Transport costs an issue with Seaway pipeline reversal

Oil producers have been desperate for pipeline capacity away from the storage hub at Cushing, but some apparently aren’t willing to pay for added capacity at market price.

The Financial Times reports industry groups in the U.S. and Canada are fighting to keep the Seaway pipeline between Cushing and refineries on the Gulf Coast from being unregulated. Enid-based Continental Resources Inc. also opposes the move, according to the article.

Operators Enbridge Inc. and Enterprise Products Partners, who are reversing the line to move oil away from Cushing, have sought permission to charge what the market will bear, according to the report.

The final decision rests with the Federal Energy Regulatory Commission, which is responsible for setting reasonable rates for petroleum products by pipeline.

Due to the lack of pipeline capacity out of new production centers like North Dakota,  oil traders have been moving crude by train, barge and truck from the central US to the Gulf, according to the Financial Times report. Prices range from $5 a barrel by rail to as much as $24 a barrel by truck.