The owners of the 1.2mn b/d Capline crude pipeline that runs from St James, Louisiana to Patoka, Illinois, will study "potential commercial opportunities" for the underutilized system, which for years has been considered a candidate for reversal amid the North American onshore crude boom.
"This analysis is being conducted to address the expanding crude oil supply in North American and the significant changes in crude oil demand patterns," Capline owners Plains All American Pipeline, Marathon Petroleum and BP said in a joint release.
Crude flows through the US have effectively flipped as less costly US and Canadian production pushes out imports delivered to the US Gulf coast. A series of reversals and newly built pipelines now deliver Canadian and northern US midcontinent crudes to the Texas coast, leading to a decline in northbound deliveries.
The new infrastructure leaves out Louisiana refineries, however, including the 565,000 b/d Garyville refinery operated by Marathon Petroleum. Marathon Petroleum chief executive Gary Heminger said refiners in the state need more direct access to heavy Canadian barrels, something that might be possible with a Capline reversal.
Plains, as a logistics company, and Marathon Petroleum, which operates a logistics entity, would both see advantages in increasing flows along the pipeline.
"It's too early to be able to put a forecast, but if heavy crude from the Canadian region was available, there's substantial demand in the Louisiana refining corridor," Heminger said. "Most of those refineries, in Baton Rouge through Garyville and on, are heavy refineries, so I think there's a lot of volume that could go that direction some day."
All three owners of Capline would need to agree for it to be reversed.
The owners did not immediately give details about what they were looking to do with the pipeline, except to say that a connection with Plains' proposed 200,000 b/d Diamond pipeline from Cushing, Oklahoma to Memphis, Tennessee "will be evaluated" and that the Capline study should be ready before April.
The Diamond line, which should be complete in late 2016, effectively would replace Capline as a supplier to Valero Energy's 190,000 b/d refinery at Memphis. A connection coupled with a reversal would for the first time link the oil hub at Cushing with eastern US Gulf coast refineries.
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