1. The State Of ECHO
he unprecedented rise in domestic crude oil production
has created tremendous change for the U.S. Gulf Coast
refining market, including an advantageous position for
some midstream logistics companies.
With U.S. domestic production at 7 million barrels
(bbl.) per day, as well as increased Canadian production,
there’s an increasing flood of inland crude creating a bot-
tleneck at the Cushing, Oklahoma, trading hub that
needs alleviation. Many in the industry anticipate a host
of pipeline projects will bring more than 3 million bbl.
per day from Cushing and South Texas to the Gulf Coast,
helping relieve the crude oil stockpile.
But it is possible “the Cushing backlog will essentially
just transfer to Houston,” Sandy Fielden, director of an-
alytics at RBN Energy, tells Midstream Business.
And, Fielden says, terminal operators are currently ex-
panding or building storage terminals equipped with
nearly 19 million bbl. of capacity.
“Some facilities are older, some are new. Some are in
Houston and some are in Louisiana,” he says. “They are
all trying to address the same issue. Someone is going to
need to redistribute the incoming crude, and there is a
lot of money to be made if they are in the right place.”
Expected demand
Aiming to capitalize on this expected demand, Enterprise
Products Partners LP is in the midst of constructing the
ECHO crude oil storage and terminal facility,located out-
side Houston in southeast Harris County, Texas. Of that
expected 19 million bbl. of capacity, Enterprise estimates
that the ECHO facility could have as much as 6 million
bbl. of crude oil storage capacity when completed.
The terminal will be connected to both the Enterprise-
owned Eagle Ford crude pipeline from South Texas and
the Seaway line that runs between Cushing and Freeport,
Texas, once the company completes an ECHO-to-Jones
As it nears completion, Enterprise Products Partners’ Houston ECHO terminal is expected to link the
growing North American oil supply—causing an unprecedented glut at the Cushing,
Oklahoma, hub—with Gulf Coast refineries. But as storage dwindles at the country’s
most popular hub, where does the project stand today?
By Jennifer Postel, Assistant Editor
MidstreamBusiness.com April 2013 65
EPD ECHO
Crude Oil Terminal
Cushing, OK
Crude Oil Complex
West Texas
Crude Production
Eagle Ford
Crude Production
South Texas
Crude Production
1.6 million BPD
Houston
Refining Complex
Water Access to
≈4.3 million BPD
USGC Market
(excl. Houston)
Seaway Texas City
& Freeport Docks
Canadian / Bakken
Crude Production
0.8 million BPD
Texas City
Refining Complex
1.4 million BPD
Beaumont / Port Arthur
Refining Complex
400–800 MBPD
Flow Rate
350 MBPD
Flow Rate
600 MBPD
Flow Rate
According to Enterprise Products Partners, ECHO will link growing oil supplies from inland U.S., Canada and
Gulf of Mexico, plus waterborne imports with Gulf Coast refineries.
HOUSTON ECHO TERMINAL
Source: Enterprise Products Partners LP
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2. April 2013 MidstreamBusiness.com66
Creek, Texas, pipeline in the third quarter of 2013. Jones
Creek, outside Feeport, is Seaway’s southern terminus.
Once completed, the ECHO terminal will offer ac-
cess to major Texas Gulf Coast refining centers in Texas
City, Pasadena/Deer Park, Baytown and along the Hous-
ton Ship Channel. ECHO will also be connected to the
Enterprise marine terminal at Morgan’s Point on the
ship channel.
“The neat thing about ECHO is it is a pipeline con-
nected to every major refinery in the Houston,Beaumont,
Port Arthur areas and the entire Gulf and East Coasts
through waterborne,” A.J. “Jim” Teague, executive vice
president and chief operating officer of Enterprise’s gen-
eral partner, recently told the Houston Producers Forum.
Enterprise announced in November 2012 that the ini-
tial phase of the storage facility was complete and receiv-
ing deliveries of crude oil.At press time, the facility’s first
three tanks have a total 750,000 bbl. of storage capacity.
And, according to the company, the next expansion phase
is expected to add as much as 900,000 bbl. of storage ca-
pacity, which could be in service as early as the first quar-
ter of 2014. That could bring large potential benefits to
both Enterprise and refiners, according to RBN’s Fielden.
“For Enterprise, the huge potential benefit from the
ECHO terminal, which they have yet to realize, is they
will be able to offer customers a throughput from Sea-
way to Houston and then once in Houston, they will be
able to offer customers a redistribution point to refiners
around the area or an access point to the Houston Ship
Channel, for marine transport,” he says. “For refiners,
storage facilities like ECHO offer a useful staging post to
reliably provide a given amount of crude feedstock on a
consistent basis.”
