Enbridge (ENB) is solidifying its position as the leading service provider for crude oil exports from Corpus Christi. The company will expand its terminal assets and plans to add pipeline capacity to the South Texas export hub.
In a March 6 update, Enbridge announced a deal with Flint Hills Resources to buy two docks and land for $200MM. The docks are located adjacent to the company’s Enbridge Ingleside Energy Center (EIEC), where ENB said it has sanctioned an investment to add 2.5 MMbbl of new storage capacity.
ENB also plans to hold an open season to gauge interest in expanding its Gray Oak Pipeline by 120 Mb/d. The expansion would take Gray Oak capacity to 1,020 Mb/d and make it the largest pipeline moving crude oil from the Permian Basin to Corpus Christi. Gray Oak also moves the most crude oil to ENB’s docks at EIEC.
East Daley Analytics expects a relatively quick turnaround for the open season and project. We believe ENB plans to use drag-reducing agents (DRAs) to increase volumes on Gray Oak, an expansion requiring little lead time to implement if the open season is successful.
According to EDA’s Crude Hub Model, the Gray Oak expansion will be necessary for Corpus Christi to keep up with growth and maintain its share of Permian volumes. The Crude Hub Model predicts 245 Mb/d of production growth from the Permian between July 2024 and YE24, a wedge of new supply that could easily fill the Gray Oak expansion. Assuming the project comes online in 2Q24, new Permian growth could fill the additional egress in one quarter.
Even with the added Gray Oak capacity, pipelines moving crude oil from the Permian Basin to the Gulf Coast will continue to run near capacity, reaching ~90% utilization by YE24, according to the Crude Hub Model. Total Permian Basin pipeline egress, including destinations to Cushing, would hit 80% utilization by the end of 2024, while pipelines to Corpus Christi run over 90% utilization (see black line in figure).
Enbridge’s EIEC currently exports ~925 Mb/d, or ~40% of all crude volumes leaving Corpus Christi docks. The two additional docks will boost ENB’s market share to ~55%+ of all Corpus Christi exports. East Daley believes Enbridge will use the Gray Oak expansion to optimize volumes moved at the new docks. The acquisition also gives ENB optionality to move other products through the company’s docks. – Kristy Oleszek Tickers: ENB.
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