High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
By Devika Krishna Kumar NEW YORK, May 1 (Reuters) – Enterprise Products Partners LP said on Wednesday volumes at its crude marine terminals jumped to a record of nearly 900,000 barrels per day (bpd) in the first quarter, despite a disruption on the Houston Ship Channel.
A petrochemical fire and fog halted vessel traffic for several days and disrupted movements in the nation’s busiest oil port in late March and into April. Enterprise said it expects in early May to load the remaining backlog of vessels due to the disruption.
The company also said volumes of crude from the Permian basin, the largest U.S. oilfield, is expected to increase by about 700,000 bpd in 2019, with export demand rising.
“We believe substantially all of this increase in volumes will be destined for international markets,” Jim Teague, chief executive of Enterprise’s general partner, said in a statement.
Production in the Permian basin, spanning Texas and New Mexico, has surged over the past year, largely outpacing pipeline capacity from the region. That has prompted pipeline companies to announce several new lines and conversions of existing lines to accommodate growing crude volumes.
Output in Texas, the largest producing state, rose 1.3 percent to 4.8 million bpd in February, while in New Mexico, it rose 3.2 percent to 843,000 bpd, according to U.S. government data this week.
Enterprise’s Midland-to-ECHO 1 pipeline volumes increased 15 percent from a year earlier to a net 456,000 bpd for the first quarter. The pipeline runs from Midland, Texas, the heart of the Permian basin, to Enterprise’s ECHO terminal in Houston.
During the first quarter, the company said it also completed the repurposing of one of its Seminole NGL pipelines into crude oil service, now referred to as the Midland-to-ECHO 2 pipeline. This pipeline began limited service in February and full commercial operations April 1.
“Starting April 1, that pipeline was handed over to the committed shipper and that volume is at 205,000 bpd,” a company executive said during an earnings call.
About 475,000 bpd of capacity on Midland-to-ECHO 1 was under contracts for the first quarter, and contractual volumes are expected to peak at about 535,000 bpd in the second quarter. (Reporting by Devika Krishna Kumar in New York; editing by Diane Craft)
(c) Copyright Thomson Reuters 2019.
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