Light vs. sour
According to Fielden, in the recent past Gulf Coast refin-
ers spent billions of dollars reconfiguring their refineries
to“live on a diet of heavy sour crude.”The influx of com-
petitively priced inland light crude is not really suitable
for these refineries.
“You can run lighter crude, but it produces too much
light distillate that overwhelms the refinery capacity forc-
ing a reduced throughput,” he says. “One way for Hous-
ton refineries to consume more of the competitively
priced light crude is to blend it with heavier grades. And
one of the advantages of having access to storage termi-
nals like ECHO is its blending capabilities.”
Due to the backlog experienced in Cushing, inland
crude prices are depressed, with a price spread of as much
as $20 between West Texas Intermediate (WTI) crude
and North Sea Brent crude. Many in the market, Fielden
says, once believed that ECHO, along with the Seaway
and Keystone pipelines, would miraculously bring inland
prices “back in line with Brent.” But, pricing predictions
can be difficult and, Fielden explains, the old rule of
thought is looking unlikely.
“The market, at the moment, is waiting with bated
breath for new capacity to open up between Cushing and
Houston to reduce the stockpile at Cushing, but so far it
has been a bumpy ride,” he says. “There was a hiccup re-
cently when Enterprise announced a constraint on the Sea-
way pipeline because the takeaway capacity at the Houston
end is restricted until Enterprise completes the Jones Creek-
to-ECHO pipeline.”According to analysts, recent develop-
ments have had an impact on the unpredictability of inland
crude prices, which are set by the WTI-Cushing bench-
mark. There is no guarantee what potential effect the new
terminal will have on pricing,according to Larry Schwartz,
an independent energy and petrochemical consultant.
“Conceptually, if everything is just connected by
pipeline, it should just be pipeline tariff as the differential
plus maybe a little bit for handling,” he tells Midstream
Business. “So what you have is WTI, which is stranded
MidCon; Eagle Ford which is either a parity or above
WTI, and they are competing and trying to get LLS
[Louisiana Light Sweet] prices.”
“The next two years will indeed be challenging for
midstream crude logistics in the Gulf Coast region.
The pace of the changes that have already been
made is remarkable.”
—Sandy Fielden, director of analytics, RBN Energy
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3. MidstreamBusiness.com April 2013 67
Traffic congestion
Fielden emphasizes that transfer of Cushing’s congestion
to the Houston-Gulf Coast region is a distinct possibility.
“All of this stuff is just going to come down the line
and then backup in Houston. Right now, Cushing has
roughly 50 million bbl. stored,”he says.“ECHO has 6 mil-
lion bbl., which will not be ready until the end of this year
at the earliest. So with simple math, things are likely to
get backed up in Houston.
“These places must have connectivity, as Enterprise
has found out. If your terminal is not connected to any-
thing then it pretty quickly fills up.”
To alleviate these concerns, Enterprise is working to
complete the line between its Jones Creek terminal and
the ECHO terminal. For now, Fielden says, the crude is
expected to be routed into Houston through the Rancho
Pipeline, which runs from Sealy, Texas, to Houston and
intersects with Seaway at Jones Creek.
Despite these challenges, the future of ECHO and
other Gulf Coast storage terminals appears bright, given
the soaring domestic crude market.
“The next two years will be very challenging for mid-
stream crude logistics in the Gulf Coast region. The pace of
the changes that have already been made is remarkable,”
FieldenexplainedinanRBNEnergyarticletitled,“Gulf Coast
Crude Oil Flood Preparations: The Terminal Operators.”
“Crude terminal operators in the right location with
the right facilities look set to benefit significantly from
the process of rewiring and blending supplies to Gulf
Coast refineries. Hopefully the preparations that these
operators have made in expanded infrastructure will
prove capable of handling the flood of new crude,” ac-
cording to the report. ■
Jennifer Postel can be reached at
jpostel@hartenergy.com or 713-260-5205.
Port Arthur
ECHO Crude Oil Terminal
Connects Eagle Ford, Bakken, Permian,
Midcontinent and imports with Gulf Coast
area refineries and water access
representing more than 8 million barrels
per day of capacity
Build-out up to 6 million barrels of storage
Being considered by NYMEX as a
regional pricing point for Gulf Coast
market
The Seaway Pipeline, which is supported by commitments for as long as 20 years, will have its capacity expanded to a maximum of
850,000 barrels per day of service in the first quarter of 2014.
Source: Enterprise Products Partners LP
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