Oil producers in North America are hoping to ease the disconnect in the crude markets by addressing the reversal of the Seaway pipeline to run to refineries nest the Gulf of Mexico from the central United States. Seaway’s owners, Enbridge and Enterprise Products Partners are seeking the authority to charge what the market will bear once the pipeline starts flowing north to south, but are being met by opposition from the Canadian Association of Petroleum Producers, the Independent Petroleum Association of America, Chevron, Noble Energy, Suncor Energy, Continental Resources and other industry groups and companies. The first link expanding supplies at the Cushing, Oklahoma trading hub to the global market, it is being argued that the 500-mile Seaway pipeline will not face enough competition for rates to be unregulated.
After production rises in Canada and the U.S., stocks at Cushing increased to 38.7m barrels last week, which was the highest since June of last year. The high stocks weigh on U.S. oil prices. Though the oil shippers are welcoming the reversal that will help relieve congestion in the Cushing area, their concerns lie with the possibility that Seaway will be granted the authority to charge market-based rates and instead want rates to be overseen by the Federal Energy Regulatory Commission.
The pipeline will carry 150,000bpd to begin with room for expansion to 375,000bpd by early next year.