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Guernsey Egress Tightens as Inland Crude Builds · The Gathering Line

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  Good morning.
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  Here's what matters before Monday's scheduling call.
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  Markets are closed, so everything below is Friday's settle.
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  Global first.
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  Brent settled Friday, October twenty third, between one hundred sixteen dollars and
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  seventy two cents and one hundred sixteen ninety one.
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  That's up three fifty five, or three point one four percent on the day,
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  and up over six percent on the week, the highest since June twenty twenty two.
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  The driver is the U.S.
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  and Iran.
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  U.S.
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  leadership publicly denied active negotiations, while reports point to contingency
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  strike planning after the midterms.
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  That's reporting, not confirmation.
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  Iran's military leadership says it's ready for asymmetric warfare.
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  Houthi strikes on Saudi energy infrastructure continue, the State Department ordered
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  nonessential personnel out, and Aramco told Dhahran headquarters staff to work
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  remotely.
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  OPEC plus quotas are unchanged going into the November first ministerial.
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  JODI data via OilPrice has Saudi crude output holding at six point two four million
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  barrels per day in August, with exports of four point four five million supported by
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  domestic inventory draws, not more drilling.
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  The number that matters for us is freight.
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  RBN reports supertanker fixtures from the Gulf Coast to Asia above eighty million
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  dollars.
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  Goldman puts waterborne crude freight near twenty dollars a barrel,
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  against roughly three historically.
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  That wedge is why inland light sweet isn't capturing Brent's strength.
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  The Strategic Petroleum Reserve sits at two hundred eighty two point seven million
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  barrels, the lowest since nineteen eighty two.
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  North America.
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  November W C S at Hardisty settled Friday at twenty five fifty five under W T I,
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  per CalRock via Reuters.
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  That's thirty five cents wider than Thursday's twenty five twenty under,
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  and implies about seventy seven seventy two outright.
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  The widening ties to heavy freight premiums and weak Gulf Coast heavy fuel oil
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  margins.
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  Canadian export trunklines are near ninety three percent utilization.
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  Trans Mountain is throttled near sixty percent, about four hundred twenty five
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  thousand barrels per day, because tanker freight has shut the arbitrage across the
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  Pacific.
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  That pushes surplus heavy south into the Midcontinent.
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  Enbridge's Express is at one hundred percent, two hundred eighty thousand barrels
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  per day, into Casper and Guernsey.
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  Mexico, nothing material.
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  United States.
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  W T I settled Friday at one hundred three twenty seven, up three eighty,
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  or three point eight two percent.
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  No new E I A report since last episode, but the latest one matters for the Rockies.
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  Commercial crude fell three point zero six one million barrels to four hundred
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  twelve point five one seven million, a bigger draw than the consensus one point
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  three.
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  But that draw was coastal.
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  The Gulf Coast fell five point oh four one million on storm shut ins,
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  while inland stocks built.
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  PADD four, the Rockies, added seven hundred eighty six thousand barrels to twenty
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  three point four nine six million.
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  Cushing built one million to twenty seven point six, its fourth straight weekly
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  build.
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  Production was thirteen point two seven million barrels per day,
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  and refinery utilization eased to ninety three point four percent.
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  Baker Hughes held flat at six hundred three rigs, up fifty three from a year ago.
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  Oil rigs rose one to four sixty, gas fell one to one thirty two.
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  Triple digit W T I with no rig additions is capital discipline.
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  Don't underwrite volume growth off this price.
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  On deals, Devon is selling its Eagle Ford assets to Crescent for four point two two
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  billion in cash.
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  Antitrust reviews remain active on Enbridge's two point five five billion dollar
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  purchase of Tallgrass crude assets, including seventy five percent of Pony Express,
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  and on Hess Midstream's roughly two hundred million dollar buy of Chevron's D J
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  Basin gathering plus a twenty percent stake in Saddlehorn.
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  Uinta Basin.
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  Yellow wax wellhead postings hold at ten to fourteen dollars under Cushing.
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  Those are indicative desk quotes, not published prices.
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  Delivered Gulf Coast waxy trades at W T I plus three twenty,
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  about one oh six forty seven.
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  Coiled, insulated railcar freight runs sixteen to eighteen dollars,
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  so the netback is eighty eight forty seven to ninety forty seven,
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  twelve eighty to fourteen eighty under Cushing.
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  Spot rail is shut and underwater against Salt Lake postings.
