The Oil & Gas Financial Journal asks, Can Houston refineries absorb new Permian crude supplies?
The article opens:
Permian crude production is set to increase 0.4 MMb/d to 1.8 MMb/d by December 2018 (Bentek). New pipeline capacity currently being built and planned to be in place by the end of 2015 should comfortably handle the output by then – primarily pushing Permian crude into the Houston market. The bigger question is whether Houston region Gulf Coast refineries can process the new crude without significant reconfiguration. Today we review whether Gulf Coast refiners can handle incoming Permian production.
It concludes:
On balance our analysis therefore suggests that Houston/Beaumont/Port Arthur region refineries should easily be able to absorb the current light sweet crude coming out of the Permian Basin by replacing imported light sweet or medium crudes that they are currently processing. Anecdotal and pricing evidence however suggest that light sweet shale crude is over supplied into Houston area refineries today. And that is where we will take this analysis in the next episode – to look at whether regional refineries are likely to actually be replacing imports – especially those owned by crude producing nations such as Saudi Arabia and Mexico. We will also look at the effect on this equation of future pipeline capacity growth into Houston.
How do you see it?