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14 Spring 2019 The majority of crude now moves through the extensive pipelines, storage and docking facilities in the Houston Ship Channel. There are concerns that the Channel might become a bottleneck, however, and companies are looking for alternatives. In late 2018, Carlyle Group signed an agreement with the Port of Corpus Christi (250 km southwest of Houston), to develop an offshore crude export terminal that can handle the world's largest oil tankers. The Harbor Island terminal would be the first US facility to be able to fully load very large crude carriers (VLCCs) capable of holding up to 2 million bbl. The company expects the terminal to be operational by 2020. In addition, commodities trader Trafigura Ltd is promoting a VLCC port approximately 25 km offshore of Corpus Christi. Enbridge is also looking at building a terminal in Freeport, Texas. New pipelines are key to determining which terminals will capture the growing export market. Plains All American Pipeline's Cactus II project, with a capacity of 585 000 bpd, will terminate in Corpus Christi. Enbridge's terminal would be supplied by its 850 000 bpd Seaway pipeline running from Cushing, Oklahoma. Ports in Louisiana are also looking at major expansions. Tallgrass Energy plans to build the Seahorse Pipeline, a 950 km, 30 in. oil line linking the Cushing storage hub with the 2.5 million bpd refinery complex near St. James, Louisiana. The 800 000 bpd system will also include a new, 20 million bbl storage facility, the Plaquemines Liquids Terminal. The terminal will have the ability to service Post Panamax tankers (up to 1 million bbl capacity), and VLCC tankers. Cushing is the major storage facility for the US Midwest, serving refineries throughout the PADD 2 region. In the last decade, it has expanded tank capacity from 60 million bbl to 90 million bbl. The terminal reached a record high storage level in mid-2017, when it was holding slightly under 70 million bbl. By mid-2018, crude storage had dropped to 23 million bbl, due to stronger prices and greater takeaway capacity to the US Gulf Coast (USGC). Prices have since dropped, however, and storage levels are expected to rise through 2019 as producers store barrels and wait for the market to recover. Oilsands While the oilsands have expanded, pipeline capacity to market has not. The proposed 590 000 bpd Keystone XL line running from Alberta to Nebraska (and hence to the USGC) has been delayed for more than a decade. The Trans Mountain pipeline expansion (which would have tripled capacity from Alberta to Vancouver to almost 900 000 bpd) has been held up by adverse court rulings. As a result, the expansion of production at the oilsands in Alberta has exceeded pipeline takeaway capacity and created a price differential of up to CAN$50/bbl, costing the industry an estimated CAN$80 million/d. Crude has backed up in storage to an estimated near-record of 35 million bbls. Gibson Energy, based in Calgary, is adding tank capacity in Alberta. In October 2018, it announced a 1 million bbl expansion in its Hardisty facility and an expansion at its Moose Jaw, Saskatchewan farm. "We expect that our sanctioned capital programme will grow over the course of 2019 as we seek to sanction two to four tanks per year on a run rate basis and pursue additional infrastructure investment opportunities in both Canada and the US," said CEO Steve Spaulding. Producers have been increasingly relying on crude-by-rail. Facilities at the five major terminals in Canada have been expanded in order to handle a record of 274 000 bpd. But it has not been enough to alleviate discounts. The government estimated that the province was producing 190 000 bpd over pipeline capacity. In December 2018, Alberta Premier, Rachel Notley, ordered a reduction of 325 000 bpd (8.7%) in order to drain the glut. After excess storage is drawn down, the reduction will drop to 95 000 bpd until the end of 2019. NGL NGLs, including ethane, propane, and butane, are an important side-product of shale production. NGL production in the US stood at a record 4.8 million bpd in late 2018, and the EIA expects it to grow a further 10% in 2019. In addition to supplying petrochemical plants in the USGC, NGLs are increasingly being exported abroad. Over 250 000 bpd of ethane are now being shipped from Energy Transfer Partners' (ETP) Marcus Hook facility in Pennsylvania and Enterprise Products Partners' (EPD) Morgan's Point ethane export terminal on the Houston Ship Channel. In 2018, ETP announced that it would build a new export facility in the USGC to supply buyers in China. The Orbit terminal near Mont Belvieu, Texas will have an 800 000 bbl refrigerated ethane storage tank. AltaGas Ltd, of Calgary, is on track to complete its propane export terminal in the Pacific port of Prince Rupert, British Columbia (B.C.) by 2019. The CAN$500 million project includes a deepwater marine jetty capable of handling very large gas carriers and sufficient storage to handle 40 000 bpd LPG export capacity. Pembina Pipeline also has plans to construct its own propane export terminal in Prince Rupert. The CAN$270 million project will have a capacity of 15 000 bpd. Shale drillers in Appalachia have been able to boost output to a record high of almost 30 billion ft 3 /d in late 2018. Related ethane production in the region is expected to grow to 640 000 bpd by 2025. In a report to Congress, the US Department of Energy suggested that the

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