Argus Americas Crude

Crude market prices and analysis

Issue 16-184  |  Friday 23 September 2016

Overview Key prices

„„ WTI futures dropped sharply, ending a four-day rally on All-day assessments $/bl
Diff to WTI Diff to LLS Price ±
signs that oil producers will not reach a formal agreement
to limit output when they meet in Algiers next week. Nymex LLS St James +1.70 45.97 -1.83
WTI Cushing -1.70 44.27 -1.87
November light, sweet crude futures settled down by $1.84/bl
WTI Midland -0.95 -2.65 43.32 -2.04
or nearly 4pc at $44.48/bl. WTI Houston +1.35 -0.35 45.62 -1.87
Mars Clovelly -2.98 -4.68 41.29 -1.91
„„ HLS weakened by 10¢/bl to trade at parity to LLS after WCS Hardisty -14.35 -15.07 30.90 -1.80
WCS Cushing -9.00 -10.29 35.68 -1.83
maintaining a roughly 15¢/bl premium since Wednesday.
WCS Houston -8.10 -9.39 36.58 -1.83

„„ BP's Alaskan Jones Act tanker Alaskan Frontier departed on Forward curve: Locational spreads $/bl
19 September from the Port of Valdez, Alaska, for Barber's WTI/Brent WTI/Brent LLS/Brent
4:30pm 1:30pm 1:30pm
Point, Hawaii. It is expected to arrive on 30 September. London Houston Houston

Nov -1.53 -1.41 +0.19

„„ Ecuadorean heavy sour Napo was valued at a discount to Dec -1.52 -1.41 -0.35
Ice Brent of about $11.50/bl on an fob basis, or at least 15¢/bl Jan -1.42 -1.33 -0.40
stronger than when the grade was last heard trading. 1:30pm Houston LLS/WTI Mars/WTI Mars/LLS

Oct -4.75
„„ Apportionment on Enbridge's 215,000 b/d Ozark pipeline, Nov +1.65 -3.10 -4.75
which runs from Cushing, Oklahoma, to Wood River, Illinois, Dec +1.55 -3.20 -4.75

will climb in October to the highest level since October 2015. Forward curve: Time spreads $/bl
Ozark apportionment follows the highest apportionment on 1:30pm Houston ICE Brent CME WTI LLS Mars
lines of the Mainline system since August 2015. Nov/Dec -0.59 -0.59 -0.49 -0.49
Dec/Jan -0.54 -0.62 -0.57 -0.37
Jan/Feb -0.52 -0.59 -0.54 -0.59

In the news Forward curve: Outright prices $/bl

1:30pm Houston LLS WTI Midland Mars
Infrastructure Oct 46.08 43.33 41.33
„„ Sunoco restarts Permian Express 2 line Nov 46.13 43.88 41.38
Dec 46.62 44.47 41.87
„„ Citgo shuts Corpus Christi gasoline unit
„„ Phillips 66 plans Los Angeles maintenance

Industry Contents
„„ US Senate bill aims to boost Alaska output WTI, Gulf coast and midcontinent 2-4
„„ Congress targets Obama Middle East policies West coast and Latin America 4-6
Canada 6
„„ White House seeks tribes' input
CME Nymex and Ice 6
„„ Colombia diversifies slate with US crudes
Americas crude pipeline deals 7
„„ Petrobras seeks to revive mature basin News 8

Copyright © 2016 Argus Media group

Licensed to: Cortney Becker, Argus Media Inc (New York)

Argus Americas Crude Issue 16-184  |  Friday 23 September 2016

WTI $/bl
WTI formula WTI formula Roll to next
Timing Low High
basis price basis MTD month Argus documentation links:

