Exclusive: Valero to back Double E oil pipeline
NEW YORK (Reuters) - Top U.S. refiner Valero is likely to commit to shipping crude on Enterprise Products Double E pipeline, a 450,000 bpd oil link that would run from Cushing, Oklahoma, to Houston and could begin operating before 2013, two industry sources told Reuters on Tuesday.
Enterprise and its partner, Energy Transfer, have been scrambling to drum up commitments from oil shippers to help it build the line, which could alleviate a glut of crude in the U.S. midcontinent.
As a huge Gulf Coast refiner, Valero's weight behind the project may help give it critical mass to go forward, said the sources who requested anonymity.
Valero declined comment on whether it would participate in Double E. The company has said in the past it supports a "debottlenecking" of oil logistics in the U.S. Midwest and wants to bring more oil to its plants along the Gulf Coast.
Valero has already committed to shipping crude down a competing oil pipeline known as Keystone XL, which is still seeking approval from the U.S. State Department since it would bring in crude from Canada and ship it to the Gulf Coast.
Energy Transfer did not return calls seeking comment. Enterprise spokesman Rick Rainey declined comment on whether Valero would ship oil on Double E. He said the company expects to announce results of its so-called open season for Double E soon.
That period, which was extended twice before it ended on Friday, saw Enterprise seek commitments from oil producers, oil traders and refiners to ship crude on Double E once it is built.
Due in part to a dearth of pipeline capacity linking the U.S. midcontinent to the refining hub on the Gulf Coast, U.S. oil futures -- delivered at landlocked Cushing -- have been trading at huge discounts of more than $22 a barrel to Europe's Brent, a seaborne crude which can be shipped around the world in tankers.
(Reporting by Joshua Schneyer; additional reporting by Bruce Nichols in Houston and Selam Gebrekidan in New York; editing by Jim Marshall)
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