Faced with a loss of Canadian barrels, Capline Pipeline is looking to expand its rolodex in the Bakken. The pipeline could become a supplier of light sweet crude oil to the St. James hub, thanks to new market dynamics created by the Trans Mountain Pipeline expansion (TMX).
Operated by MPLX, Capline historically has delivered Canadian heavy oil sands crude from Patoka, IL to St. James on the Louisiana Gulf Coast. The pipeline recently held an open season to attract light sweet barrels to the system. As the Bakken continues to grow, Capline is positioned to move some of that supply growth to St. James.
TMX came online in May 2024 and can take 590 Mb/d of heavy Canadian crude from Edmonton, AB to the Vancouver port for export. The expansion enables shippers in Canada to divert heavy barrels from Enbridge’s (ENB) Mainline feeding both Trans Mountain and Capline.
East Daley Analytics expects Capline will lose barrels in 2H24 and 2025 compared to activity prior to TMX start-up. According to the latest Crude Hub Model, throughput on Capline declines by 70 Mb/d by YE24 vs the 5-month average through May ’24, just prior to TMX start-up.
Capline must compete against other routes for Bakken barrels to reach the St. James market, shown in the figure from the Crude Hub Model. Shippers on Capline pay $8.83/bbl to transport crude out of the Williston Basin to Patoka and then to St. James. The alternative Dakota Access Pipeline (DAPL) moves Bakken oil to ETCOP pipeline, then to Bayou Bridge Pipeline running from Nederland, TX to St. James. That route currently costs $11.55/bbl for shippers.
Zydeco Pipeline is another option to move a similar-grade Permian barrel to St. James. Zydeco runs from Houston to St. James and has a current tariff rate of $10.05/bbl. Capline is the most cost-effective option for the light sweet barrel for shippers. Capline also currently has incentive rates for both light and heavy barrels.
Bakken growth should create opportunities for Capline. Using EDA’s Production Scenario Tools, we forecast Bakken crude oil production to grow by 5% in 2024 and 8% in 2025, creating more demand for transport services. – Haley Vinton Tickers: ENB, MPLX.
Join East Daley’s Next Webinar - NGLs Heading into a Super-Volatility Cycle
Don't miss this exclusive webinar diving into trends in NGL markets. We will look at:
- NGLs & commodity ties: Gas, NGLs and Crude - One constraint will constrain all
- Permian back on the board in 4Q24 and what it means for supply
- Activity afoot in the Bakken – Double H impact to the NGL market & the long game
Join us on August 28 at 10 AM MST. Register here.
Sign Up for the Crude Oil Edge
East Daley’s Crude Oil Edge provides weekly updates on the US crude oil market including supply and demand fundamentals, basin-level views, and analysis of market constraints and infrastructure proposals. We explore sub-basin dynamics and provide market insights on crude oil flows, production growth, and import and export characteristics. Sign up now for the Crude Oil Edge.
The Daley Note
Subscribe to The Daley Note (TDN) for midstream insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term.
