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The Rockies’ Pipeline Choke Is Capping Crude Netbacks · The Gathering Line

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  Thursday, October fifteenth.
• 0:02
  Here's what moved since yesterday morning.
• 0:04
  Global first.
• 0:06
  Brent slipped two dollars and twenty eight cents, or two point two percent,
• 0:10
  to a hundred and three dollars and seventy eight cents in early trading.
• 0:14
  Reuters says Washington is weighing a partial easing of sanctions on shadow fleet
• 0:19
  tankers to bring down record freight rates and ease the diesel shortage.
• 0:23
  The slide was checked by two commercial ships, a container vessel and a dry bulk
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  carrier, sinking near Hormuz after being struck by projectiles.
• 0:32
  Physical is a different world.
• 0:34
  The IEA's October report has North Sea Dated trading around a hundred and thirty
• 0:38
  four dollars.
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  On Aramco, Reuters now confirms Tuesday night's strike on the Dhahran complex caused
• 0:45
  extensive structural damage across floors six through ten, with ceilings down on the
• 0:50
  executive floor that houses Amin Nasser's office.
• 0:53
  Field, pipeline and export terminal operations are running normally,
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  and administrative work has shifted to Aramco's offices elsewhere.
• 1:01
  The Houthis say Saudi oil facilities and airports remain targets.
• 1:06
  The IEA report, out yesterday, sees 2026 global demand falling two point six million
• 1:12
  barrels per day, with the fourth quarter down two point five year over year.
• 1:17
  Diesel is a quarter of that drop.
• 1:19
  September supply rose two point five million barrels per day to a hundred and two
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  point three million, led by Saudi Arabia, but 2026 supply still averages five point
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  eight million below last year.
• 1:32
  Observed global stocks are five hundred and nine million barrels below pre war
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  levels.
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  OPEC plus targets are unchanged through November, and the next meeting is November
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  first.
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  North America.
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  Western Canadian Select for November at Hardisty is holding at twenty five fifty to
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  twenty five fifty five under W T I, near multi year lows.
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  The drivers are high tanker freight shutting export arbs, soft Gulf Coast heavy
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  margins, and winter diluent blending that adds roughly thirty percent to batch
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  volumes.
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  Express into Casper is full at two hundred and eighty thousand barrels per day.
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  Trans Mountain is around sixty percent, roughly four hundred and twenty five
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  thousand barrels per day to Westridge, and Canadian egress overall is near ninety
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  three percent utilized.
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  Mexico, nothing material.
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  United States.
• 2:20
  W T I fell a dollar thirty four, one point four percent, to ninety three seventy
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  five.
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  Brent minus W T I narrowed to ten dollars and three cents, from roughly twelve fifty
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  to thirteen twenty five yesterday.
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  Still a strong pull toward the Gulf Coast.
• 2:37
  The E I A report is not out yet.
• 2:39
  The Columbus Day holiday pushed it to noon Eastern today, ten Mountain.
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  What we have is the A P I, and it's a shocker: commercial crude down eleven point
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  one two million barrels for the week ending October ninth.
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  Distillates fell one point five million, gasoline built one point one million.
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  I haven't seen a firm consensus for today, so I can't give you the surprise yet.
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  Remember the A P I and the E I A routinely disagree on size.
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  Last week the A P I showed a draw of two point oh nine million,
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  and the E I A printed three point one eight six.
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  Baseline from that last E I A print: commercial crude at four hundred and twenty
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  four point one million barrels, Cushing at twenty four point seven million,
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  up four hundred and forty four thousand.
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  P A D D four, the Rockies, drew a hundred and forty four thousand barrels to twenty
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  two point three five million.
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  Refinery utilization was ninety two point seven percent.
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  Hurricane Isaias has shut in an estimated five hundred thousand barrels per day of
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  Gulf output, about a quarter of the region, and that will bleed into today's and
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  next week's balances.
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  Deals still pending: Enbridge's two point five five billion dollar Tallgrass crude
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  logistics purchase, and Hess Midstream's two hundred million dollar buy of Chevron's
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  D J Basin gathering, which includes a twenty percent stake in Saddlehorn.