WTI Cushing Oct 44.25 44.29 44.27 45.05 -0.21 Argus Americas Crude Methodology and
WTI Cushing Nov 44.46 44.50 44.48 -0.59 Specification Guide
WTI Cushing Dec 45.05 45.09 -0.62 Argus Global Compliance Policy
WTI Cushing Jan 45.67 45.71
Argus Media Editorial Code of Conduct
Timing Price
CMA Nymex Oct 44.68
CMA Nymex Nov 45.25
Diff Diff MTD
Weighted
Timing Base Diff low Diff high weighted weighted Low High
average
average average
WTI Houston Oct Oct WTI +1.35 +1.40 +1.35 +1.53 45.62 45.67 45.62
WTI Houston Nov Nov WTI +1.40 +1.60 +1.50 +1.40 45.88 46.08 45.98
WTI Midland Oct Oct WTI -1.05 -0.90 -0.95 -0.52 43.22 43.37 43.32
WTI Midland Nov Nov WTI -0.70 -0.50 -0.60 -0.52 43.78 43.98 43.88
WTI diff to CMA Nymex Oct CMA -0.45 -0.40 -0.40 -0.74
WTI postings-plus Oct Postings +2.95 +2.97 +2.97 +2.64

Gulf coast and midcontinent domestic $/bl

Diff Diff MTD
Weighted
Timing Base Diff low Diff high weighted weighted Low High
average
average average

Bakken Nov CMA Nym -1.15 -0.65 44.10 44.60

LLS Oct Oct WTI +1.60 +1.85 +1.70 +1.65 45.87 46.12 45.97
LLS Nov Nov WTI +1.55 +1.70 +1.63 +1.60 46.03 46.18 46.11
HLS Oct Oct WTI +1.65 +1.75 +1.70 +0.95 45.92 46.02 45.97
Thunder Horse Oct Oct WTI -0.70 -0.60 -0.65 -0.69 43.57 43.67 43.62
Bonito Oct Oct WTI -2.00 -1.30 -1.65 -1.60 42.27 42.97 42.62
WTS Oct Oct WTI -2.00 -1.20 -1.60 -2.17 42.27 43.07 42.67
WTS Nov Nov WTI -2.00 -1.80 -1.90 -1.95 42.48 42.68 42.58
Poseidon Oct Oct WTI -3.50 -2.90 -3.20 -3.15 40.77 41.37 41.07
Mars Oct Oct WTI -3.00 -2.90 -2.98 -2.94 41.27 41.37 41.29
Mars Nov Nov WTI -3.20 -3.00 -3.10 -3.18 41.28 41.48 41.38
Southern Green Canyon Oct Oct WTI -3.10 -2.90 -3.00 -3.64 41.17 41.37 41.27
WCS Houston Oct CMA Nym -8.35 -7.85 -8.10 -8.56 36.33 36.83 36.58
WCS Cushing Oct CMA Nym -9.25 -8.75 -9.00 -9.15 35.43 35.93 35.68

US Gulf Coast and Midcontinent

The final day of the October trade month ended with the
October-November WTI contango still around 20¢/bl.
The October/November WTI Cash Roll weighted-average
widened slightly to 21¢/bl from 18¢/bl. The narrow spread
as the month ended suggested increased buying interest for
prompt light crude.
Prior to the final three days of the US pipeline trade
month, the average spread between October/November WTI
futures settlement prices was 61¢/bl. The final three days have
averaged 20¢/bl. Overall the October WTI discount to Novem-
ber during the WTI trade month averaged 55¢/bl, about 10¢/
bl narrower than the September/October contango during the
September trade month.
October WTI Midland ended the trade month around $1/
bl under light sweet crude at Cushing, 17¢/bl weaker than its
weighted-average discount the prior day. October WTI Midland
has fluctuated in recent days with the unplanned outage of Su-
noco’s Permian Express 2 pipeline after a leak was discovered
on 10 September. But the pipeline has now been repaired and
returned to service Friday morning at 8am central time. The

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Argus Americas Crude Issue 16-184  |  Friday 23 September 2016

