Pipeline Bottlenecks at Guernsey and Shifting Rockies Flows

Marcus Hayes

Friday, October ninth. Here's what moved since Thursday's close, and what it means for Rockies and Bakken flows.

Marcus Hayes

Global first. Brent is down about one percent overnight, roughly a hundred and three dollars and thirty cents. That's off Thursday's settle of a hundred and four twenty eight, and Thursday's intraday high of a hundred and five seventeen. The trigger, per the twenty two V overnight briefing, was a statement that the United States will not strike Iran before the November midterms. Other reports say the military was told to prepare for a possible resumption, so treat this as headline relief, not a change in supply. And the offsets are live. Houthi strikes on Riyadh's King Khalid airport killed three and grounded flights. The group also claims a hit on Aramco's Rabigh refinery. That's a claim, and I haven't seen confirmed damage. Treasury sanctioned seventeen shadow fleet tankers. Brent has been working a ninety six to a hundred and ten range for a month, and nothing overnight breaks it.

Marcus Hayes

OPEC plus, nothing new. November production baselines stand. The provisional hundred and eighty thousand barrel per day December increment is still contingent on Iraqi and Kazakh compensation cuts. And the IEA talk of a hundred million barrel coordinated stock release remains unformalized. Discussion, not a decision.

Marcus Hayes

North America. Western Canadian Select at Hardisty is still deeply discounted, about sixteen dollars and sixty five cents under W T I, with fall turnarounds in the Midwest doing the damage. Canadian export pipes are around ninety three percent utilized, which leaves roughly three hundred and fifty thousand barrels per day of headroom. Enbridge's Express into Casper is fully booked at its two hundred and eighty thousand barrel per day nameplate. Trans Mountain is steady near sixty percent. One thing to watch: winter condensate blending requirements will squeeze effective heavy takeaway as we head into November. Mexico's Maya export curtailments are unchanged.

Marcus Hayes

United States. W T I front month is around ninety dollars and sixty seven cents, down from ninety two seventy two Thursday, tracking Brent lower. The Brent W T I spread widened to twelve dollars and sixty three cents from twelve forty six. A double digit spread like that keeps pulling inland barrels toward Gulf Coast export docks, and hold that thought for Guernsey. No new E I A print since Wednesday, so the backdrop stands. Commercial crude drew three point one eight six million barrels to four hundred twenty four point one three million. Cushing built four hundred and forty thousand to twenty four point seven million, still one point eight four million under the five year seasonal average. The Midwest built one point eight seven two million to a hundred and six point nine eight million on turnarounds. The Rockies drew a hundred and forty four thousand to twenty two point three five million. The Gulf Coast drew three point eight nine eight million. Refinery utilization is ninety two point seven percent. The Baker Hughes count comes at noon Central. Last week's was four fifty six oil rigs, up one, with total rigs at five ninety eight, down one.

Marcus Hayes

Uinta Basin. Yellow wax is trading at an indicative ten to fourteen dollars under W T I at the wellhead, and I'd stress indicative. Gulf Coast refiners are bidding an indicative premium of about three twenty over W T I for wax, for the lube and low sulfur yield. Here's the problem. Spot crude by rail in coiled, insulated cars runs sixteen to eighteen dollars a barrel. Set a three twenty premium against that freight and you're twelve eighty to fourteen eighty a barrel in the hole versus selling locally. So rail stays confined to term contracted baseline volumes. The local cap is Salt Lake City, five refineries, about two hundred and five thousand barrels per day total, and roughly eighty thousand barrels per day of capacity for waxy crude. The Uinta Basin Railway is still stalled after the D.C. Circuit remand. The Surface Transportation Board supplemental review and Forest Service right of way approvals are pending. The two point two to two point five billion dollar private financing is unfinalized, with no construction. Operators including Crescent Point, Veren, Ovintiv, Scout, XCL, Uinta Wax, Berry, Caerus and SM Energy are holding steady on contracted development.

Marcus Hayes

Bakken. Output holds near one point one four million barrels per day in North Dakota, with the Williston total around one point one nine to one point two million. Ninety seven point four percent comes from the Bakken and Three Forks. Statewide gas capture is ninety five point five percent, even with a gas to oil ratio of three point zero nine M C F per barrel. Long laterals, three to four miles, are sixty three percent of new completions. Dakota Access is running near full, so negligible spot space south. Kinder Morgan's conversion of the eighty eight thousand barrel per day Double H line to N G L service keeps pulling crude capacity out of the region and pushes incremental volumes toward Bridger's Belle Fourche system. Steel Reef's F E R C application to export unprocessed North Dakota gas into Saskatchewan is still pending. Rail to coastal refineries runs ten to fifteen dollars a barrel, so it's legacy firm agreements only. Chord, Hess and Chevron, Devon and Grayson Mill, and ConocoPhillips report steady operations. Hess Midstream is targeting at least five percent volume growth in the second half.

Marcus Hayes

Powder River Basin. Anschutz, Continental, Devon, EOG and Peak are steady, no interruptions. With Double H leaving crude service, egress leans on local gathering and the Bridger and Belle Fourche interconnects into Guernsey. Plains continues folding the Silver Creek Midstream assets, a five hundred and eighty five million dollar acquisition, into Guernsey delivery headers.

Marcus Hayes

Now Guernsey, which is pronounced GERN zee, and the part that matters most. Light sweet is firm at about eighty five cents over W T I Cushing. Clearbrook trades at a discount to Guernsey of a dollar fifty to two ten. Both unchanged over the last twenty four hours. Those are desk indications, not published settlements.

Marcus Hayes

The story is space, not price. Pony Express, about four hundred and thirty thousand barrels per day to Cushing, and Platte, a hundred and forty five thousand to Wood River and Patoka, are both severely apportioned. With Brent W T I at twelve sixty three pulling barrels to the Gulf Coast, pipeline capacity is trading at a premium to uncommitted barrels sitting in tanks. On tariffs, Bridger's recent filing provides interim capacity moving more than two hundred and fifty thousand barrels per day from the Bakken into Wyoming while it evaluates downstream expansions of up to two hundred thousand. The Tallgrass and Bridger open season closed in early twenty twenty five, and Bridger's proposed five hundred and fifty thousand barrel per day Canada to Guernsey line is a long term concept, not a project.

Marcus Hayes

So what's a Guernsey shipper choosing? One, take proration on Pony or Platte and reach Gulf Coast export margins. Even after volume cuts, that's the best realized netback, which is why the space is contested. Two, sell east into Clearbrook at that one fifty to two ten discount, into a Midwest already long one point eight seven two million barrels on turnarounds. Three, rail at ten to fifteen dollars a barrel, which wipes out the arbitrage. Rationing of pipe, not molecule pricing, is the friction to bring to your call.

Marcus Hayes

That's the brief. Rig count at noon Central.