Given the growth in PADD 2 crude oil production, crude oil is increasingly moving south. In 2010, just 147,000 bbl/d of crude oil was shipped from the Midwest to the Gulf Coast. Through October 2012, that number had increased to 252,000 bbl/d. The May 2012 reversal of the Seaway Pipeline contributed most of this increase, adding 150,000 bbl/d of pipeline capacity from PADD 2 to PADD 3.
Notwithstanding the increases, pipeline capacity has not been able to keep up with production growth. PADD 2 crude oil production in 2012 (through October) was almost 1.1 million bbl/d, up from 436,000 bbl/d in 2004. Moreover, production growth in West Texas's Permian Basin is linked by pipeline to PADD 2 markets in Cushing and the surrounding refineries. Along with PADD 2's growing production, these shipments have increased the congestion at Cushing. In an effort to avoid the lower-priced Cushing area, growing Permian Basin production is encouraging intra-PADD shipments from there to the refining centers along the Gulf Coast.
Given the significant time required to reverse or construct pipelines, market participants are increasing shipments on rail, the next most economic choice, from PADD 2 to PADD 3, and even farther to markets on the East and West Coasts. However, as previously mentioned, EIA does not track petroleum movements by rail.
Barges and tankers are additional modes of transportation moving crude oil from PADD 2 to PADD 3. Through October 2012, 55,000 bbl/d of crude oil was shipped on tankers and barges from PADD 2 to PADD 3, up from less than 10,000 bbl/d during the same period in 2010. While EIA does not record routes traveled, the trade press reports Bakken crude oil arriving in Missouri via rail and being barged down the Mississippi River. Other reports have noted trucks moving crude oil from Cushing to the Arkansas River and then to the Mississippi River and south to Louisiana.
Looking forward, it is likely pipeline flows from PADD 2 to PADD 3 will increase in the coming months. Early this year, Enterprise Products Partners LP and Enbridge Inc. announced that the Seaway Pipeline's capacity expansion project, which will increase pipeline capacity from Cushing to the Houston area by 250,000 bbl/d, was nearing completion. Another notable project expected to add Cushing-to-Gulf-Coast capacity is TransCanada's Gulf Coast Pipeline project, which began construction in August 2012 and is expected to be completed in mid-to-late 2013 with an initial capacity of 700,000 bbl/d. Additionally, the Seaway Pipeline is expected to be twinned, increasing its capacity to 850,000 bbl/d in early 2014.