US west coast pipeline $/bl

Announcement
Timing Base Diff low/high Low/High

SJLB P-Plus Oct Postings -2.25/-1.75 41.61-42.11

Argus completes and extends annual Iosco
Implied WTI diff Oct Oct -2.66/-2.16
assurance review
Line 63 P-Plus Oct Postings -0.91/-0.41 42.95-43.45
Argus has completed its fourth external assurance review Implied WTI diff Oct Oct -1.32/-0.82
of its price benchmarks, extending the scope of the process Midway Sunset P-Plus Oct Postings -4.75/-4.25 34.05-34.55
to cover petrochemicals and fertilizers for the first time, as Implied WTI diff Oct Oct -10.22/-9.72
well as again covering crude, products, biofuels, thermal Light postings avg 43.86
coal, coking coal, natural gas and biomass benchmarks. The Heavy postings avg 38.80
review was carried out by professional services firm PwC.
Annual independent, external reviews of oil benchmarks are US west coast waterborne $/bl
required by international regulatory group Iosco’s Principles Timing Base Diff low/high Low/High
for Oil Price Reporting Agencies, and Iosco encourages Isthmus USWC Sep Oct -2.55 41.72
extension of the reviews to non-oil benchmarks. K-Factor Sep -3.10
For more information and to download the review visit our ANS del Nov CMA Nym -1.70/-1.20 43.55-44.05
website http://www.argusmedia.com/About-Argus/How-We- ANS del concurrent Nov Nov WTI -1.70/-1.20 42.78-43.28
Work/

pipeline has started making deliveries to Corsicana and after
inventory levels reach operationally required levels, shipments
to final destinations will start.
October WTI Midland ended the trade month averaging
around 50¢/bl under WTI Cushing, a discount of about 40¢/bl
wider than in the September trade month.
WTI Houston traded at WTI +1.35 on Friday for October deliv-
ery, unchanged from the previous session. For October delivery,
WTI Houston averaged about $1.50/bl over WTI Cushing, or about
10¢/bl stronger than for September delivery. Demand for exports
may be helping to support the Texas coast price.
HLS crude weakened by 10¢/bl as 6,000 b/d was heard trading
this session at a premium to WTI of $1.70/bl, or at parity to the vol-
ume-weighted average of LLS, which traded at premiums between
$1.60/bl and $1.85/bl in seven deals totaling 7,150 b/d.
HLS had maintained a premium to LLS of about 15¢/bl
since Wednesday on support of anticipation of heavier offshore
Louisiana crude during Amberjack construction work. Before
Wednesday, the last time HLS reached a premium to LLS was
in February. The last time HLS stayed above the lighter grade
for more than one trade session was May 2015.
Reported HLS deals totaled 75,000 b/d during the October
trade month, up from 70,250 b/d in September and from 46,645
Colorado. Vesseltracking data reflects the tanker is anticipated
to arrive in Rio de Janeiro, Brazil, on 9 October after leaving
Los Angeles, California, 11 September.
Assessment rationale
The minimum volume was met and volume-weighted average
calculated according to the methodology for HLS, LLS, Mars,
Southern Green Canyon, Thunder Horse, WTI Diff to CMA Ny-
mex, WTI Houston, WTI Midland and WTI Postings.
No Poseidon trades were reported Friday. Argus assessed the
grade to reflect a bid/ask range reported this session equiva-
lent to -3.50/-2.90 relative to WTI.
WTS outright $/bl
55
50
45
hh

40
b/d in the same month last year. LLS deals totaled 231,150 b/d
for prompt-month delivery, down from 251,412 b/d reported
35
trading last month and 244,717 b/d in October 2015.
Friday’s shipping fixture reports indicate Shell plans to
30
import Brazilian crude oil to the US Gulf coast on the Suezmax
31 Mar 16 27 May 16 27 Jul 16 23 Sep 16

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Argus Americas Crude Issue 16-184  |  Friday 23 September 2016

