Executive Summary: Rigs - The total US rig count increased by 8 during the week of January 2 to 550. Infrastructure - Sentinel Midstream, LLC crossed a significant milestone last week for its Texas Gulflink deepwater export terminal. Storage - East Daley expects a 6.1 MMbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending February 21.
Rigs:
Infrastructure:
Sentinel Midstream, LLC crossed a significant milestone last week for its Texas Gulflink deepwater export terminal. The project received a record of decision (ROD) from the Department of Transportation, often the most challenging and time-consuming piece of the approval process for deepwater terminals.
The ROD comes nearly six years since Sentinel filed the project application in June 2019. Now that the ROD is secured, the next step for Texas Gulflink will be to receive the deepwater port license, which East Daley expects to happen in the next few months. This will pave the way for Sentinel to commercialize the project and ultimately reach a final investment decision (FID).
Planned 32 miles offshore Freeport, Texas Gulflink would link to Houston markets via the Bryan Mound Station (see map). The offshore platform will connect via pipeline to a new crude terminal planned in Brazoria County, TX with ~9 MMbbl of tank capacity.
East Daley believes Sentinel may have a leg up on commercialization due to the company’s strong relationship with ExxonMobil (XOM). In 2021 and 2024, Sentinel Midstream and XOM created two joint ventures, Enercoast Midstream and Enercoast Midstream Louisiana, for last-mile transport services between Louisiana and Texas oil terminals. XOM provided pipelines to the JVs, and Sentinel contributed cash to become the majority owner and operator.
Sentinel competes in a crowded field for deepwater terminal projects including Enterprise Products’ (EPD) Sea Port Oil Terminal (SPOT), Energy Transfer’s Blue Marlin, and Phillips66/Trafigura’s Bluewater. Only EPD’s SPOT has received the full deepwater port license.
With a planned capacity of 85 MMb/hr, or one VLCC (Very Large Crude Carrier) per day, Texas Gulflink would be a competitive player in the Gulf Coast export market. The project has strong pipeline connections with access to Houston’s crude oil infrastructure, including pipelines like EPD/Enbridge‘s Seaway Pipeline and XOM’s Texas City to Bryan Mound Pipeline. However, East Daley predicts increased competition for barrels at Jones Creek, where a market battle between Texas Gulflink and EPD’s Echo Station could impact market dynamics.
Storage
East Daley expects a 6.1 MMbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending February 21. We expect total US stocks, including the SPR, will close at 834 MMbbl.
The US natural gas pipeline sample, a proxy for change in oil production, decreased 1.74% W-o-W across all liquids-focused basins. Samples increased .58% in the Gulf of Mexico, and decreased 10.8% in the Eagle Ford, 2.41% in the Rockies and 1.60% in the Williston Basin. 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 be 13.5 MMb/d. According to US bill of lading data, US crude imports increased by 700 Mb/d W-o-W to 6.5 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 February 21, there was ~1,045 Mb/d of refining capacity offline, including downtime for planned and unplanned maintenance. EDA expects gross crude input into refineries to decrease, coming in at 15.25 MMb/d.
Vessel traffic monitored by EDA along the Gulf Coast increased W-o-W. There were 27 vessels loaded for the week ending February 21 and 23 the prior week. EDA expects US exports to be 4.2 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 395 MMbbl in storage as of February 14, 2025.
Regulatory and Tariffs:
Presented by ARBO
Tariffs:
GEL Offshore Pipeline, LLC The incentive rate was increased from Carr, CO to Platteville, CO. FERC No 155.9.0 IS25-220 (filed January 31, 2025) Effective February 1, 2025.
Lambda Energy Gathering LLC The loss allowance was increased from 0.2% to 0.7%, including volume received at truck stations, for production with gravity above 44.9 API. The changes are being made to more accurately reflect actual losses. FERC No 7.20.0 IS25-218 (filed January 31, 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/