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BP Prudhoe Bay Royalty Trust Message Board

  • redsky_night redsky_night Feb 1, 2013 3:08 PM Flag

    Seaway Pipeline Impact

    With the expansion of the Seaway pipeline moving crude out of Cushing and towards the Gulf refineries, will we see a rise in the WTI crude prices?? Any normalization between Brent and WTI prices? And what impact will this have on the unit distribution from BPT?

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    • The Seaway pipeline is not moving enough oil away from Cushing and has a bottleneck at its terminus in Texas at the Jones Creek terminal.

      Seaway is adding a second 450,000 BPD parallel pipeline from Cushing expected to be completed in the first quarter of 2014.

      Rapidly expanding oil production in North Dakota, Texas and Canada will keep pressure on WTI prices until more transportation facilities are built to move it elsewhere.

      Brent and WTI price normalization appears to be somewhere in the fuzzy future.

    • Perhaps you should ask why BPT oil is not priced close to BRENT prices since there is no transportation bottle neck for the Prudhoe Bay oil. The Valdez terminal can ship the oil anywhere in the world and the oil is treated at Prudhoe Bay before going into the pipeline primarily to protect the pipeline from sour crude. There are some other pricing considerations such as viscosity but the Cushing bottleneck affecting WTI pricing should not be one of them.

      Kurt

      Sentiment: Hold

      • 2 Replies to kurt49431
      • "Perhaps you should ask why BPT oil is not priced close to BRENT prices"

        Very easy answer - the trust document specifies WTI price for oil not the Brent or Alaska price.

        On 02/01/2013 WTI price was $97.77 and Alaska North Slope price was $112.07.

        BP gets the Alaska North Slope price and BPT gets the WTI price.

        What affects the price of WTI affects BPT.

      • Not true Kurt. The Valdez crude by law can only go to US ports. Years ago they had an exception for two Italian flag VLCCs to run crude to the Caribbean(Hess?) from Valdez. But that was the only Valdez crude going foreign. All of the rest of the tankers calling at Valdez are US crewed and flagged going to west coast ports.

 
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