* EIA to sharply revise southbound pipeline flow volumes
* Flow may be near 150,000 bpd, triple previous estimates
* Some Exxon flow may have been omitted from EIA data
* Errors in flow data may go back to 2009-EIA
* Data may show less Midwest glut, change market outlook
(Recasts, adds EIA comment, graphic link.)
By Joshua Schneyer and Bruce Nichols
NEW YORK, Dec 2 Far greater volumes of crude
oil than previously reported have flowed this year from the
U.S. Midwest into the Gulf Coast states, which will lead to a
large revision in U.S. Energy Information Administration data,
an EIA official told Reuters.
The data gap -- of perhaps 100,000 barrels per day (bpd) --
is small in the U.S. market that consumes around 19 million
barrels a day, but could have a significant impact on oil
For analysts and economists who use EIA's data to model
supply and demand in diverse U.S. regions, a revision could
indicate more Canadian crude flowing south to the Gulf Coast
refining hub and fewer potential gluts in the key Midwest
region, where U.S. oil futures are delivered.
It could also raise more questions over the accuracy and
survey methods of the EIA, which has been under fire this year
over its energy data, or about whether companies including
Exxon Mobil (XOM.N) have met strict reporting requirements.
The EIA discovered it was working with incomplete data this
year and potentially in 2009, and will sharply revise upward
the figures, said EIA statistician Michael Conner.
"There will be a large and very visible revision of our
data" on pipeline flows from the Midwest, PADD 2, to the Gulf
Coast states, PADD 3, Conner told Reuters.
The flows for most of this year so far were vastly
under-stated in EIA data. It's not yet clear when the revision
will occur. EIA often waits for an annual report in June, but
the data may be corrected earlier, Conner said.
Revision may show that volumes of crude piped south from
the Midwest have been up to several times greater than EIA data
An EIA report this week showed a radical, recent spike in
pipeline shipments from the Midwest, or PADD 2, to the southern
Gulf Coast states, or PADD 3, raising eyebrows among oil
analysts since little crude was thought to be flowing south,
although large volumes usually flow north.
In September, 151,000 bpd flowed south between the two
regions on pipelines, EIA data shows, or more than triple the
average flow of 45,000 bpd in the first eight months of 2010.
The September flows were 47 percent higher than a previous
monthly record in 1994.
(Graphic on pipeline flows: r.reuters.com/dyj38q)
Pipeline flows throughout 2010 have been "close to, or much
closer to" the record high levels recorded in September, Conner
He couldn't offer precise figures since the agency is still
poring over pipeline data. He declined to say which pipeline
flows weren't fully accounted for in EIA's existing figures, or
whether oil companies had failed to report volumes, which is
required by law.
OIL COMPANIES QUESTIONED
The EIA detected potential anomalies in the flow data and
"started asking questions" of pipeline operators earlier this
year, Conner said.
The huge discrepancy may stem in part from EIA's omission
of pipeline flows on lines owned by oil giant Exxon, according
to a source familiar with the matter, although flows on other
pipelines may also be involved.
"We are talking to EIA now to verify our report data,"
Exxon spokesman Kevin Allexon said in an email response to
questions on Thursday.
Exxon's Pegasus line, an 858-mile (1,381-km) pipeline, was
the first between the PADD 2 and PADD 3 regions to be reversed
to transport crude flows south instead of north, starting in
2006. The line's capacity was expanded by at least 50 percent
last year, to a current 96,000 bpd, Allexon said.
He declined to say whether Pegasus flows had been
accurately reported by the EIA, or if any additional Exxon
pipeline flows between the regions may have gone undetected by
Other lines also flow between the PADDs, including two
owned by ConocoPhillips (COP.N) that go from Oklahoma to Texas.
Conoco declined to comment immediately.
Occidental's (OXY.N) Centurion pipeline also flows from
Cushing in PADD 2 toward West Texas, in PADD 3, after the
60,000 bpd line had its flow direction reversed. A company
spokesman said he couldn't immediately comment.
If average volumes were near September's high levels, that
means around a million barrels a week may have been traveling
south from the Midwest, compared with previous estimates of
just 315,000 barrels a week on average through August.
Northbound pipeline flows from PADD 3 to PADD 2 are still
far higher, or around 1.3 million bpd in September. But those
volumes are almost 50 percent lower than peak levels in 2000.
U.S. oil futures are delivered to Cushing, Oklahoma, in
PADD 2, and prices there serve as a major world benchmark.
Supply gluts and pipeline bottlenecks in the area have placed
pressure on U.S. oil prices since 2008, hitting U.S. oil
futures for near-term delivery hardest.
U.S. oil futures for delivery at Cushing in January CLc1
were up $1.25 a barrel at $88 on Thursday, or 42 cents cheaper
than February barrels. CL-1=R
The bigger flows may indicate PADD 3 demand is greater than
once thought, and show higher volumes of Canadian crude are
rushing through PADD 2 to Gulf Coast states, site of the
largest U.S. refining complex.
New north-to-south running pipelines are planned, which in
coming years could ship more than 2 million bpd of crude pumped
in from Canada all the way to the Gulf Coast. PADD 2 oil output
is also rising, after production soared 20-fold in North
Dakota's Bakken Shale in recent years.
(Editing by Marguerita Choy)