Pipeline companies Enterprise Products Partners L.P. (EPD - Analyst Report) and Enbridge Inc. (ENB - Snapshot Report) have completed their reversal operation of the Seaway pipeline. This will enable crude oil to flow from Oklahoma storage hub to the Gulf Coast refining hub.
The reversal of the Seaway pipeline was first announced on November 2011, when the U.S. energy behemoth ConocoPhillips (COP - Analyst Report) sold its 50% stake in the pipeline for $1.1 billion to Enbridge.
This turnaround of the 500-mile, 30-inch diameter line will facilitate North American crude oil producers in transporting more than 4 million barrels per day (BPD) of oil to U.S. Gulf Coast refineries. Initially, the pipeline will have the capacity to transport 150,000 BPD, which will likely exceed 400,000 BPD in the first quarter of 2013 upon further alternations as well as improved pumping capabilities.
The companies highlighted that the pipeline is ready to initiate oil transportation this weekend from Cushing, Oklahoma, where the inventory level has reached a record high. According to the U.S. Energy Information Administration (EIA), 45 million barrels of commercial crude oil was stored in the tanks at Cushing as of the week ended May 11. This represents a 12% increase from the year-earlier period. The recent boost in domestic oil production as well as lack of infrastructure to take it out of Cushing had pushed the U.S. benchmark oil prices approximately $20 below European benchmark Brent.
Seaway Crude Pipeline Company LLC is equally owned by the units of Enterprise Products Partners as well as Enbridge. This Seaway system also includes a terminal and distribution network that originates from Texas City, Texas, and serves local refineries and in the Houston region. Additionally, it includes dock facilities at Freeport and Texas City.
Enterprise Products Partners, a leading master limited partnership (MLP), is engaged in a wide range of midstream energy services to producers and consumers of natural gas, natural gas liquid, and crude oil. With its diverse set of midstream infrastructure assets, we believe the partnership possesses fundamental strengths, which will in turn support consistent distribution growth.
Enterprise holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months.