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  The five Salt Lake refineries are near their ceiling of about eighty thousand
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  barrels per day of waxy crude.
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  Rail loadings average about one hundred fifteen thousand, all committed under
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  minimum volume contracts, with spot racks idle.
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  Wildcat's Helper terminal is expanding toward one hundred thousand.
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  Energy Transfer's Price River rail terminal is in Utah state review,
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  targeting a fourth quarter decision.
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  On the Uinta Basin Railway, no track has been laid.
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  Per the desk brief, the D C Circuit remanded the approval to the Surface
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  Transportation Board in October.
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  The approval stays in place, but the Board owes deeper review of downline accident
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  and wildfire risk along the Colorado River corridor, plus downstream emissions.
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  The Forest Service right of way permit stays paused until the Board's supplemental
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  order.
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  Veren, Ovintiv, Scout, XCL, Uinta Wax, Berry, Caerus and SM Energy
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  are all running steady programs.
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  Bakken.
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  The Director's Cut holds state output near one point one five three million barrels
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  per day, thirty three rigs, ninety six percent gas capture,
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  and about one hundred thirty million cubic feet per day flared.
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  Dakota Access is full at its effective seven hundred fifty thousand barrels per day,
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  with walk up tariffs at nine seventy five against committed rates of five sixteen to
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  seven fifty six.
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  Kinder Morgan's Double H conversion permanently removed sixty five to eighty eight
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  thousand barrels per day of crude takeaway, pushing Williston barrels onto Dakota
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  Access and Bridger and Belle Fourche.
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  All in rail to the coasts runs ten to fifteen dollars before car leases and
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  destination rack tariffs.
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  Spot is closed.
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  Chevron drops one Williston rig by December, three to two, to drill longer laterals,
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  and Hess Midstream sees twenty twenty seven gathering dipping about five percent.
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  Chord, Continental, Devon, and ConocoPhillips are steady.
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  Powder River.
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  Gathering capacity upstream is sufficient, and Anschutz, Continental,
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  Devon, EOG and Peak are drilling disciplined schedules.
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  The constraint is downstream, at the receipt manifolds feeding the Guernsey headers.
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  Plains continues integrating the Silver Creek system.
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  Now Gernzee, the section that matters most.
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  Guernsey Sweet was flat over the last day or two at eighty five cents over Cushing,
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  roughly one oh four twelve outright on Friday's W T I.
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  Clearbrook trades one fifty to two ten under Gernzee, or sixty five cents to one
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  twenty five under Cushing.
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  Inflows are heavy.
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  Express delivers two hundred eighty thousand barrels per day of Canadian crude into
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  Casper and Gernzee, and Bridger and Belle Fourche feed over three hundred thousand
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  of Bakken.
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  Egress is the problem.
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  Pony Express is constrained to about two hundred thirty thousand barrels per day out
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  of Gernzee, against a four hundred thirty thousand system nameplate,
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  which the desk attributes to limits at the Midcontinent refineries,
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  McPherson, El Dorado and Ponca City, and to upstream proration.
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  Platte, at one hundred forty five thousand eastbound to Wood River and Patoka,
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  is heavily prorated.
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  Saddlehorn and Grand Mesa are full of D J barrels headed to Cushing.
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  With December nominations locked, this week is execution.
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  First, uncommitted barrels shut out of the prorated southbound lines have two
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  choices.
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  Take the one fifty to two ten discount to clear northeast to Clearbrook,
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  or pay for storage in Gernzee tankage.
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  Second, batch segregation.
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  Heavy Canadian crude moving on Express into Casper and Gernzee creates real gravity
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  and sulfur contamination risk at shared manifold headers, and an off spec rejection
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  at a refinery is a serious liability.
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  Third, enforce the minimum volume deficiency charges against shippers whose
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  nominated volumes were cut by downstream apportionment.
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  That's contract execution, not a negotiation.
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  Longer term, Bridger's proposed five hundred fifty thousand barrel per day,
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  thirty six inch line from the Canadian border to Gernzee, targeting July twenty
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  twenty seven, can't be absorbed by the hub without more Pony Express egress.
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  That's why the Tallgrass and Bridger joint tariff open seasons matter.
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  The August open seasons on Pony Express and Seahorse, which began August twenty
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  first, used existing capacity.
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  Per Midstream Calendar, no capacity amount, rates, or results were disclosed,
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  and no expansion was announced.
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  Watch for any follow up.
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  That's the board.
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  Watch Sunday evening's open.