Open Season Extended for Tallgrass Energy’s Pony Express Pipeline

Tallgrass Energy, LP has announced that it has extended and expanded its open season soliciting shipper commitments for crude oil transportation services.

The open season, initially announced on 13 November 2018, has been extended to 14 April 2019. This is to reflect updated rates and contracting options to accommodate newly secured commitments.

The 760-mile Pony Express crude oil pipeline originates in Guernsey, Wyo., and runs through Colorado, Nebraska and Kansas, connecting with three refineries before terminating in Cushing, Okla.

Placed in service in 2014, Pony Express has a design capacity of 320,000 barrels a day, and based on a number of factors has the capacity to transport additional barrels.


Marathon Petroleum to Maximize U.S. Crude in Third Quarter

Marathon Petroleum Corp (MPC.N) said that it plans to “maximize” input of U.S. crude in the third quarter, as bottlenecks have weakened domestic prices.

The company said on a Thursday earnings call that about 32 percent of its total throughput will be crude linked to the U.S. benchmark price.

It is expected that input at the company’s Midwest refineries will jump to 53 percent of total throughput in the third quarter.

U.S. and Canadian producers have been selling crude at a discount compared to global prices because of production outpacing pipeline capacity, helping Marathon report its highest quarterly earnings since 2011.

The U.S. refining outlook continues to remain strong as crude remain discounted.

“I think inventories are going to remain for both gasoline and distillate, inventories are going to remain in check through the year, which bodes very well for the business. But as we look into 2019 and where we believe inventories will end up at the balance of this year, it should put us in a really good position moving into ‘19 as well,” said Chief Executive Gary Heminger.


Phillips 66 Plans Crude Oil Pipeline from St. James to Serve Louisiana Refineries

Phillips 66 is in talks to build a 94-mile crude oil pipeline from St. James to Louisiana refineries so as to provide them with new access to U.S.-produced crude oil.

The proposed Ace Pipeline would reduce reliance on foreign crude and keep state refineries competitive in the global market for energy projects, the company wrote in a summary.

The pipeline would run to the Phillips 66 Alliance Refinery in Plaquemines Parish and cross the Mississippi River to also serve refineries in St. Bernard Parish.

The proposed route crosses several wetlands as well as Lake Salvador, but Phillips 66 says the pipeline route would be within existing pipeline corridors.

The company expects the pipeline to be in service 12 to 18 months after permits are acquired. The target date for permit submittal is mid-2018.

Phillips 66 also owns 40 percent of the controversial 162-mile Bayou Bridge crude oil pipeline that is currently under construction. The pipeline, which is 60 percent owned by Energy Transfer Partners, is being fought against by local environmentalists and fishermen who oppose the route through the Atchafalaya Basin in southern Louisiana.

The Times-Picayune

Crude Oil Price Hits Above $50 For First Time in Two Months

U.S. crude oil hit above $50 on Wednesday for the first time since late July due to a combination of factors that have helped push prices higher and shed light on the energy sector.

One of the contributions to higher oil price includes the restart of refineries along the Gulf Coast after Hurricane Harvey caused the shutdown of near a quarter of U.S. refinery capacity. The restart is triggering the need for millions of barrels of crude for fuel in order to meet motorist demands.

The International Energy Agency also forecasted that the global oil demand this year will grow the most since 2015 as OPEC considers to extend its production cuts into mid-2018.

Another contribution to higher oil price could be President Trump's call for more potential sanctions against Iran and Venezuela, two major oil producers.

Fuel Fix

Texas Refineries Begin to Restart After Major Shutdown Due to Storm Harvey

Gasoline prices are slowly falling and oil prices are rising as of Tuesday after refineries in the Gulf Coast slowly begin to restart after nearly a quarter of the U.S. refining capacity was shut down last week during Hurricane Harvey.

Harvey blasted the Gulf Coast and other areas of southeastern Texas, including the city of Houston, on August 25 and hovered over the area for nearly a week, dropping trillions of gallons of water onto the state.

As of Monday afternoon, eight U.S. oil refineries with 2.1 million barrels per day of refining capacity were still shut, according to the Department of Energy.

Texas is slowly beginning its recovery as oil pipelines and refineries begin to start operations again, raising the demand for crude and easing fears of a fuel supply shortage.


Colonial Pipeline to Shutdown Key Fuel Pipeline Due to Harvey Floods

Colonial Pipeline announced it will shut down a key gasoline line that supplies the South due to Tropical Storm Harvey-related refinery shutdowns in Houston and the storm’s effect on Colonial’s facilities in Lake Charles, Louisiana.

The line, which provides nearly 40 percent of the South’s gasoline, will be shut down Thursday, according to the company.

Colonial Pipeline already shut down its other mainline that transports diesel and aviation fuels.

Colonial’s shutdown will surely raise gasoline prices as it did when the line was shut down in September, 2016 due to a leak and gas spill. But prices have been on the rise ever since storm Harvey dumped more than four feet of rain on southeastern Texas over the last week.

Harvey caused shutdown of over 20 percent of the Gulf Coast’s oil refining capacity due to floods.

At least eight refineries in the area were also shut down, according to AAA.

Colonial Pipeline said its system would resume operations once the company can ensure that its facilities are safe and able to move product.

The Colonial Pipeline runs from Houston to New York and makes up more than 5,500 miles of pipeline.


Report: Gulf Coast Refineries Need New Canadian Pipelines in Order to Reduce Costs

Gulf Coast refineries are in need of new pipeline transport from Canada in order to cut supply costs, according to a new report by the IHS Markit research firm.

According to the report, most Gulf Coast refineries rely on heavier crude oil and have to turn to costlier Latin American countries for supply. An increase in pipeline transport to carry heavy crude from Canada's oil sands to the Gulf Coast would reduce refineries' supply costs and burdens.

Oil production in Canada is expected to increase by 1 million barrels a day by 2020, which would force much of the oil to be transported by rail if Canada does not increase its already constrained pipeline system.

The report mentioned four major pipelines in line to become solutions for Canada's lack of transportation: TransCanada's resurrected Keystone XL pipeline and Energy East pipeline, Kinder Morgan's Trans Mountain pipeline expansion, and Enbridge's Alberta Clipper expansion project.

These four pipelines would turn Canada's pipeline capacity from shortage to surplus if they all come online. Unfortunately they are years away from completion, which means until they do come online, a revival of crude-by-rail from Canada into the U.S. is likely.

Fuel Fix