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With the startup of the Dakota Access Pipeline (DAPL) set for June 1, Bakken producers are only days away from gaining easier, cheaper pipeline access to the Gulf Coast. DAPL runs from North Dakota to the crude hub at Patoka, IL, from where the new Energy Transfer Crude Oil Pipeline (ETCOP) links volumes to 
Nederland, TX. Bakken producers are keen to explore new worldwide export markets and these pipelines offer them an economical way to get their crude at least into PADD 3. The 450,000 b/d DAPL promises to provide a safer and more direct route for U.S. According to CR Weber, “Bakken crude traveling to refineries on the Gulf coast. Currently, oil from the Bakken in North Dakota must take a “…circuitous route through the Rocky Mountains or the Midwest and into Oklahoma, before heading south”. This new direct supply will certainly boost existing US crude exports. Even before it commences, US crude exports in the first 19 weeks of 2017 have averaged 767,000 b/d. This compares to an average of 485,000 b/d during 2016 in its entirety. This is combined with shifting export destinations and in some cases, large increases in volumes”. CR Weber’s Mr. John M. Kulukundis noted that “exporting oil from US shale plays, which became possible after Congress lifted a 40‐ year‐old export ban in 2015, is becoming a more attractive option for American producers. While VLCCs have been used to carry US crude before, they have all been reverse lightered. But all going well, Occidental hopes to export US crude by VLCCs from its former US naval base in Ingleside, TX, by 2019. Until then, there are no VLCC export terminals available. Occidental this month plans to test whether a VLCC can dock at its oil terminal along Texas’ Corpus Christi Bay. If it works, the company plans to turn its onshore terminal into the first in the US to receive VLCCs to export U.S. crude”. Kulukundis says that “there will be numerous challenges to accommodating VLCCs at Ingleside; the Port of Corpus Christi is currently about 45 feet deep, though officials hope to deepen the port to 52 feet within 18 months to 2+ years. Then Occidental is hoping to partial‐ load the ships at the new dock and top them off in the Gulf. Occidental estimates its ability to berth VLCCs for partial loading ‐‐ rather than reverse lightering the entire vessel should save about 75 cents per barrel on transportation costs. Occidental is reportedly currently moving 250,000 barrels a day of Permian crude ‐‐ about one‐ eighth of the field’s total production ‐‐ out of its facility in Ingleside, which is about 20 miles east of Corpus Christi. The 1,000‐acre Ingleside facility presently has 2.1 million barrels of storage in six tanks and a berth designed to take an aircraft carrier. Their intention next week is to bring a VLCC into their berth so that they can reportedly take photos and measurements and work out where to install the necessary loading arms and mooring bits for a vessel of this size”. CR Weber’s analyst added that “another project under discussion is the transformation of the Louisiana Offshore Oil Port (LOOP), which is the only port in the US capable of offloading VLCCs. LOOP consists of three SPMs 18 miles off the Louisiana coast in waters 110 feet deep. The SPMs are connected by a 48‐inch‐diameter, northbound‐only pipeline to the Clovelly Hub, a crude storage and blending facility located 25 miles inland in Clovelly, LA; the hub has eight underground salt caverns with a combined capacity of more than 60 MnBbls, as well as more than 20 aboveground tanks totaling another 12 MnBbls. The Clovelly Hub is also the pipeline destination for as much as 500 Mb/d of offshore Gulf of Mexico crude production, primarily from the Shell‐operated Mars pipeline system and BP’s Thunder Horse field. Since 2013 Clovelly has also been a destination point for Shell’s Zydeco Pipeline (formerly Ho‐Ho), which delivers up to 350 Mb/d of crude from terminals in Houston; Port Arthur/Beaumont, TX; and Lake Charles, LA”. “LOOP has also been increasingly used to receive domestic crude and condensate on Jones Act tankers from Corpus Christi, TX, and other Gulf Coast ports as a more efficient way to get oil to refineries East of Houston. Post US crude ban lifting there have been discussions for LOOP to be converted to an export facility or, more likely, for LOOP to be expanded to allow both exports and continued imports. Whoever succeeds in getting VLCC export facilities up and running, there is clearly a global market for US crude – at least as long as OPEC cuts continue and the price remains around the $50/bbl mark”, CR Weber concluded.
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