Opinion

Seminole-Red crude oil pipeline operational

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Enterprise Products new 200,000 barrel per day Seminole-Red crude oil pipeline from the Permian Basin to Houston is operational, according to infrared imagery collected by Wood Mackenzie on 6 February 2019. One of the two turbines associated with the crude pipeline at the Coupland, TX, pumping station was active at the time of imagery collection, indicating that the pipeline started operations, at least under a limited capacity. Wood Mackenzie also collected infrared imagery at the Millersview, TX, pumping station. The two turbines associated with crude service at that location were offline at the time of imagery collection.

Figure 1: Wood Mackenzie detects activity on a Seminole-Red crude pipeline gas turbine, indicating that the pipeline is now operational

Source: Wood Mackenzie

The start-up of the Seminole-Red pipeline comes as the crude price differential between WTI-Midland and WTI-Houston narrowed. While the current spread is still wide enough to cover transportation costs, margins may reduce enough that traders ignore the newly available pipeline space that Seminole-Red has to offer. Despite continued increases in production - Wood Mackenzie forecasts show Permian production adding another 450,000 bpd by August 2019, when the next Permian outbound pipeline is slated to come online. The Seminole-Red pipeline may also help keep those differentials tight in the coming months.

Enterprise recently converted part of the 280,000 bpd Seminole NGL pipeline into crude service. The Seminole NGL pipeline previously consisted of two parallel pipelines, Seminole-Blue and Seminole-Red. The Seminole-Red pipeline was converted to a 200,000 bpd crude pipeline, according to permitting documents. The Seminole-Blue pipeline remains under NGL service. On 31 January 2019, Enterprise announced that it expected the repurposed Seminole crude pipeline to begin limited operations in February 2019 and full operations in April 2019.

Wood Mackenzie will continue to produce intelligence reports on the Seminole-Red pipeline and provide updates on its apparent utilisation via our Gulf Coast Pipeline monitoring service.