New Pipeline from Cushing to the Gulf

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Enterprise Product Partners and Enbridge Inc announced plans to build a 500-mile pipeline to transport oil from the current bottleneck at Cushing Oklahoma to refineries along the Gulf coast.

The proposed Wrangler Pipeline would be 36-inches in diameter and designed to carry up to 800,000 bpd. This would solve the current storage problem at Cushing that is keeping WTI prices artificially low. The sudden surge in shale oil in the Midwest is creating a bottleneck at Cushing because there is no pipeline from Cushing to the Gulf to allow that oil to compete with water borne crude (Brent) and Gulf production (Louisiana Light Sweet). Those grades sell for significantly more than WTI with LLS prices in the $105 range.

Producers in the Bakken have been building rail loading facilities to ship oil south to the Gulf and to the Mississippi where it can be loaded on barges and moved south to the refineries.

The partners in the pipeline claim it will be designed to accommodate "quality controlled batches of a variety of crudes."

The key is in this sentence. "If approved by federal regulators" the pipeline could begin operations by the middle of 2013.

Jim Brown

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