No WTS trades were reported. It was bid and offered at WTI Latin America $/bl
-2.00/-1.20. The midpoint of this range was 20¢/bl weaker than Timing Base Diff low/high Low/High

the prior day's assessment. This seemed reasonable as WTI Mexico

Midland's weighted-average differential weakened by 17¢/bl. Maya (USGC) Sep Oct -6.22 38.05
Argus assessed WTS at WTI -1.60, the midpoint of the bid and K-Factor Sep -2.60

offer. Olmeca Sep Oct +0.73 45.00

K-Factor Sep -0.10
No Bonito Sour trades were reported Friday. Argus assessed
Isthmus Sep Oct -0.20 44.07
the grade to reflect a bid/ask range reported throughout the
K-Factor Sep -0.75
session at -2.00/-1.30 relative to WTI.
Colombia
The Bakken assessment was left unchanged as no fresh trade
Vasconia Prompt Jan WTI -4.97/-4.27 40.72-41.42
or market discussion emerged. Jan Ice -6.30/-5.60
The WCS Cushing assessment was left unchanged as no fresh Castilla Prompt Jan WTI -8.72/-7.72 36.97-37.97
trade or market discussion emerged. Jan Ice -10.05/-9.05
The WTI Formula Basis reflected the weighted average of the Argentina
October/November WTI Cash Roll applied to the front-month Escalante Prompt Jan WTI -4.97/-3.97 40.72-41.72
Nymex settlement price for November. Jan Ice -6.30/-5.30

US West Coast discount of $2.94/bl to November CMA Ice Brent.

In the absence of trade, Alaskan North Slope (ANS) crude for
November delivery to the US west coast is assessed at a discount
of $1.45/bl to November CMA Nymex WTI, or 8¢/bl stronger than
the level at which the medium sour was assessed on Thursday, as
the CMA Nymex WTI/CMA Ice Brent spread widened.
ANS sold Wednesday for November delivery to the US west
coast at a discount of $3.50/bl to November CMA Ice Brent.
ANS also sold Wednesday for November delivery to the
US west coast at a discount of $1.23/bl to November CMA
Nymex WTI. As the CMA Nymex WTI/CMA Ice Brent spread
stood Wednesday at $1.71/bl, that trade represented a
A total of 4.6mn bl of spot ANS has sold in ten transactions for
delivery to the US west coast in November. The grade's discount to
CMA Ice Brent has remained between $3.50-$2.94/bl for a volume
weighted average discount of $3.30/bl during November trade.
The estimated discount to December CMA Ice Brent for
Oman crude loading in November at the Port of Mina al-Fahal,
Oman, and delivering in December to Los Angeles, California,
stood at $3.10/bl at Friday's Singapore close.
In shipping news, BP's 193,049t Alaskan Jones Act tanker
Alaskan Frontier departed on 19 September from the Port of
Valdez, Alaska, for Barber's Point, Hawaii. It is expected to
arrive on 30 September.

Escalante vs Ice Brent $/bl Mars vs Nymex WTI 1.30pm Spread $/bl

-4.5 -2
Ice Brent = 0 WTI = 0
-5

-5.5
-4
hh hh

-6

-6.5

-7 -6
31 Mar 16 27 May 16 27 Jul 16 23 Sep 16 31 Mar 16 27 May 16 27 Jul 16 23 Sep 16

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Argus Americas Crude Issue 16-184  |  Friday 23 September 2016

Canada domestic $/bl

Diff Diff MTD
Weighted
Timing Base Diff low Diff high weighted weighted Low High
average
average average

Syncrude (SPP) Nov CMA Nym +0.80 +1.30 +1.05 - 46.05 46.55 46.30
WCS Nov CMA Nym -14.60 -14.10 -14.35 - 30.65 31.15 30.90
WCS Cushing Oct CMA Nym -9.25 -8.75 -9.00 -9.15 35.43 35.93 35.68

