midwest to the Gulf Coast refining belt. The reversal will help in draining the excess crude oil from increased drilling in the Midcontinent.

The 1.2 million barrel-a-day Capline pipeline is currently operated by Shell Pipeline, a subsidiary of Royal Dutch Shell plc (RDS.A). Marathon owns 32.6% of the same and at present, the pipeline delivers crude oil from Louisiana to Illinois.

Marathon is expected to start operating the 630-mile pipeline from Sep 2013. Other details of the deal are yet to be disclosed by the company.

This will be the second key pipeline reversal following the Seaway pipeline. Enbridge Inc. and Enterprise Products Partners have plans to convert the Seaway pipeline in a month and increase its capacity to 400,000 barrels a day by 2013.

The second linked article is dated February 1, 2013. I thought the Seaway had already been converted; but a delay in expanding the capacity to 400,000 bbls to 4Q13. Time will tell.

Diluent Central

Updates

November 28, 2014: TransCanada to increase diluent capacity to northwest Canada.

June 3, 2013: EPD to move diluent from Texas to Chicago area. 

February 4, 2013: decision to reverse the Capline, the nation's largest continental pipeline.

Original Post

The diluent story, start with the Reuters article posted March 29, 2012, previously posted and linked.

Two of the country's biggest pipelines, both now underutilized, are competing to pump a special type of ultralight oil from the Gulf Coast to the Midwest, betting on growing demand from Canadian producers for the "diluent" necessary to their heavy oil sands bitumen flowing to refiners.

Whether heavy oil sands bitumen is shipped by rail or through pipelines, diluent is required to thin it down for movement. One source said that rail used a third (33 percent) less diluent than pipeline.

Data points:

• oil sands demand for diluent last year (2011): 275,000 bpd
• by 2025, estimate: 1 million bpd diluent needed by Canadian oil sands
• Canadian condensate slipped to 130,000 bpd; was 165,000 in 2000
• US exports of one type of diluent: Pentanes Plus -- surged to 86,000 bpd, up from 11,000 bpd in the first seven months of this year (2012)
• last year estimate for total US exports of all diluents: 125,000 bpd
• US share of that million bpd diluent could be 385,000 bpd (3x today)

Because of low prices of natural gas, producers in Canada are cutting back on natural gas production, and imports of natural gas from the US to Canada are surging. This is also happening in Mexico, where US is exporting increased amounts of natural gas to Mexico because its producers there are also cutting back (the MDW posted/linked that story earlier).

Now, Canada needs that natural gas and/or diluent to ship its heavy oil.

Two pipelines: Capline and Explorer [Later: see map of these pipelines provided by RBN Energy.]

Capline:

• tracks the Mississippi River from Louisiana to Patoka, IL
• largest continental US pipeline
• at 1/6th capacity; only pumping every other day due to glut from north
• 1.2 million bbls/day; currently operated by Shell; will be operated by MRO starting September, 2013; MRO owns 32.6% of the pipeline
• if Utica shale pans out; under-utilization even worse
• shipping diluent back to Canada from as far away as the Eagle Ford
• Eagle Ford --> St James --> Capline --> Southern Lights (Enbridge)--> Alberta (Rusty Braziel, RBN Energy)
• considering increasing the flow of diluent to fill its empty pipes
• Capline had planned to reverse its north-south pipeline to south-north, BUT a reversal less likely now that Enbridge/EPD said they would double capacity of the competing Seaway Pipeline

Explorer:

• Houston to Chicago
• 850,000 bpd capacity at Houston; narrows to 380,000 at Chicago
• no longer needed for original function: to carry gasoline/diesel from Gulf Coast to the Midwest
• landlocked refiners expanding to tak in more Canadian crude
• some believe Explorer is already taking diluent north (company declined comment)

Diluent-by-Rail

• this issue is not covered in the Reuters article linked at the top
• starting to be reported in trade journals
• apparently BNSF is bringing diluent back in its otherwise empty rail cars; currently not charging to transport back north (previously posted; need to confirm; I could have misread that)

Some great links for further reading:

• RBN Energy: a primer on diluent -- perhaps the best place to start
• RBN energy primer on natural gas liquids
• Costs -- RBN Energy