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Capline to Study Future Operations, Possible Diamond Interconnection

The three owners of the Capline crude oil pipeline system said they will conduct a study to determine potential future operations, as well as a possible connection to the proposed Diamond Pipeline.

The Capline system -- which is owned by wholly-owned subsidiaries of Plains All American Pipeline LP, Marathon Petroleum Corp. (MPC) and BP plc -- is 632 miles long, originating in St. James, LA, and terminating in Patoka, IL. The system includes 40-inch diameter pipe with 16 mainline pumping stations, with more than 10 million bbl of storage capacity. Mainline capacity is 1.2 million b/d.

In a statement Thursday, Capline's owners said the study would "examine the potential commercial opportunities for future Capline operations. This analysis is being conducted to address the expanding crude oil supply in North America and the significant changes in crude oil demand patterns. As a part of this study, a connection to the proposed Diamond Pipeline will be evaluated."

Another option possibly under consideration is to reverse the Capline system, thereby allowing Canadian crude oil to be transported to refineries on the U.S. Gulf Coast. During an investor and analyst meeting in December 2013, MPC CEO Gary Heminger said all three of Capline’s owners would need to approve a reversal before it could be implemented (see Shale Daily, Dec. 5, 2013).

“We certainly are in favor of giving consideration [to a reversal] some day,” Heminger said. “But before you do that, you have to have a south-to-north solution. If you were to take that -- the big line that can move 1 million b/d and turn it into a south-to-north movement -- you certainly have to have another line. And there are some lines that are already in place that possibly could fit that solution.”

Capline's owners said they expect to complete the study in 1Q2015. Marathon Pipe Line LLC operates the Capline system.

Last August, Plains announced plans to build the 440-mile Diamond Pipeline to transport crude oil produced in the Permian Basin, Bakken Shale and the Midcontinent from its terminal in Cushing, OK, to a Valero Energy Corp. refinery in Memphis, TN (see Shale Daily, Aug. 22). The 20-inch diameter, 200,000 b/d capacity pipeline is expected to be completed in late 2016.

Analysts with Genscape Inc. and RBN Energy LLC subsequently speculated, in separate reports, that the Diamond Pipeline could displace current crude oil shipments on the Capline system (see Shale Daily, Sept. 3).

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