Enbridge Inc. is offering up new space on a crude pipeline running to the Texas oil port of Corpus Christi, a top exporting hub that’s currently suffering from constrained pipeline capacity.
The Canadian company is asking shippers to commit to an expansion that would add as much as 120,000 barrels a day of capacity on the 900,000-barrel-a-day Gray Oak pipeline. The conduit transports crude from West Texas to the Corpus Christi and Freeport areas in Texas.
An expansion of Gray Oak would help alleviate the backlog at Corpus Christi, where feeder pipelines — which also include EPIC and Plains All American’s Cactus — are operating at full capacity. The situation has forced exporters to turn to other Texas ports around Houston, Beaumont, Port Arthur and Nederland.
Corpus Christi is where the majority of the most economical supertanker-loading capacity is located. For cargoes sailing to Europe, shipping oil in Very Large Crude Carriers costs about $2.28 per barrel, compared with $3.90 for smaller Aframax-size tankers, according to Bloomberg calculations.
The Gray Oak expansion doesn’t involve new construction. Calgary-based Enbridge has said in the past it plans to use chemicals known as drag-reducing agents, which reduce friction and allow oil to flow faster inside the steel vessels. Gray Oak is operated by Enbridge, and Phillips 66 and Marathon Petroleum are partners.
US crude exports have surged, rising to 4.7 million barrels a day in February, the second-highest on record in US Energy Department monthly data.
