How the US shale boom has propelled pipeline infrastructure buildout

Author Jeff Kralowetz, VP, Business Development

Pipeline and export infrastructure is finally catching up with the US shale oil boom, with most activity occurring around the US Gulf coast to support increasing exports. In addition to investments in new pipelines and reversing the direction of existing pipelines, a new export hub is emerging at Corpus Christi, Texas.


Most of you know about the great shale revolution in the US in the last 10 years, but fewer may know that it has created a once-in-a-generation reworking of the crude pipeline system, which used to flow north to Chicago with imports, but now flows south to the Gulf coast with crude that is ready to be exported. One of the biggest changes in the infrastructure is the 1.2mn b/d Capline, which is the granddaddy of all crude pipelines in the US. It used to flow north, but by September next year, it is going to flow south with light crude, probably by 2022 with heavy. And one of the implications of this is we are going to see St James become the Walmart super-center of North American crude with essentially every grade produced in the continent available there right on the Mississippi River for export.

Further west – Nederland, Beaumont, Port Arthur – not many people realize that more than a half a million barrels a day of crude are being exported from this area, and it also has great connections east into Louisiana via the Bayou Bridge and the Zydeco. On the export side, we have a system that is mostly Aframaxes going out to reverse lighter into VLCCs, the biggest ships operating into Asia. But we do have the Louisiana Offshore Oil Port (Loop) that takes VLCCs now. Up to 12 VLCCs a month can leave the Loop.

Houston is getting built out. We see connections of even heavy crude into MEH which is the traditional home of the August WTI Houston light crude infrastructure. And as good as Houston is, we are starting to see the constraints in the ship channel become important. And as we see more and more propane exported out of the ship channel, and more big container ships coming in, we expect congestion to become a bigger issue. Which leads us to talk about Corpus Christi. Corpus has three major new lines being completed to it by the end of the year, 2mn b/d of capacity from the Permian. This is essentially all going to get exported and it is going to get exported by ports very close to Tidewater that can partially load VLCCs.

If you are interested in learning more about how the US Gulf coast is gearing up to support an increasing volume of US crude exports, listen to our US crude exports and infrastructure webinar.

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