Canada domestic $/bl Canada waterborne prices $/bl

Timing Basis Diff low/high Low/High Timing Basis Diff low/high Low/High

Condensate Nov CMA Nym -1.15/-0.75 44.10/44.50 Hibernia Dated North Sea -0.65/-0.35 46.15/46.45
MSW Nov CMA Nym -3.20/-2.70 42.05/42.55 Terra Nova Dated North Sea -0.80/-0.50 46.00/46.30
LSB Nov CMA Nym -4.68/-3.68 40.57/41.57
LLB Nov CMA Nym -14.30/-13.80 30.95/31.45
Sellers meanwhile maintained that November cargoes were
being traded at discounts to January Ice Brent between $9.40/
Assessment rationale bl and $9.05/bl. The high end of the assessed range of possible
At settlement, the CMA Nymex WTI/CMA Ice Brent spread trade was set at a $9.05/bl discount to January Ice Brent to in-
stood Friday at $1.77/bl. The ANS discount to CMA Nymex WTI clude all recently completed deals, maintaining a median dis-
was set at $1.45/bl to reflect the $3.22/bl discount to CMA Ice count roughly around $9.50/bl under January Ice Brent, which
Brent established when the grade last traded. No trades were market analysts reported as representative of the market.
reported Friday. Colombian medium sour Vasconia meanwhile fell 25¢/bl to
an assessed discount of $5.95/bl to January Ice Brent as par-
ticipants valued the grade at discounts between $6.30/bl and
Latin America $5.60/bl, settling the low and high ends of the assessed range.
Vasconia weakened by 15¢/bl in the previous session
Colombian heavy sour Castilla Blend weakened 50¢/bl to a on news of an Occidental Petroleum tender selling at least
$9.55/bl assessed discount to January Ice Brent as buyers 500,000 bl at a discount wider than $6/bl, moving the low end
reported bid levels for late-October cargoes at discounts to of the Argus-assessed range.
December Ice Brent between $9.60/bl and $9.50/bl. The high- Ecuadorean medium sour Oriente was estimated about
est bid set the low end of the assessed range of possible trade $1.50/bl lower than Vasconia on an fob basis, at a roughly
at an equivalent discount to January Ice Brent of $10.05/bl. $7.50/bl discount to January Ice Brent. This compares to a

Maya vs ASCI $/bl Castilla Blend vs Ice Brent $/bl

-8.5
Maya USGC vs ASCI (5 day MA)
Maya USGC vs WTI (5 day MA) Ice Brent = 0
0
ASCI/WTI = 0 -9

-9.5
hh hh

-10

-10 -10.5
29 Dec 15 30 Mar 16 27 Jun 16 23 Sep 16 31 Mar 16 27 May 16 27 Jul 16 23 Sep 16

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Argus Americas Crude Issue 16-184  |  Friday 23 September 2016

discount to December Ice Brent between $7/bl and $6.50/ CME Nymex light sweet $/bl
bl calculated Tuesday when a 380,000 bl cargo was heard 1:30pm
4:30pm
Timing Open Low High Houston ±
London
selling to PetroPeru at an equivalent discount to WTI be- settle
tween $4.25/bl and $4/bl. Nov 46.07 44.22 46.55 45.86 44.48 -1.84
The 54¢/bl contango spread between December and Janu-
Dec 46.63 44.82 47.13 46.46 45.07 -1.81
ary Ice Brent indicates the $7.50/bl discount to the January
Jan 47.19 45.43 47.75 47.08 45.69 -1.79
contract heard Friday is roughly in line with where the grade
Feb 47.68 46.06 48.32 47.79 46.28 -1.78
was valued earlier this week.
Ecuadorean heavy sour Napo was valued at a discount to
Ice Brent of about $11.50/bl on an fob basis, or at least 15¢/ Ice Brent $/bl
bl stronger than when the grade was last heard trading at a 1:30pm
4:30pm
Timing Open Low High Houston ±
London
discount to November Ice Brent wider than $10/bl, or about settle
$11.65/bl under January Ice Brent. Nov 47.42 45.65 48.26 47.39 45.89 -1.76
Brazilian medium sweet crudes Lula and Sapinhoa were
Dec 47.85 46.24 48.78 47.98 46.48 -1.73
both valued at a $2.70/bl discount to Dated Brent on news
Jan 48.48 46.79 49.26 48.50 47.02 -1.72
the two grades traded this week at this level on an fob basis
from La Paloma, Uruguay. On an fob basis from Angra dos Reis,
Brazil, Lula and Sapinhoa were valued Friday at discounts to
Maya vs Ice Brent $/bl
Dated Brent between $2.50/bl and $2/bl.
-5
Ice Brent = 0
-6
Canada
-7
In western Canada, trade was light as the market remains -8
between cycles.
-9
November WCS at Houston, Texas, sold at a discount of hh

