Enterprise doubles capacity on Seaway oil line to Gulf coast
HOUSTON (Bloomberg) -- Enterprise Products Partners LP and Enbridge Inc. said the 512-mile expansion of their Seaway oil pipeline is mechanically complete, with commissioning work remaining before it starts to move oil south from the delivery point for West Texas Intermediate futures in Cushing, Oklahoma.
Enterprise looped the existing Seaway line with a parallel pipe, increasing capacity to the Houston area to 850,000 bpd, the companies said in a joint statement.
The expansion will draw barrels from the nation’s biggest oil-storage hub, where stockpiles have fallen 48% this year to the lowest level in five years. New pipelines and expansions, including the southern leg of TransCanada Corp.’s Keystone XL system, helped eliminate a glut that built at Cushing as oil flooded in from Canada and North Dakota.
Workers need to perform several tests on the pipe to make sure there are no leaks before pumping oil into it, said Andy Lipow, an oil industry consultant with Lipow Oil Associates LLC in Houston.
“The pieces of the pipe are put together, the pumps are hooked up,” he said. “Now it’s been turned over to operations, and they have to complete their procedures ensuring the line is ready to receive oil and begin routine operations.”
The new 30-in. Seaway Loop Pipeline connects to the Jones Creek storage terminal near Freeport, Texas, the companies said in the statement. Jones Creek is connected to Enterprise’s ECHO crude storage facility in Houston by a 65-mile, 36-in. line. Construction of a 100-mile pipeline from ECHO to Beaumont and Port Arthur is expected to be completed this month, and commissioning of both lines will continue through the third quarter.
West Texas Intermediate futures were down 74 cents, or 0.7%, to $103.74 a barrel on the New York Mercantile Exchange at 11:47 a.m. New York time. WTI’s discount to the European benchmark crude Brent widened by 22 cents to $6.98.
Enterprise, a Houston-based company that operates the Seaway pipeline and co-owns it with Enbridge, reversed the system in May 2012 and expanded its capacity to 400,000 bpd in January 2013. As part of the most recent expansion, Enterprise said storage at the ECHO terminal would increase by 900,000 bbl to 6 million.
Crude stockpiles at Cushing slid 1.36 MMbbl, or 6.2%, to 20.5 million in the week ended June 27, the lowest level since Nov. 14, 2008, according to U.S. Energy Information Administration data. They were 41.8 million in January. Supplies in PADD 3, which includes the U.S. Gulf Coast, have climbed 19% this year to 204.8 MMbbl.