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  Uinta Basin.
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  Yellow wax wellhead pricing is steady at ten to fourteen dollars under Cushing.
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  Gulf Coast delivered wax bids are around W T I plus three twenty,
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  about ninety seven dollars.
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  Heated rail from Utah to the Gulf runs sixteen to eighteen dollars,
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  so basin netbacks land at seventy eight to eighty one dollars,
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  twelve seventy five to fifteen seventy five under Cushing.
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  That does not beat local postings.
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  Spot rail stays shut, and only minimum volume commitment barrels are moving.
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  Salt Lake's five refineries are at their technical wax limit near eighty thousand
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  barrels per day, and basin rail loadings hold near a hundred and fifteen thousand.
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  Energy Transfer's Price River terminal is targeting a late fourth quarter start,
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  pending Utah air permits.
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  Wildcat continues phasing Helper from twenty thousand toward a hundred thousand
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  barrels per day.
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  The Uinta Basin Railway is stalled, no physical construction,
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  pending the D C Circuit remand at the S T B, Forest Service right of way reviews and
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  bond structuring by the Seven County coalition.
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  Operators report planned completions, no interruptions.
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  Bakken.
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  The Director's Cut has North Dakota at one point one five three million barrels per
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  day on thirty three rigs.
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  Gas capture is about ninety six percent, flaring near a hundred and thirty million
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  cubic feet per day.
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  Dakota Access is effectively full at seven hundred and fifty thousand barrels per
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  day.
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  Committed tariffs run five sixteen to seven fifty six, uncommitted is nine seventy
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  five.
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  Rail to the Pacific Northwest or East Coast is ten to fifteen dollars all in,
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  which eats the arb even with Brent this wide, so spot Bakken rail stays subdued.
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  Chevron is cutting Williston rigs from three to two by December,
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  and Hess Midstream guides throughput down about five percent in 2027 before
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  flattening, as Chevron favors longer laterals over new wells.
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  Powder River.
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  Anschutz, Continental, Devon, EOG and Peak are drilling and completing steadily.
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  In basin gathering has room.
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  The constraint sits downstream at GERN zee.
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  Plains is still integrating its five hundred and eighty five million dollar Silver
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  Creek gathering purchase.
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  Now GERN zee, the one that matters.
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  The screen holds at eighty five cents over Cushing.
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  Clearbrook is indicated a dollar fifty to two ten under GERN zee,
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  sixty five cents to a dollar twenty five under Cushing.
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  Unchanged.
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  But that eighty five cents is not what an uncommitted barrel nets,
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  because of proration.
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  Pony Express has four hundred and thirty thousand barrels per day of capacity,
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  moves about two hundred and thirty thousand from GERN zee to Cushing,
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  and remains heavily apportioned.
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  The Tallgrass and Bridger open season offered incentive rates but added no physical
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  pipe.
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  Platte, around a hundred and forty five thousand to Wood River and Patoka,
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  is under severe proration.
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  Saddlehorn and Grand Mesa are full with D J barrels headed to Cushing.
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  And the Double H conversion to N G L service has permanently removed sixty five to
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  eighty eight thousand barrels per day of crude takeaway into GERN zee,
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  pushing northern barrels onto Bridger, Belle Fourche, and Enbridge's North Dakota
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  system to Clearbrook, which runs above ninety percent.
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  So here's the netback picture.
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  A ten dollar Brent premium wants barrels on the Gulf Coast.
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  Cushing is the only pipe south, and GERN zee is the choke.
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  A barrel apportioned off Pony or Platte can't reach Cushing.
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  It either goes north and east to Clearbrook, into a PADD two market already carrying
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  maintenance builds, or it takes rail at ten to fifteen dollars,
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  which absorbs the spread.
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  Apportionment, not the published differential, is capping Rockies and Williston
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  netbacks.
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  Watch the noon E I A print for PADD two and Cushing.
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  That's the brief.
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  Good luck on the call.