Last month, Exxon Mobil Corp reversed part of a 71 mile long oil pipeline from Lonview, Texas, to northern Louisiana in Shrevenport and Finney. This is said to be the beginning of a link between the Permain Basin output to the Louisiana refineries.
The section reversed by Exxon is presently filling approximately 15 000 bpd of Texas crude oil, which is being transported to Delek US Holding’s Arkansas refinery.
Exxon’s refinery plans
Exxon intends to build an infrastructure in and around the Gulf Coast, which will join the oil and gas fields in Texas to the refineries in Louisiana. Once Exxon completes a reversal on a pipeline to Baton Rouge, this will then enable the oil to freely flow to one of the oil major’s refineries – with a capacity of 502 000 bpd.
Exxon’s refinery in Beaumont, Texas, already has the holding capacity of 345 000 bpd, and its aim is to increase this and expand by another 20 000 bpd.
Oil drillers have found difficulties with moving their products to the market, regardless of its high level of production. As a result, a discount in price occurred, which had mostly been removed over the last year as the new pipeline segments have become available. The plans Exxon has are thusly characteristic of this trend.
As these new pipelines begin to be operated, refineries have more access to crude oil. However, it also offers salvation to upstream producers. And with a greater market access, it provides a stimulus for more drilling.
Edited from various sources – Oil Price, Street Wise Report, Reuters – by Stephanie Roker