In baby steps and giant leaps, Enbridge has been building two “supersystems” to transport crude oil to the company’s own refineries and export terminals along the Texas Gulf Coast, one that moves heavy crude from the Alberta tar sands to the Houston area and the other light oil from the Permian to Enbridge’s large terminal at Ingleside on the north side of Corpus Christi Bay. There’s nothing quite like it: First, an uninterrupted series of pipelines from Western Canada to Enbridge’s tank farm in Cushing, OK, (through the Midwest) and from there to Freeport, TX , to the twin gas pipelines of the maritime route; and second, the Gray Oak and Cactus II pipelines from West Texas to the US No. 1 crude oil export terminal. And the middle giant is far from over. New projects and expansions are in the works, as we discuss in today’s RBN blog.
We’ll start with some relevant facts. First, the US produces far more light crude than its refineries can economically process; the same is true of Canada for heavy crude. Secondly, the supply of crude oil that exceeds domestic demand must be exported; for the US that means loading oil onto tankers, and for Canada it largely means driving crude south to the US, with some of that volume sent to refineries in the Midwest/Great Plains and most of the rest they went to the Gulf Coast, either for use in the refineries there or for “re-export”. And third, the Permian and Alberta oil sands are by far the largest, and fastest growing, production areas in the United States and Canada, respectively, and given the relative proximity of the Permian to the ports of the Gulf Coast (not to mention the demand for its light crude in some foreign markets) it stands to reason that a good portion of West Texas production is shipped overseas.
All of this helps explain why Enbridge, one of North America’s largest mid-sized companies, has focused much of its attention and capital on facilitating the transportation of increasing volumes of crude oil from western Canada and the Permian to the Texas Gulf Coast and loading significant portions of this crude onto ships. Next, we’ll look at Enbridge’s existing pipeline, storage and crude oil export assets, particularly those related to the delivery of Western Canadian and Permian crude to the Texas Gulf Coast, as well as what the company plans to make its two oil super systems. even bigger and more efficient.
