Largest Mainland US Crude Pipeline May Be Reversed

Oil Pro ^ | 10/30/2014 | Jeff Reed

[thackney]

Marathon Petroleum says it's assessing options for the future of the largest mainland US oil conduit- the 1.2 M/bd Capline pipeline.

In recent years, the pipeline, which runs from St. James, Louisiana (the delivery hub for Light Louisiana Sweet crude) to Patoka, Illinois, has seen sharp declines in shipping volumes as midwestern refiners access the growing supply of Bakken and Canadian crude to replace expensive imports via Capline.

Crude flows through the US have effectively reversed as less expensive US (primarily Bakken) and Canadian production pushes out imports delivered to the US Gulf coast.

Several reversals and newly-built pipelines now deliver Canadian and northern US midcontinent crudes to the Texas coast, thereby leading to a drop in northbound deliveries.

Last December, Marathon CEO Gary Heminger said that the company might consider connecting the pipeline to the proposed Diamond pipeline, which will go from the Cushing, Oklahoma storage hub to Valero's Memphis, Tennessee, refinery. This would provide the Valero plant an alternate source of oil.

The 632-mile, 40-inch Capline pipeline has more than 10 million barrels of storage capacity and 16 mainline pumping stations. Marathon Petroleum operates the line, and BP and Plains All American Pipeline are the co-owners.

For several years, analysts and traders have speculated that the Capline could be reversed to move Canadian crude to US Gulf Coast refineries, enabling it to increase throughput.

Marathon said in a statement, "This analysis is being conducted to address the expanding crude oil supply in North America and the significant changes in crude oil demand patterns."

The three companies said they plan to complete the assessment sometime in 1Q15.

[thackney]