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Rockies Crude Brief: Guernsey Bottlenecks and PADD 4 Builds · The Gathering Line

• 0:00
  Morning.
• 0:01
  Here's what moved, with a Rockies and Bakken lens.
• 0:04
  Global first.
• 0:05
  Brent futures are trading around one hundred thirteen dollars and eighty four cents
• 0:09
  a barrel, easing about one point seven percent over recent sessions.
• 0:14
  Diplomatic chatter and stock releases are giving the paper market some relief.
• 0:19
  The physical risk hasn't gone anywhere, though.
• 0:21
  Houthi attacks and regional transit disruptions keep a wide international premium
• 0:26
  over inland barrels.
• 0:28
  I have no new OPEC Plus decision and no IEA or OPEC monthly report in this window,
• 0:33
  so nothing to add there.
• 0:35
  North America.
• 0:36
  Canadian heavy keeps moving south, through Enbridge's Express line into Casper and
• 0:41
  Gernzee, rated at two hundred eighty thousand barrels per day,
• 0:45
  and through the Mainline.
• 0:47
  W C S differentials remain at a discount, and I don't have a confirmed print for you
• 0:52
  today.
• 0:53
  The direction is steady, and the driver is strong upstream Canadian output competing
• 0:57
  with Bakken and Rockies barrels at the northern corridor terminals.
• 1:01
  That limits your northern egress options.
• 1:04
  Nothing material on Mexico.
• 1:06
  United States, and the E I A report leads.
• 1:10
  The Weekly Petroleum Status Report for the week ending October twenty third came out
• 1:14
  this morning.
• 1:15
  Commercial crude, excluding the SPR, drew one point eight nine two million barrels
• 1:21
  to four hundred ten point six two five million, from four hundred twelve point five
• 1:26
  one seven million the week before.
• 1:28
  The draw was larger than the consensus, which my notes put near flat,
• 1:32
  around zero.
• 1:33
  I can't confirm the poll source for that, so treat the size of the surprise as soft.
• 1:38
  Direction isn't in doubt.
• 1:39
  Cushing drew six hundred twenty four thousand barrels, reversing the prior week's
• 1:44
  build.
• 1:44
  Gasoline stocks built three point eight seven million barrels.
• 1:48
  Distillate fell one point four six two million.
• 1:51
  Refinery crude runs dropped one hundred twenty three thousand barrels per day,
• 1:56
  and utilization softened from ninety three point four percent.
• 1:59
  On price, the last E I A spot print I can confirm is Monday.
• 2:04
  W T I at Cushing was one hundred five dollars and twenty five cents,
• 2:08
  down from one hundred nine seventy two on Friday.
• 2:10
  Now the line that matters to you.
• 2:12
  Everything else drew.
• 2:14
  PADD four, the Rockies, built one point four one nine million barrels to twenty four
• 2:19
  point nine one five million, up from twenty three point four nine six.
• 2:24
  The Midwest built two hundred forty five thousand.
• 2:28
  The Gulf Coast drew one point five four two million.
• 2:31
  The national tape says tight.
• 2:33
  The Rockies tape says barrels are backing up into local tankage.
• 2:37
  Uinta Basin.
• 2:39
  Waxy crude production stays active in Duchesne and Uintah counties.
• 2:43
  Yellow wax keeps its light sweet character, thirty eight to forty four A P I,
• 2:48
  but the high pour points still demand insulated trucks and heated coiled rail cars.
• 2:54
  The Salt Lake City refineries remain a captive outlet, roughly ninety thousand
• 2:58
  barrels per day of capacity across five plants.
• 3:02
  The Uinta Basin Railway, the eighty five to eighty eight mile project,
• 3:06
  is still tied up in regulatory and lower court procedure after the Supreme Court
• 3:10
  remand.
• 3:11
  Nothing new on financing or construction.
• 3:14
  Operators keep leaning on truck to rail transloading, with Wildcat the example.
• 3:19
  The rail math hasn't improved.
• 3:21
  Freight plus heated car lease costs eat ten to fifteen dollars a barrel to the Gulf
• 3:26
  Coast.
• 3:27
  Against Salt Lake City postings, spot rail is out of the money,
• 3:31
  so rail loading is mostly term commitments.
• 3:34
  I have no fresh turnaround news for the Salt Lake refineries today.
• 3:38
  Bakken.
• 3:39
  Production is steady above one point two million barrels per day.
• 3:43
  Pipeline capacity is generally well utilized, and the Dakota Access line is
• 3:47
  absorbing core barrels toward Patoka and on to Nederland and St.
• 3:51
  James.
• 3:52
  As Double H moves toward N G L service, marginal volumes have shifted to Bridger and
• 3:57
  Belle Fourche toward Gernzee, and to D A P L.
• 4:00
  East Daley flagged that unwinding back in May of last year.
• 4:04
  Crude by rail loadings remain subdued, a niche safety valve for term destinations on
• 4:08
  both coasts, not an open arbitrage.
• 4:11
  No Director's Cut or flaring rule news in this window.
• 4:15
  Powder River.
• 4:16
  Turner, Parkman and Niobrara development keeps sweet barrels flowing into Casper and
• 4:22
  Gernzee gathering lines.
• 4:24
  Continental, Anschutz, Devon and EOG are drilling with discipline,
• 4:29
  nothing newsworthy in activity.
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  The constraint is downstream.
• 4:34
  Regional gathering throughput is limited by apportionment out of the hub.
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  Which brings us to Gernzee, the priority.
• 4:41
  Think of it as one funnel.
• 4:43
  Canadian Express barrels come in from the north.
• 4:46
  Powder River gathering comes in from the west.
• 4:49
  Bridger and Belle Fourche bring Bakken crude from the north.
• 4:53
  All of it has to leave south or east on two main outlets.
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  Those outlets are Pony Express toward Cushing and Platte toward Wood River and
• 5:03
  Patoka.
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  The nameplate figures in my notes are roughly four hundred thirty thousand barrels
• 5:09
  per day for Pony Express and about one hundred forty five thousand for Platte.
• 5:14
  Both face tight capacity and monthly nomination proration.
• 5:18
  I'm treating those as approximate, not confirmed today.
• 5:22
  Here's the mechanism, and it follows what we've been tracking on southbound
• 5:25
  proration.
• 5:27
  When nominations exceed space, committed shippers get their share.
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  Uncommitted barrels have two choices.
• 5:33
  They compete for spot space, or they discount against Cushing and Clearbrook until
• 5:38
  someone will clear them into local storage.
• 5:41
  That's where a Rockies discount comes from.
• 5:44
  I don't have a confirmed Gernzee differential print this morning,
• 5:47
  so I won't give you a number.
• 5:49
  The direction is under downward pressure, not tightening.
• 5:52
  The E I A data backs that up.
• 5:54
  That one point four two million barrel build in PADD four is the physical footprint
• 5:59
  of the congestion.
• 6:00
  Barrels that can't get south are sitting in tanks at the hub and the regional farms.
• 6:05
  The national draws are real.
• 6:07
  They just aren't reaching Gernzee, because the pipes between Wyoming and Cushing are
• 6:12
  the limit, not demand.
• 6:14
  So the netback question on your call is simple.
• 6:17
  Rockies barrels are choosing between a proration queue and a discount,
• 6:21
  and the Bakken volumes redirected from Double H add to that queue.
• 6:26
  Watch next week's PADD four number.
• 6:29
  A second build would tell you the funnel is still jammed.
• 6:32
  That's the brief.