Executive Summary: Rigs: As the Denver-Julesburg Basin experiences a gradual production decline starting in 2024, competition for committed crude oil barrels has intensified. Infrastructure: As the Denver-Julesburg Basin experiences a gradual production decline starting in 2024, competition for committed crude oil barrels has intensified. Storage: East Daley expects a 350 Mbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending March 14.
Rigs:
The total US rig count decreased by 1 during the week of March 2 to 564. Liquids-driven basins decreased by 6 W-o-W to 462.
- Eagle Ford (-3): EOG Resources, Kimmeridge Texas Gas, Magnolia Oil & Gas
- Anadarko (-1): JEL Resources
- Permian – Midland (-1): Firebird Energy II
- Powder River (-1): Anschutz
Infrastructure:
As the Denver-Julesburg Basin experiences a gradual production decline starting in 2024, competition for committed crude oil barrels has intensified. The four main transmission pipelines (Pony Express/Seahorse, Saddlehorn, Grand Mesa and Whitecliffs) have all launched open seasons to secure minimum volume commitments (MVCs) or acreage commitments.
The Pony Express/Seahorse pipelines owned by Tallgrass have been highly successful, achieving >90% utilization since 2H23. Pony Express has a key advantage in being able to access volume from multiple receipts points in the DJ Basin, including the northeast corridor up to Laramie County, WY and connecting to Guernsey, WY. This enables Bakken and Powder River commitments through a joint tariff with Bridger Pipeline. Additionally, Pony Express has multiple delivery points to refineries in Kansas and ultimately delivers to Cushing markets. Since 2023, Tallgrass has held several open seasons to effectively convert volumes to MVCs.
Saddlehorn and Grand Mesa Pipeline operate as an undivided joint-interest pipeline, under which the companies each separately own distinct capacity on the one asset. NGL Energy Partners’ Grand Mesa holds ~1/3, and Saddlehorn owns the remaining ~2/3 and is the operator. Saddlehorn is owned by Plains All American (PAA), Chevron (CVX) and ONEOK (OKE).
Saddlehorn Pipeline has been fully utilized since 2024, benefiting from additional connectivity to PAA’s Cheyenne and Cowboy pipelines that move Bakken and Powder River volumes. Saddlehorn has also held numerous open seasons the last few years to secure MVCs.
Grand Mesa has been a holdout, preferring to maintain the status quo until tariff levels return to the pre-Covid levels of ~$6.50/bbl. Additionally, Grand Mesa has limited connectivity to only core areas in the DJ. However, recently Grand Mesa held an open season and successfully secured an acreage commitment with Prairie Operating (PROP), potentially increasing Grand Mesa’s utilization to ~70%.
Owned by Energy Transfer (ET) and PAA, Whitecliffs Pipeline is the DJ’s oldest transmission line. In 2021, the Whitecliffs twin was converted to NGL service while the original Whitecliffs line is still transporting crude oil. Whitecliffs has seen volume decline from 70% average utilization in 1H24 to 45% in 3Q24. However, Whitecliffs recently announced an open season to attract committed volumes, suggesting operator ET is attempting to keep up with the competition despite the pipe’s limited connectivity.
Storage:
East Daley expects a 350 Mbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending March 14. We expect total US stocks, including the SPR, will close at 833 MMbbl.
The US natural gas pipeline sample, a proxy for change in oil production, decreased 0.22% W-o-W across all liquids-focused basins. Samples increased 6.29% in the Gulf of Mexico and 1% in the Williston Basin, and decreased 8% in the Eagle Ford and 1.25% in the Permian. The Rockies and Gulf of Mexico samples have a high correlation between gas volumes and crude oil volumes, whereas the Permian and Eagle Ford basins correlation is less than 45%.
We expect US crude production to be 13.5 MMb/d. According to US bill of lading data, US crude imports increased to 6.1 MMb/d. More than 60% of the supply originated from Canadian pipelines and vessels into the US, with the remainder largely coming from vessels carrying crude from Mexico, Brazil and Venezuela.
As of March 14, there was ~550 Mb/d of refining capacity offline, including downtime for planned and unplanned maintenance. EDA expects gross crude input into refineries to increase, coming in at 15.8 MMb/d.
Vessel traffic monitored by EDA along the Gulf Coast increased W-o-W. There were 24 vessels loaded for the week ending March 14 and 21 the prior week. EDA expects US exports to be 3.5 MMb/d.
The SPR awarded contracts for 6.0 MMbbl to be delivered To Choctaw February – May and 2.475 to be delivered to Bryan Mount Jan – March 2025. The SPR has 396 MMbbl in storage as of March 14, 2025.
Regulatory and Tariffs:
Presented by ARBO
Tariffs:
Tallgrass Pony Express Pipeline, LLC Initial incentive rates were established for joint (Bridger) service for crude petroleum movements from Bridger Guernsey HUB to various Oklahoma destinations. Service requires execution of a Joint volume Commitment and Rate Incentive Agreement during the Open Season that commenced on February 14, 2025. FERC No 12.2.0 IS25-267 (filed February 28, 2025) Effective April 1, 2025.
Seahorse Pipeline, LLC A new Bakken Joint Tariff Offering was established with Bridger for committed shippers executing a TSA on or before March 31, 2025 agreeing to transport at least 10 Mb/d for a 5-year term. Shippers with an existing TSA and a 40 Mb/d commitment for a 7-year term will pay the new Anchor Shipper rate per the rate protection clause of the existing TSAs. The Rules and Regulations were modified to add Mixed Sweet as an eligible Common Stream. FERC No 1.2.0 IS25-266 (filed February 28, 2025) Effective April 1, 2025.
Bridger Pipeline LLC Expiring contract rate programs were replaced with new contract programs from locations in North Dakota and Montana to destinations at Bridger Guernsey HUB, Platte County, Wyoming and Osage Station, Weston County, Wyoming. The TSA terms include the agreement to ship at least 40 Mb/d for a 7-year term. FERC No 45.6.0 IS25-263 (filed February 28, 2025) Effective April 1, 2025.
The above information is provided by ARBO’s Oil Pipeline Tariff Monitor. For more information on regulatory proceedings or tariff rates, please contact please contact Corey Brill via email at corey@goarbo.com or phone at 202-505-5296. https://www.goarbo.com/
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