Page 7 - NorthAmOil Week 49 2021

NorthAmOil PIPELINES & TRANSPORT NorthAmOil

Magellan explores Longhorn pipeline options

TEXAS MAGELLAN Midstream has said it is evaluating Bridgetex pipeline, to stay relatively flat for a few
alternative uses for its Longhorn crude pipeline years.
from the Permian Basin. The company said this Mears added that he anticipated slow but
week that it was exploring options that include steady growth in Permian output over the next
converting the pipeline to carry other fuels, few years, with it matching the current pipeline
including natural gas or refined products. infrastructure carrying oil out of the basin by
The 450-mile (724-km) Longhorn pipeline 2024 or 2025.
has the capacity to move up to 275,000 barrels The comments about the Longhorn pipeline
per day (bpd) of crude from the West Texas por- come after Magellan raised its annual forecast for
tion of the Permian to Houston. shipments of refined products in early Novem-
The move comes as pipeline operators strug- ber on rising demand for jet fuel and distillates.
gle with certain market dynamics following the The company now expects the shipments to
onset of the coronavirus (COVID-19) pandemic expand by 14% compared with 2020 levels, up
last year. In 2020, lower production forced pipe- from a previous projection of 13%, as volumes
line operators to reduce rates in a bid to attract are added from expansion projects in Texas in
barrels to their pipelines. The dip in output fol- the wake of the first waves of the pandemic.
lowed a pipeline construction spree that had Magellan also said it expected gasoline ship-
added significant new takeaway capacity to the ments to be 10% higher than a year earlier, dis-
basin. Permian production has since bounced tillates to rise 17% and aviation fuel to increase
back, but pipeline operators have continued to by 40%. These projections compare with a July
face challenges owing to this glut of new capacity. forecast for a rise of 13% in gasoline shipments,
Speaking at a virtual event hosted by Wells 10% in distillates and 25% in aviation fuel.
Fargo, Magellan’s CEO, Michael Mears, said the Given Magellan’s expectations for refined
margins on spot shipments from the Permian product shipments, it is perhaps not surprising
were currently “extremely low”. He expects vol- that it is considering converting an oil pipeline
umes on Longhorn, as well as the 440,000 bpd on which volumes are flat.™

POLICY

Alberta prepares to end curtailment policy

ALBERTA THE Canadian province of Alberta will allow its the onset of the coronavirus (COVID-19) pan-
oil production curtailment policy to expire on demic, with the first wave of lockdowns leading
December 31. The provincial government has to a collapse in crude prices and demand. Oil
said that the policy is no longer needed. sands producers – among others – responded by
The policy was introduced by Alberta’s previ- voluntarily shutting in significant proportions of
ous New Democratic Party (NDP) government their output.
in 2019 in a bid to prop up Western Canadian Indeed, the Alberta government has not had
crude prices, which had been trading at an to impose production limits on the province’s
increasingly steeper discount to US benchmarks. oil industry since December 2020. Output has
This situation had come about as a result of take- bounced back this year, but the recent start-up
away capacity bottlenecks in Alberta, which is of Enbridge’s Line 3 replacement pipeline has
home to Canada’s prolific oil sands, among other helped to alleviate the takeaway capacity short-
factors. ages that the oil sands had previously struggled
The discounts were hitting both company with.
profits and provincial revenues from oil and “The market is now working as it should:
gas operations and the challenges faced by oil production has reached pre-pandemic lev-
new pipeline projects meant that the takeaway els but is within export capacity, and storage
capacity crunch was not going to be alleviated levels are expected to remain within the nor-
anytime soon when the policy was first brought mal range of operations,” Alberta Minister of
in. Energy Sonya Savage said in a statement. “This
The NDP was succeeded by the United Con- is in large part because Enbridge’s Line 3 is now
servative Party (UCP), which sought to gradually online and operational and the Trans Moun-
scale back the output curbs but initially struggled tain Expansion is expected to come online in
to do so. The situation changed, however, with early 2023,” she added.™

Week 49 09•December•2021 www. NEWSBASE .com P7