http://www.forexpros.com/analysis/pumping-oil-through-gas-lines-141206
Early in the year Greg Merrill discussed the current administration's decision to shut down the Keystone pipeline project and the issues surrounding that policy. That was obviously not the end of the story. If there is a need, the energy industry will find a way.
In recent years the various natural gas shale projects have changed the configuration of natural gas delivery in the U.S. That means some of the traditional routes used to transport natural gas to a number of areas - some over long distances -- are no longer economical. And now a number of these gas lines could be modified to transport crude, sometimes in the opposite direction.
JPMorgan: - Given the regulatory challenges facing the construction of some new oil pipelines in North America, many companies are turning to converting existing assets to oil service. With natural gas supplies growing in numerous regions from shale plays such as the Marcellus, gas pipelines delivering along historical routes into these regions are becoming underutilized, providing options for conversion to transport crude oil.
At least four gas lines are under discussion for conversion into oil service that could move oil out of Canada, the US Gulf Coast, and upper Midwest areas. One of the pipes making up TransCanada’s Mainline gas network that runs from western Canada to the eastern border is under consideration for conversion to crude oil, which could reportedly deliver 0.5 to 1.0 mb into Padd 1 and eastern Canadian refineries. Additionally, Energy Transfer Partners has petitioned the U.S. Federal Energy Regulatory Commission to repurpose the Trunkline natural gas line into crude service and reverse the direction to run south from the upper U.S. Midwest into the Gulf Coast. The Pony Express line originating in Wyoming completed an open season for deliveries of approximately 230 kbd of crude into Oklahoma in 3Q2014 after being in gas service since 1997. Lastly, parts of the underutilized El Paso Natural Gas (EPNG) pipeline system are being considered for conversion to transport an estimated 400 kbd of crude to southern California refineries from west Texas.
Here is an example. The Trunkline gas line, developed to deliver natural gas from the Gulf Coast to the Midwest is no longer economical because these customers (in most cases) can get gas from nearby shale sources.
Panhandle Energy: - Trunkline Gas Company operates a 3,059-mile pipeline system with access to Gulf Coast supply sources which can deliver 1.5 Bcf/d of natural gas to Midwest and East Coast markets. Our Midwest customer base includes some of the nation's largest utility and industrial gas users in Chicago, Michigan, Memphis and St. Louis.
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Crude is getting to the gulf coast as any cursory look at the EIA stockpile numbers would indicate
http://www.eia.gov/oog/info/twip/twip_crude.html
As the second table indicates crude not only continues to pile in the Midwest and Cushing, but Gulf Coast inventory are 17 million barrels above last year. All without Keystone II adding 800,000 more bpd (though some of that oil is making it there by train. Gulf coast refineries did spend money and make adjustments expecting to handle more of the Canadian oil, what they failed to prepare for was to be inundated with all the light crudes flowing from the multiple oily shale plays. On top of all that, neither the Canadian heavy tar sands oil and the light crudes from shale are really what the refiners want, they want to produce diesel because that's where the best spreads (profits) are right now, especially in the export market. The Heavy and lights are ill suited for making diesel, what they want is old fashioned West Texas Intermediate and without that, they keep bringing in Saudi and Venezuelan oil.
This article explains the inundation of "dumbell" crude on the US refinery market
http://www.rbnenergy.com/turner-mason-and-the-goblet-of-light-heavy...
As a result, producer/refiners are trying to find new ways to shuffle all the supply around. Companies are asking the Commerce Department for permission to ship light crude from the Gulf Coast to East Coast refiners in Canada (can't export crude oil from the US without a license). The finished product would then be imported into the Eastern US for consumption.
http://finance.yahoo.com/news/bp-export-u-crude-canada-000128632.html
There are also early stages of a plan to use to switch an underutilized NG pipeline from West Texas to California into an oil pipeline ans send to light crude to California which would prefer that supply to the higher coast Alaskan crude they use. That leaves Alaska crude in the cold (pun not intended) and maybe being shipped to the Far East, public policy permitting.
As for Keystone II, if it makes it all the way from Canada to coast, it may result in much of the oil being exported (if you can export Canadian oil without a license),
AS for the Utica shale play, right now the oiliness of the play is in question and given the midwest glut is seems more likely a plan to get the oil to the East Coast makes more sense.
Shale drilling and lithium extraction are seemingly distinct activities, but there is a growing connection between the two as the world moves towards cleaner energy solutions. While shale drilling primarily targets…
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AboutAs exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More |
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