Executive Summary: Rigs - The total rig count increased by 3 for the December 1 week, up to 572 from 569. Infrastructure - Four projects still hang in the balance to build offshore export terminals capable of loading Very Large Crude Carriers (VLCCs) in the Gulf of Mexico. Storage - East Daley expects a 513 Mbbl withdraw from commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending December 13.
Rigs:
The total rig count increased by 3 for the December 1 week, up to 572 from 569. Liquids-driven basins increased by 2 rigs W-o-W.
• Anadarko (+1): Marathon Oil
• Permian – Midland (+1): Diamondback Energy
Infrastructure:
Four projects still hang in the balance to build offshore export terminals capable of loading Very Large Crude Carriers (VLCCs) in the Gulf of Mexico. These projects have been on the books for ~6 years and only one, Enterprise Products’ (EPD) Sea Port Oil Terminal (SPOT), has received the necessary deepwater port license to begin construction. The others, Energy Transfer’s (ET) Blue Marlin Offshore Port (BMOP), Sentinel Midstream’s Texas Gulf Link, and Phillips 66 (PSX) and Trafigura’s Blue Water project, are still caught in the permitting process.
EPD’s SPOT and ET’s BMOP have been the front-runners to reach a final investment decision (FID) and start construction. Both offer strong pipeline connectivity and the fastest path to operations. Not far behind is Sentinel’s Texas Gulf Link, which was granted a Final Environmental Impact Assessment (FEIS), the most arduous piece of the approval process, in August 2024. With the FEIS out of the way, a record of decision and final deepwater port license shouldn’t be far behind.
Enterprise was the first out of the gate to start the permitting process, and the first to gain the elusive deepwater port license from the US Maritimes Administration. EPD received the license in April 2024 but has yet to take FID on the project. In the early stages, SPOT was backed by volume agreements from Chevron. But CVX later rescinded its commitments, and EPD continues to try to commercialize SPOT with other customers. The project would have exceptional supply optionality by using Enterprise’s ECHO Terminal to source volume. ECHO has direct connections to the Permian Basin, and to the Houston and Cushing markets via Seaway.
ET recently said that BMOP passed an internal front-end engineering and design (FEED) study to ensure the project can move forward. With a heads of agreement (HOA) with Total Energies, BMOP may be in the best position to reach a final decision, even though it is still working towards a FEIS. BMOP will also have strong connectivity by using ET’s Nederland Terminal. The company has communicated it expects up to 45% of its crude exports to be of Canadian origin via the Keystone/Marketlink and Cushing markets, in addition to direct access to neat Bakken production. BMOP has the added advantage of using existing infrastructure, so the timeline to operations should be quicker than the other proposals if it can receive a deepwater license.
PSX and Trafigura’s Blue Water Terminal may have the toughest road, since the project’s original draft environmental impact statement was revoked by the Environmental Protection Agency (EPA) and had to be resubmitted. The Blue Water project has the most direct access to Permian production, but also limited connectivity to Cushing and Houston barrels.
Storage:
East Daley expects a 513 Mbbl withdraw from commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending December 13. 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 0.4% W-o-W across all liquids-focused basins. Samples increased 2.3% in the Permian Basin and 2.2% in the Gulf of Mexico. Samples decreased 4.0% in the Barnett and 1.8% in the Eagle Ford. 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 remain at 13.6 MMb/d. According to US bill of lading data, US crude imports increased by 100 Mb/d W-o-W 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, Venezuela and Brazil.
As of December 13, there was ~65 Mb/d of refining capacity offline, including downtime for planned and unplanned maintenance. EDA expects gross crude inputs into refineries to decrease by ~139 Mb/d W-o-W, coming in at 16.5 MMb/d.
Vessel traffic monitored by EDA along the Gulf Coast increased W-o-W. There were 25 vessels loaded for the week ending December 14 and 20 the prior week. EDA expects US exports to be 3.96 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 December 13, 2024.
Regulatory and Tariffs:
Presented by ARBO
Tariffs:
ETP Crude LLC Indexed rates from Goodrich Junction, Polk County, TX to Longview, Gregg County, TX (Mid Valley Pipeline) were increased by 2.254% and remain less than the applicable ceiling rates. FERC No 15.5.0 IS25-96 (filed November 21, 2024) Effective January 1, 2025.
Holly Energy Partners Operating, L.P. Rates were increased by the revised FERC ceiling levels on movements from Lovington, NM to Slaughter, TX Incentives were also increased. FERC No 63.16.0 IS25-151 (filed November 29, 2024) Effective January 1, 2025.
Gray Oak Pipeline, LLC The temporary Rate Reduction percentages (West Texas) were decreased, and the temporary volume incentive rates were increased. FERC No 2.23.0 IS25-146 (filed November 27, 2024) Effective January 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/
