Oil markets shrugged off a spill that shut a pipeline crossing Texas, signaling no immediate shortage of space to haul crude from the region’s prolific
Permian Basin to Houston-area refineries.
The 1,200-barrel release on Magellan Midstream Partners LP’s 275,000 barrel-a-day Longhorn system near Austin started after a contractor struck the pipeline while doing maintenance, according to a company statement. Residents within a 1-mile radius of the spill were evacuated. The leak has been contained, Brian McGovern, a spokesman for the Texas Commission on Environmental Quality, said by email. Longhorn moves regional crudes like West Texas Intermediate to Gulf Coast refineries and export terminals.
“There is enough spare capacity for now to juggle barrels around to other pipelines,” John Auers, executive vice president at energy consultant Turner Mason & Co. in Dallas, said.
The shutdown will affect other pipelines, hubs and markets as Permian producers look for other outlets for their crude, Auers said. More crude is likely to be shipped to Cushing, Oklahoma, US Midcontinent pipeline hub, and to Corpus Christi, Texas, on the Gulf Coast, he said. WTI traded in spot markets in Houston and Midland, Texas, is likely to become depressed if the shutdown is prolonged, Auers said. WTI in both locations was steady relative to prices in Cushing, US benchmark, according to data compiled by Bloomberg.