Executive Summary: Rigs: The total rig count increased by 6 for the November 24 week, up to 570 from 564. Infrastructure: The midstream sector has been relatively quiet over the last few months on the crude oil front. Storage: East Daley expects a 280 Mbbl withdraw from commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending November 15.
Rigs:
The total rig count increased by 6 for the November 24 week, up to 570 from 564. Liquids-driven basins increased by 3 rigs W-o-W.
Infrastructure:
The midstream sector has been relatively quiet over the last few months on the crude oil front. Much depends on pending export terminal projects, and companies are not likely to announce new projects until their fates are decided. However, rather under the radar, Enbridge (ENB) is expanding its own crude oil infrastructure. The company’s recent and planned projects could create noise in a muted market.
East Daley’s Crude Hub Model forecasts pipeline egress from the Western Canadian Sedimentary Basin (WCSB) to become constrained by YE25. The bottleneck emerges as total WCSB production increases 226 Mb/d (4.7%) Y-o-Y, according to our WCSB Production Scenario Tool. The start of the Trans Mountain Pipeline expansion (TMX) opened new takeaway to the Pacific market this spring, yet WCSB oil production grows steadily in our outlook and eventually fills available pipeline egress.
What other options are available to move WCSB crude oil? Canada’s West Coast is saturated after TMX. Moreover, East Daley does not expect new life for South Bow’s (SOBO) Keystone XL extension, despite the incoming Trump administration. TC Energy (TRP) has discontinued preservation costs and in 3Q24 booked an impairment charge for the project. As a result, an Enbridge Mainline expansion is likely the best option to meet future egress needs.
ENB has also increased the number of barrels transported out of the Bakken, through an open season on its Bakken Pipeline. We believe ENB successfully secured 30 Mb/d to transport Bakken barrels north to Cromer, MB for a Clearbrook, MN delivery via the Mainline’s Line 65.
In April ‘24, ENB expanded Flanagan South Pipeline by 60 Mb/d resulting in 720 Mb/d capacity. This expansion adds to the feasibility of expanding the Mainline, as Flanagan South primarily carries WCSB production. Combined with Seaway Pipeline, Flanagan South allows WCSB barrels to reach Gulf Coast refiners and export docks. Additionally, the Enbridge Houston Oil Terminal (EHOT), a 2.7 MMbbl capacity sour crude terminal, is expected to start service in 2Q26.
In the Permian, ENB is expanding Gray Oak Pipeline in two phases. The first phase for 80 Mb/d is expected to be completed this month (December ’24) and will bring capacity to 980 Mb/d. The second phase, expected by mid-2025, will add 40 Mb/d and take total capacity to 1,020 Mb/d. Gray Oak transports Permian and Eagle Ford production to Corpus Christi.
The Gray Oak expansion is supported by the October ’24 acquisition of two additional docks and land from Flint Hills Resources, located adjacent to ENB’s Corpus Christi Enbridge Ingleside Energy Center (EIEC). The EIEC is the largest crude oil export terminal by volume, loading ~25% of all Gulf Coast crude exports. Along with the acquisition, ENB is building the Ingleside Phase 7 Tank Expansion project, adding five tanks with a total 490 Mbbl of capacity. ENB expects the first tank to be operational by late 2025, and to complete all the tanks by YE26.
Storage:
East Daley expects a 280 Mbbl withdraw from commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending November 15. We expect total US stocks, including the SPR, will close at 815 MMbbl.
The US natural gas pipeline sample, a proxy for change in oil production, increased 0.13% W-o-W across all liquids-focused basins. Samples increased 3.89% in the Gulf of Mexico and 0.38% the Permian Basin. Samples decreased 2.02% in the Eagle Ford and 1.36% in the Bakken. The Rockies and the Gulf of Mexico 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 increase to 13.5 MMb/d. According to US bill of lading data, US crude imports decreased by 490 Mb/d W-o-W to 6.8 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, Venezuela and Brazil.
As of December 6, there was ~37 Mb/d of refining capacity offline, including downtime for planned and unplanned maintenance. EDA expects gross crude inputs into refineries to increase by ~240 Mb/d W-o-W, coming in at 17.1 MMb/d.
Vessel traffic monitored by EDA along the Gulf Coast decreased W-o-W. There were 20 vessels loaded for the week ending December 7 and 29 the prior week. EDA expects US exports to be 3.5 MMb/d.
The SPR awarded contracts for 4.65 MMbbl to be delivered in October – December 2024 at the Choctaw SPR Site. The SPR has 392 MMbbl in storage as of November 29, 2024.
Regulatory and Tariffs:
Presented by ARBO
Tariffs:
Plains Pipeline, L.P. The capital surcharge for crude oil received into the Big Horn System at Elk Basin, WY was canceled as the stated capital amount has been recouped and the rate is no longer needed in the tariff. FERC No 147.56.0 IS25-15 (filed November 25, 2024) Effective January 1, 2025.
Seaway Crude Pipeline Company LLC The temporary volume incentive rate was extended through December 31, 2024. FERC No 2.91.0 IS25-101 (filed November 22, 2024) Effective December 1, 2024.
Marketlink, LLC The temporary volume incentive rates were extended, unchanged, through December 31, 2024. FERC No 3.36.0 IS25-132 (filed November 25, 2024) Effective December 1, 2024.
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/