The recent eight-day outage on TransCanada’s cross-border Keystone pipeline potentially removed 4.6mn bbls of oil from entering the United States from Canada and was a widespread influence on crude stock levels in both countries, according to Genscape.
The 590,000 bpd pipeline resumed flow on April 10, 2016, after being shut due to a leak near the Freeman pumping station in South Dakota. The Keystone pipeline system flows from Hardisty, AB, to Steele City, NE. From there, crude flows to either Patoka, IL, or to Cushing, OK, where stocks declined greatly last week.
Genscape monitors detected the pipeline restart at about 12:30 p.m. (EST) April 10, 2016, issuing an alert to customers at 3:00 p.m. (EST) April 10. The pipeline restarted a day later than was expected. TransCanada issued a statement on April 8, 2016, indicating that the company was granted conditional approval by the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration to resume delivering crude on the Keystone Pipeline system on April 9, following completion of repairs.
The pipeline was expected to restart at reduced pressure, according to TransCanada.
Cushing stocks draw down
Crude inventories at Cushing fell 1.5mn bbls for the week ending April 8, 2016, after flow on the Keystone pipeline to the hub decreased 291,000 bpd to 26,000 bpd. The stock decline marked the largest draw at the storage hub since September 11, 2015, when inventories had a week-over-week decline of 1.8mn bbls.
Despite the large draw last week, inventories on April 8, 2016 were just 2.3mn bbls from the record high of 69.65mn bbls set March 15, 2016. Capacity utilization of operational storage at Cushing was 77 percent on April 8, 2016. This is two percent below the all-time high set on March 11, 2016. Assuming an operational max of 80 percent utilization for Cushing, there is an estimated 2.6mn bbls of available storage space.
West Texas pipe flow jumps to Cushing
Meanwhile, flow on the Wichita Falls, TX,-to-Cushing 450,000 bpd segment of Plains All American’s Basin pipeline increased, supplementing lower flows to Cushing from Canada. Weekly average Basin pipeline flow increased 108,000 bpd to 352,000 bpd for week ending April 8, 2016.
In addition, West Texas storage inventories dropped 686,000 bbls for week ending April 8, 2016 as pipeline flow from West Texas to Cushing increased. Stock levels at Midland, TX, and Wichita Falls fell 1.28mn bbls collectively, coinciding with higher outbound Basin pipeline flows.
The Keystone outage was not expected to affect volumes on TransCanada’s 700,000 bpd Gulf Coast pipeline, which uses the facilities of the southern leg of the Keystone system from Cushing to the U.S. Gulf Coast, according to TransCanada on April 4, 2016. Weekly average flows on TransCanada’s 700,000 bpd Gulf Coast pipeline decreased 7,000 bpd to 341,000 bpd for week ending April 8, 2016.
Inventories fall at Patoka
The Keystone outage also led to stock declines at the storage hub in Patoka, IL, which has a capacity of nearly 19mn bbls. Storage inventories in Patoka decreased 564,000 bbls to 9.3mn bbls the week ending April 8, 2016. Keystone flows into Patoka for week ending April 8, 2016 were lower by about 233,000 bpd, offsetting increased deliveries into Patoka on the Marathon-operated 1.2mn bpd Capline Pipeline.
Flows on Capline, which delivers crude from St. James, LA, increased 77,000 bpd to 232,000 bpd for week ending April 8, 2016. In March 2016, Capline flows to Patoka averaged 147,000 bpd while Keystone flows to Patoka averaged 262,000 bpd.
West of Patoka, utilization at Phillips 66’ 305,000 bpd Wood River, IL, refinery was reduced due to the Keystone pipeline outage, according to Reuters. Genscape detected the shutdown of the 64,000 bpd crude section and 16,000 bpd coker on April 4, 2016. The units began restarting April 12, 2016, according to Genscape.
Barrels back up in Canada
As the Keystone outage decreased outgoing pipeline takeaway, barrels backed up in Western Canada. Stocks there climbed 1.5mn bbls to more than 28mn bbls last week, reaching the highest level recorded since Genscape coverage began in 2010. Stocks are expected to fall in coming weeks after the return of Keystone pipeline flow slackens bottlenecks formed in the region.
The stock increase was driven by a 1.8mn bbl build in Hardisty, AB. Inventories at the hub reached a record high last week of more than 13mn bbls. The largest inventory builds took place at the TransCanada and Gibson terminals, which feed Keystone.
Terminals at the Hardisty hub utilized less than 62 percent of capacity last week. A record-high utilization rate of 68 percent was set week ending December 31, 2010. More than 5.0mn bbls of additional storage capacity has come online at the Hardisty hub since then. Another 5.7mn bbls is under construction. Nearly 2.7mn bbls of the new capacity is being constructed by TransCanada.
Data from Genscape’s Cushing, Patoka, Canadian and Midland-Basin storage reports advised the storage trends in this blog. Genscape’s storage data is collected using infrared cameras, aerial diagnostics and other proprietary measurement techniques. This approach translates into highly accurate, advance notice of the actual oil storage levels. Genscape's Mid-Continent Pipeline Service, which includes updates on pipeline flows every 30 minutes with the option to download historical data and set up custom alerting, also advised the pipeline information contained in this report. Additionally, Genscape's North American Refinery Intelligence Service, which includes the Phillips 66 Wood River refinery, gives subscribers a comprehensive view of refinery utilization by product class around the United States and Canada. To learn more or request a free trial of any of Genscape’s Oil Market Services, please click here.