* Flows still scheduled to be reversed June 1
* Lack of pipelines south has depressed WTI prices
* Reversal is historic move to ease Midwest glut
By Bruce Nichols
HOUSTON, Feb 21 Enterprise Products
has begun purging the Seaway pipeline ahead of a
reversal that will move crude out of the glutted Midwest and
into the U.S. Gulf Coast refining hub and likely bring U.S. oil
futures closer in line with world prices.
"We just started that this weekend. We're not really giving
information out as to when it will be completed. But we will
still expect to be able to reverse flow by June 1. We're on
schedule," Enterprise spokesman Randy Burkhalter said.
"We expect to be able to flow up to 150,000 barrels per day
(bpd) south," Burkhalter said.
To empty the line for reversal, Genscape estimates 90,000
bpd are being pushed into Cushing, the only direction in which
purging could occur prior to reversal, Genscape spokesman Abudi
With 2.3 million barrels in the line, which historically has
run from the Gulf Coast to Cushing, it will take weeks to
accomplish emptying, Genscape said.
Burkhalter could not confirm the details.
The decision to reverse the line followed sale of Conoco
Phillips' 50-percent interest in the line to Enbridge
last fall. Enbridge then agreed with the other owner,
Enterprise, to reverse the line to ease the oil glut at Cushing.
It appears that initially, purging Seaway will add to oil
inventories at Cushing. Oil markets did not appear to react to
the news, with WTI up more than $1.50 and North Sea
benchmark Brent up 45 cents at 10:13 a.m. CST (1613
Reversal is planned to take place in stages, with an initial
150,000 bpd flowing from Cushing to refineries in the Houston
area by June 1, according to the schedule most recently
disclosed by Enterprise.
Since announcement of the reversal plan, the companies have
begun talk about expanding it to 800,000 bpd.
The U.S. Midwest has been inundated with rising flows of
crude from Canada and North Dakota over the past year and a
shortage of pipeline outlets to the Gulf Coast. Historically,
oil flowed from the Gulf Coast to the Midwest.
That has driven up inventories of crude in the region, which
includes the Cushing, Oklahoma, delivery point for the New York
Mercantile Exchange's U.S. oil futures contract.
The regional glut has weakened prices for U.S. oil futures,
also called West Texas Intermediate, relative to international
benchmark Brent as well as other regional U.S. crudes.
Producers have been scrambling to find ways to send crude
out of the Midwest and into the giant U.S. refining complex
along the Gulf Coast, where it fetches a healthy premium.
The build up of inventories has pushed Brent to record
premiums to West Texas Intermediate, hitting $28 a barrel in
October of 2011 before receding on news of the Seaway reversal
plan in November.
The spread widened out again in February, topping $21 on
Feb. 7 as inventories in the region began to grow again.
Genscape monitors key pipelines by measuring the amount of
power being used at pump stations.