Sunoco Logistics Partners is seeking shipper backing for its third pipeline to ease the crude bottleneck in the Texas Gulf Coast regions.
It has launched an open season for a system to carry 40,000 barrels per day of West Texas Sour from the western part of the state to its crude terminal in Nederland, Texas, with a scheduled in-service date in the first quarter of 2013.
Sunoco brought a 40,000 bpd line from West Texas to Houston on line earlier this month and is planning a 30,000 bpd line to carry crude from West Texas to the Mid-Valley pipeline in Longview, Texas, starting in January 2013.
The scramble for pipeline capacity is being fuelled by surging output from resource plays such as Eagle Ford in Texas, which has revived the declining Permian basin in West Texas, and Bakken in North Dakota, along with rising volumes from Canada.
The resulting glut of crude in the Midwest has dragged down the value of West Texas Intermediate compared with crude priced against the Brent benchmark, forcing Gulf refiners to pay Brent prices and inflate U.S. fuel costs in the process.
But the price differential is expected to narrow when the Enbridge-Enterprise Products Partners Seaway pipeline starts delivering 150,000 bpd later this month and expands rapidly to 450,000 bpd, followed by the southern leg of TransCanada’s Keystone XL system from Cushing, Oklahoma, to the Gulf Coast.
—Gary Park
