Whiting Petroleum’s CEO, appearing at one of Hart Energy’s DUG Bakken/Niobrara conference, said in an open meeting that his biggest problem was getting pipeline access to the Philadelphia refinery complex. That sparked a flurry of questions from reporters: Was Whiting involved in a pipeline project? No, he said, but indicated someone else might be. Did he know of a company planning to build a cross-country pipeline? Well, he didn’t want to divulge another company’s plans. What company? He couldn’t say. Then Oasis Petroleum’s CEO indicated he knew about a pipeline project. His company wasn’t involved, but it would sure like to ship its crude over the pipeline, once it got built. Like Whiting’s CEO, however, he couldn’t say what builder was out there.
But it turned out that there were two companies working to build that pipeline.
A little research turned up Dakota Access, a project to re-purpose an existing gas line and build on it to move crude oil from western North Dakota 1,100 miles east to Patoka, Illinois. Looking at a map and aerial photographs of the Patoka, Illinois, terminal, it appears that nearby pipelines could take that crude oil to the Gulf Coast and to northern refineries. The hiccup here is that Gulf Coast refinery operators have said they have on hand more “light,” “sweet,” low-sulfur crude than they can economically handle. Both the Eagle Ford shale and the stacked plays of the Permian Basin have been producing record amounts of light crude, prompting Gulf Coast businessmen to pay for tankers built in Philadelphia’s Aker Shipyard to ship it to West Coast refineries. Those, like the refineries on the East Coast, are optimized for light crude, while Gulf Coast refineries are set up for the heavier, high-sulfur crudes coming out of the ground in Canada and Venezuela.
In a nutshell, that is why Philadelphia Energy Solutions is the biggest buyer of North Dakota crude, why a reported two-thirds of all of the Bakken’s crude comes East.
A DUG Marcellus/Utica, I asked a MarkWest Energy VP whether there were any plans to ship Utica crude over the Mariner East system. I had learned that shippers were paying to move condensate from the Utica Shale over the rails to Perth Amboy, N.J., and it appeared that the Mariner East system, with one pipeline already in operation and another due to start construction would make a better fit.
I got two answers. The MarkWest exec smiled and said he thought it would be a good question for Sunoco, which incidentally is MarkWest’s Joint Venture partner. But another conference attendee came by to say he’d seen Sunoco documents saying Sunoco plans to batch-ship Utica crude over Mariner 1.
Made sense to me, especially after I looked over the Shale Directories report that MPLX, the outfit that bought MarkWest, is planning to build its Cornerstone East pipeline to connect MarkWest’s Cadiz, Ohio, processing center to MPLX’ terminal at Sparta, Ohio. That terminal is very near an existing liquids line that goes all the way west to Southern Illinois, not so many miles from Patoka. What MPLX plans, according to the Shale Directories report, is to “reverse” that pipeline’s transport to ship liquids west, and is looking for partners. Then again, there’s Energy Transfer’s project, building out to Patoka, preparing to transport crude oil that could be more economically used in East Coast refineries than on the Gulf Coast.
Perhaps I’ve missed some key factors here, but it does look like the Mariner East system, once Cornerstone East and Mariner East 2 are completed, is well-placed to do the takeaway from Patoka. Somebody out there, correct me if I’m wrong.
Garland L. Thompson, Contributing Editor, US Black Engineer & Information Technology