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‘Strong’ Interest in Midwest-to-Gulf Pipeline Reversal, Marathon Petroleum CEO Says

Shipper interest is high to reverse the Capline oil pipeline, which would carry Canadian heavy crude supply to the Gulf Coast for potential refining or export, Marathon Petroleum Corp. (MPC) CEO Gary Heminger said Thursday.

The operator’s MPLX LP midstream partnership operates Capline, which it owns with partners Plains All American Pipeline LP and BP Oil Pipeline Co.

The partners are holding an open season through Nov. 17 to test interest in reversing the 300,000 b/d oil conduit between Patoka, IL, and St. James, LA.

If the project becomes a commercial reality, southerly flows of crude would begin in the second half of 2022. However, Heminger indicated during the 3Q2017 earnings conference call that the reversal project would not require five years for completion.

"We're receiving very, very strong feedback for consideration of this pipeline, and it will not take five years to reverse this pipeline," he said. "In this case, the three owners are looking at the timing from the commercial side."

The project derives its impetus from what Heminger said was a strong desire by Louisiana and Mississippi refiners for a "steady source of heavy crude."  Assuming the reversed line also reverses its fortunes as an underused northerly flowing pipeline, Heminger said it could be dropped down into MPLX.

Executives said with current and future projects on the drawing board, there will be plenty of potential Canadian heavy crude supplies to move on the reversed Capline. Heminger also emphasized the potential for Capline to extend beyond St. James to export sites that have an offloading capability of up to 800,000 b/d. An ongoing study is being done to extend Capline beyond St. James.

MPC reported 3Q2017 profits of $903 million ($1.77/share), compared with $145 million (27 cents) for the same period last year. MPLX reported record net income of $216 million, versus $141 million a year ago.

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