ExxonMobil Pipeline Delivers Canadian Crude to Gulf Coast Refineries
21 April 2006
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| The pipeline run from Nederland, Texas to Patoka, Illinois. |
Mobil Pipe Line Company (MPLCO), an affiliate of ExxonMobil Pipeline Company, has started delivering Canadian crude to US Gulf Coast refineries through an 858-mile crude oil pipeline that runs from Patoka, Illinois to Nederland, Texas. Deliveries to Beaumont, Texas-area refineries began in early April.
The successful completion of the 20-inch Pipeline Reversal Project marks a first for the US Gulf Coast region and Canadian crude producers, and gives shippers of western Canadian crude oil, i.e., oil sands crude, direct pipeline access to US Gulf Coast refining markets.
It also allows MPLCO to optimize a previously under-utilized pipeline to best advantage, while helping to ensure a stable supply of crude to the Gulf Coast refineries.
Canadian shippers have committed an average volume of 50,000 barrels per day for the next five years, and, in light of the high shipper interest, we anticipate that the pipeline will operate on average near its estimated capacity of 66,000 barrels per day in heavy crude service.
—Mike Tudor, president of ExxonMobil Pipeline Company
The project reversed a 20-inch, 858-mile MPLCO crude oil pipeline that had historically run south-to-north from Nederland, Texas, to Patoka, Illinois. The 648-mile segment from Patoka to Corsicana, Texas, had been idle for several years, while the 210-mile segment from Corsicana to Nederland had been moving predominantly foreign crude north to markets in North Texas and Oklahoma.
The project has also enhanced synergies with Mustang Pipe Line Partners, a joint venture in which MPLCO has a 70% ownership share. Mustang operates a crude pipeline that extends from the Chicago area to Patoka, which allows access to other pipeline systems further north.
The US imported an average of 1.736 million barrels per day of oil from Canada in January and February 2006, up 12.7% from the level for the same period the year before, according to the most recent data from the Energy Information Administration.
That two-month average made Canada the number one source for imported oil for the US, as it edged out Mexico by a mere 1,000 barrels per day. The two countries vie for the number one and number two supplier spots, with Saudi Arabia being number three.
Doesn't it seem like it would require a lot of energy to pump the crude 858 miles? Intuitively, I would think that it would be more economical/efficient to build a refinery close to the source. I must be wrong because they spent all this set up an operational. I confess that I don't really know much about oil production.
Posted by: Reed Braman | 21 April 2006 at 04:01 AM
This 1.736 million barrel/day to USA reprensents about 2/3 of the Canadian Oil production. Since a very high percentage is from Tar Sands strip minning, it is a messy business. We will get pollution both ways - from local production in Alberta and from USA where it is consummed. Export to China and India will start soon creating more local pollution and environmental damages. All rivers, lakes, fish, games, grounds around will become highly polluted. Being number one supplier to USA, under those condiditions, is nothing to be proud about. Let's hope that the price goes up to $100+/barrel and Alberta will put a few $100 billions into a 'clean-up fund'.
Posted by: Harvey D. | 21 April 2006 at 06:46 AM
^ Refineries don't get built.
In the past 20+ years, very few (no?) refineries have been built. Apparently, the high capital cost and the percieved heavy regulations, alleged collusion of gasoline companies, plus NIMBYism for energy refineries not located where people are already used to them prevents new refineries from being built.
So, for whatever reason, refineries aren't being built. If that's the case, you've got to get the oil to where the refineries already are.
Posted by: stomv | 21 April 2006 at 07:00 AM
Its actauly fairly cheap to pump oil in a pipeline alot cheaper then trucking/ shipping it thats for sure.
Posted by: wintermane | 21 April 2006 at 07:21 AM
Wintermane,
Unless things have changed, it is cheaper to oil by barge than pipeline. They could pipe it to the Illinois and then barge it south from there. Perhaps there is now too much traffic, or potential for disruption by that route.
Stormy,
I agree refineries don't get built in the US. However, they are building a new one in India, that supposedly may create excess capacity by 2009, and Cuba is finishing a Russian-built refinery. Maybe we are just offshoring all our refining operations. It is not going to matter much if there is not enough feedstock anyway.
Posted by: JMartin | 21 April 2006 at 08:28 AM
Send 66,000 barrels per day from Illinois to Texas by barge? That seems like a recipe for environmental disaster, to me. If we've got to move this stuff around, and we do, I would think a pipeline would be the safest way to do it.
What I wonder about is why refineries tend to be clustered on the coasts. I know refineries are generally unpopular, but my bet is that there are poor, inland counties in the south that would be happy to accept a refinery, just as they are happy to accept nuclear power plants, etc.
Posted by: Mark | 21 April 2006 at 08:39 AM
Refineries tend to be at the coast for this reason: Among their products is heavy fuel oil which can be sold to ships as fuel. Nobody else seems to have much use for it. Inland refineries have problems disposing of the heavy fuel oil. They often go to extreme lengths to minimize the production of it, which of course affects the bottom line...
Posted by: An Engineer | 21 April 2006 at 09:35 AM
If they wanted to refine the oil-sands oil in the US, wouldn't the pipe it to the Texas/Gulf coast refineries. The pipeline brought it all the way to Texas just to send it to California. On it's way to China/Japan.
Posted by: Mark | 21 April 2006 at 10:06 AM
How do you recall posts after you mess-up?
Posted by: Mark | 21 April 2006 at 10:08 AM
Tell me which one you want deleted, and I'll do that.
Posted by: Mike | 21 April 2006 at 10:36 AM
Mark,
Barges currently move 68.9 Billion gallons of fuel in the United States, so this amount should not be out of the question. However, I agree there are terrorist issues and probably congestion on the rivers. Here is a website discussing the potential movement of Ethanol by barge: http://www.ethanol-gec.org/presentations/waterways_speech07-17-02.htm
Posted by: JMartin | 21 April 2006 at 10:47 AM
Thanks for the link, that was interesting.
Posted by: Mark_H | 21 April 2006 at 11:51 AM
70% of future Canada tar sand development will be the underground heat and pump method rather than the dig it up and truck it type. The majority of Alberta’s tar sands are located too deep in the ground to make open pit mining economical. Tar sand oil refining is messy, so what type of oil production isn’t? Until Canada builds a pipeline to the coast, they have to ship it out of the country some how and this pipeline to will help them in meeting that goal.
Posted by: Max | 21 April 2006 at 01:11 PM