Gas-to-Oil Pipeline Conversions Gain Momentum in the Midwest

Trunkline Gas Co and Natural Gas Pipeline Co are considering plans to convert their gas pipeline capacity to crude oil, highlighting a series of gas-to-oil conversions among pipeline companies. This move is expected to boost crude supply to the Midwest, which has been rising with recent gas-to-oil pipeline conversions and expansions. Trunkline's scheme involves switching a 246 MMcfd line from Lake Charles, LA to Patoka, IL, while Natural Gas Pipeline is contemplating converting a portion of its 1,400-mile system, but has not yet identified which part.

Key Takeaways:

• Trunkline Gas Co is considering converting a 26-inch-diameter, 680-mile pipeline from Lake Charles, LA to Patoka, IL to transport crude oil, with the potential to increase capacity by 246 MMcfd.
• Natural Gas Pipeline Co is also evaluating the possibility of converting a portion of its 1,400-mile system, which has been operating at 75% capacity due to flagging demand for natural gas.
• Recent gas-to-oil pipeline conversions and expansions have significantly altered the crude supply picture in the Midcontinent, with additional capacity expected from Arco Pipe Line Co, Phillips Petroleum Co, and Mobil Corp.
• The Seaway pipeline project, a joint venture between Arco Pipe Line Co and Phillips Petroleum Co, is expected to carry up to 800,000 b/d to Cushing, OK, with shipments to begin early next year at 270,000 b/d.
• Other pipeline expansions include the reversal of a 200,000 b/d line by Mobil Corp and an additional 120,000 b/d capacity increase on the pipeline serving the Chicago market by IPL Energy Inc.
• The conversion of Trunkline's 26-inch-diameter, 680-mile line would provide a service that is in demand, according to Trunkline spokesman Danny Gibbs.

Statistics:

• Trunkline Gas Co's system has a capacity of 1.6 Bcfd but recent throughput has been running at around 1.1 to 1.2 Bcfd.
• Natural Gas Pipeline Co operates a 1,400-mile system with capacity of 1.6 Bcfd.
• The Seaway pipeline project is expected to carry up to 800,000 b/d to Cushing, OK.
• Arco Pipe Line Co has 160,000 b/d capacity on its existing Texas City-Cushing pipeline, which is expected to reach 430,000 b/d next year.
• Mobil Corp's 200,000 b/d line from Beaumont, TX to pipelines serving the Midwest was reversed in May and is now transporting crude north.
• IPL Energy Inc's pipeline serving the Chicago market is expected to increase capacity by 120,000 b/d.

Sources:

• [Trunkline Gas Co spokesman Danny Gibbs]
• [Natural Gas Pipeline Co spokeswoman]
• [Arco Pipe Line Co and Phillips Petroleum Co's announcement of the Seaway pipeline project]
• [Mobil Corp's completion of the reversal of a 200,000 b/d line]
• [IPL Energy Inc's completion of a $313 million upgrade to the line]
• [Trunkline Gas Co news release]