Rigs: The total US rig count remained flat at 583 rigs for the week of July 11.
Infrastructure: Bridger Pipeline and South Bow plan to develop a new pipeline to move Canadian crude oil from Guernsey, WY to the Cushing hub. The ambitious project may face similar scrutiny as Keystone XL.
Supply and Demand: The US natural gas pipeline sample, a proxy for change in oil production, increased 0.4% W-o-W across all liquids-focused basins for the week ending July 20.
Rigs:
The total US rig count remained at 583 rigs for the week of July 11. Liquids-driven basins remained flat at 450 rigs W-o-W.
- DJ (-1): Mountain Petroleum Corp.
- Eagle Ford (-1): Wildfire Energy
- Permian (+2)
- Delaware (+1): SM Energy
- Midland (-1): Blackbeard Operating, LLC
Infrastructure:
Bridger Pipeline and South Bow (SOBO) reportedly plan to develop a new pipeline to move Canadian crude oil from Guernsey, WY to the Cushing hub in Oklahoma. The ambitious project will lean on remnants of the former Keystone XL and could face similar scrutiny as that proposal.
Reuters reports that Bridger and SOBO have formed a joint venture to acquire the right-of-way of the former Liberty Oil Pipeline from Tallgrass Energy. Liberty was originally proposed in 2019 by Phillips 66 (PSX) and Bridger as a Guernsey-to-Cushing crude pipeline. The project had long-term shipper commitments, but PSX withdrew it in 2021 amid the post-Covid industry retrenchment.
The new Cushing-bound pipeline would connect to Bridger Pipeline’s proposed expansion from the US-Canada border to Guernsey, a roughly 650-mile, 36-inch pipeline designed to transport up to 550 Mb/d of Canadian crude. That project in turn would connect to SOBO’s proposed Prairie Connector pipeline, moving up to 550 Mb/d of Canadian barrels from Hardisty, Alberta, to the US-Canada border.
Prairie Connector would use some of the pipeline built for Keystone XL before it was ultimately abandoned. After securing 20-year binding shipper commitments in May, South Bow continues to target a final investment decision (FID) for Prairie Connector next year. Together, the three projects represent a joint effort by Bridger and SOBO to establish a new crude corridor from Canada to Cushing and further Gulf Coast markets.
The proposals come at a critical time for Canadian crude egress. East Daley’s Crude Hub Model forecasts Canadian crude production to grow 4.2% through 2031 and steadily fill pipeline capacity. Many projects to address short-term production growth are nearing or have already reached FID, such as Enbridge’s (ENB) 30 Mb/d Platte expansion, 400 Mb/d Mainline expansions, and downstream plans to reverse Enbridge’s Bakken Pipeline to supply the Dakota Access Pipeline (DAPL). Prairie Connector would be the next major addition to Alberta’s export capacity, helping preserve destination flexibility as Canadian production continues to grow.
While SOBO has secured shipper commitments for Prairie Connector and Liberty’s former right-of-way provides a potential downstream corridor, the success of the broader system ultimately depends on Bridger’s proposed expansion through Montana and Wyoming. That segment has already encountered legal challenges during the permitting process.
When filing for a Certificate of Compliance with the Montana Department of Environmental Quality (DEQ), Bridger requested to omit certain financial and environmental information from its application. The DEQ granted the request, a decision that environmental organizations and affected landowners argue violates Montana law, since public notice was not provided and a hearing was not held.
Bridger’s attempt to withhold environmental information from public disclosure recalls the legal battles that slowed Keystone XL in Montana. In 2018, US District Judge Brian Morris halted Keystone XL construction after finding shortcomings in the federal environmental review, including its analysis of oil spill risks and other environmental impacts. The ruling became a major legal setback in Keystone XL’s permitting process, despite strong support from the Trump administration.
While Bridger’s project is not Keystone XL, the permitting process has entered a regulatory environment in Montana that has proven challenging for major cross-border crude pipelines. As a result, Bridger’s project could face the same legal scrutiny that defined Keystone XL’s prolonged permitting process
Supply and Demand:
The US natural gas pipeline sample, a proxy for change in oil production, increased 0.4% W-o-W for the July 6 week across all liquids-focused basins.
The Barnett (+11.1%) posted the largest increase for the week, followed by the Anadarko (+4.7%), Gulf of America (+2.2%), Arkoma (+1.2%) and Eagle Ford (+0.4%). Volumes decreased in the Permian (-1.6%), Rockies (-1.4%) and Williston (-0.5%). The Rockies and the Gulf of America have a high correlation between gas volumes and crude oil volumes, whereas the Permian and Eagle Ford basins correlation is less than 45%.
As of July 20, 93.5 Mb/d is offline due to planned maintenance at the Par Pacific East refinery in Kapolei, HI. The refinery is expected to run at full capacity by the end of the month.
Vessel traffic monitored by EDA along the Gulf Coast remained stable W-o-W. A total of 27 vessels were loaded for the week ending July 18, the same number of vessels loaded the previous week.