Commercial shipments have begun on the 300,000 b/d BridgeTex system, providing a new outlet for bottlenecked west Texas crudes. But further pipeline development will be necessary to fully alleviate the volatile Midland, Texas market.
Magellan Midstream Partners and joint venture partner Occidental Petroleum reported the start of commercial shipments on the line today. The BridgeTex system moves crude from Colorado City, Texas, to the crude storage and refining complexes of Houston and Texas City, Texas. Construction began in November 2012.
The company did not disclose current throughput rates, but said flows would ramp up over time.
A resurgence of Permian Basin production has outstripped pipeline capacity out of the west Texas and New Mexico fields. The supply has driven deep discounts on light, sweet shale production, reversing traditional pricing that kept West Texas Intermediate to a premium over West Texas Sour. Refiners in the region, including HollyFrontier, Western Refining and Alon USA, have moved to capture more of the stranded crude.
Producers need still more pipeline infrastructure for even BridgeTex to significantly increase their access to the US Gulf coast. While Magellan and Oxy have completed their pipeline from Colorado City to the Texas coast, operators await storage and improved capacity between the west Texas fields and the BridgeTex origin.
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