Midstream operator Epic has cut the tariff for a second time on its 400,000 b/d crude pipeline from the Permian basin to the US Gulf coast, as price spreads have narrowed sharply.
The rate for moving crude on the Epic line from Crane, Midland and Wink in Texas to the Corpus Christi area is now $1.35/bl, down from $2.50/bl, according to a revised tariff filed this week with the US Federal Energy Regulatory Commission. Epic had previously cut the rate to $2.50/bl from $5/bl.
Epic started delivering crude on the line earlier this month.
The tariff change comes as the price spread between crude at Midland and crude at the US Gulf coast has narrowed significantly with the new pipeline capacity. Another large crude line, Plains All American Pipeline's 670,000 b/d Cactus 2 line, also went into service earlier this month moving Permian oil to Corpus Christi.
The WTI Midland price discount to WTI Houston is averaging about $2/bl for the October trade month-to-date, according to Argus data. This compares to an average discount of $3.56/bl for the September trade month and an average discount of $5.16/bl for the August trade month. The spread peaked above $20/bl in October 2018.
TC Energy earlier this month also lowered its September spot crude rates on the Marketlink pipeline from Cushing, Oklahoma, to Houston and Port Arthur in Texas, citing competition from the new Permian lines.
And Magellan Midstream Partners said it expects spot shipments on its two Permian-to-Houston pipelines to decline after the third quarter amid the new pipeline capacity.
Epic's use of the natural gas liquids line is an interim measure until a larger crude project is ready for service. Epic's long-haul crude line, a 730-mile (1,175km) system from west Texas to Corpus Christi, is expected to start in early 2020. That project is 50pc complete and will have an initial capacity of 600,000 b/d, Epic said earlier this month.
Another large crude pipeline is scheduled to go into service this year to move more Permian crude to the US Gulf coast — Phillips 66' 900,000 b/d Gray Oak line.
