The US Gulf Coast shipped record low crude volumes via pipeline to the Midwest in February, federal data released Friday showed, the latest evidence of how the North America energy boom has shifted trade flows. The Gulf Coast sent 615,000 barrels-per-day of crude oil via pipeline to Midwest refineries, the lowest since the US Energy Information Administration began collecting the data in 1986.
It was also roughly about one-third less than Gulf region sent in 2012 to the Midwest, before that region shifted for more crude supplies to the oil fields of North Dakota and Canada. John Auers, executive vice president at Turner Mason & Co, said the crude oil Gulf region sends to the Midwest comes from the Permian Basin, but that has been slowly replaced by Bakken crude and heavy sours out of Canada.
"It makes sense," said Auers, who noted that Midwest refineries made economic run cuts in February due to weak margins, thus weakening demand for crude oil. Husky Energy, for example, has just finished the first stage of a project at its 155,000 bpd Lima, Ohio, refinery that will allow it process more Canadian crude. Other refineries, such as Marathon's Detroit facility have done the same. Marathon Petroleum, which operates the 1.2 million bpd Louisiana-to-Illinois Capline crude oil pipeline, told Reuters on Thursday it will likely reverse the pipeline to move heavy Canadian crude south to Louisiana after oil prices recover. "It will probably be the latter part of this decade before that happens, but we have a great asset here that will be reversed someday," Chief Executive Gary Heminger said on Thursday in an interview after the company's quarterly earnings call.