$8.70/bl to November CMA Nymex WTI, while November Cold -10

Lake at Houston changed hands at a discount of $9.15/bl. -11

Apportionment on Enbridge's 215,000 b/d Ozark pipeline,
which runs from Cushing, Oklahoma, to Wood River, Illinois, will
climb in October to the highest level since October 2015.
Ozark is apportioned by 50.11pc for October after receiving
adjusted nominations of 447,078 b/d for the month. The line
has an estimated capacity of 223,036 b/d in October.
High Ozark apportionment for October follows the
highest apportionment on lines of the Mainline system that
ship heavy crude from western Canada to Superior, Wis-
consin, since August 2015. The 796,000 b/d Line 4, which
originates in Edmonton, Alberta, and the 800,000 b/d Line
67, which originates in Hardisty, Alberta, were apportioned
by 22pc for September, leaving shippers able to transport
just 78pc of nominated volumes.
The 193,000 b/d Spearhead pipeline, which runs from Flana-
gan, Illinois, to Cushing is not apportioned for October. The line
received adjusted nominations of 183,752 b/d for October and has
an estimated capacity of 183,752 b/d for that month.
-12
-13
29 Mar 16 26 May 16 26 Jul 16 23 Sep 16
Spearhead is apportioned by 7.87pc for November after
receiving adjusted nominations of 186,210 b/d for the month. The
line has an estimated capacity of 171,560 b/d in November.
Spearhead remained unapportioned from December
2015 through October 2016.
In shipping news, BP fixed the 113,143t Kareela Spirit to
ship crude on 2 October from the west coast of Norway to
eastern Canada for WorldScale (WS) 82.5.
Assessment rationale
The Syncrude, WCS and WCS Cushing assessments were left
unchanged as no fresh trade or market discussion emerged.

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Argus Americas Crude Issue 16-184  |  Friday 23 September 2016

Deals done

North America pipeline deals done

Grade Location Trade month Basis month Differential basis Differential Price $/bl Volume b/d

WTI Cushing Oklahoma Nov Nov CMA Nymex trade days -0.75 15,000
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 10,000
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 4,097
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 4,000
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 4,000
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 3,226
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 2,481
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 1,806
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 1,613
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 1,000
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.40 1,000
WTI Cushing Oklahoma Oct Oct CMA Nymex trade days -0.45 2,500
WTI Cushing Oklahoma Oct Oct Phillips 66 Posting +2.97 4,500
WTI Cushing Oklahoma Oct Oct Phillips 66 Posting +2.95 1,000
WTI Cushing Oklahoma Oct Nov WTI -0.20 7,548
WTI Cushing Oklahoma Oct Nov WTI -0.20 3,226
WTI Cushing Oklahoma Oct Nov WTI -0.20 3,226
WTI Cushing Oklahoma Oct Nov WTI -0.20 3,226
WTI Cushing Oklahoma Oct Nov WTI -0.20 3,226
WTI Cushing Oklahoma Oct Nov WTI -0.20 3,226
WTI Cushing Oklahoma Oct Nov WTI -0.20 3,226
WTI Cushing Oklahoma Oct Nov WTI -0.20 1,935
WTI Cushing Oklahoma Oct Nov WTI -0.20 1,835
WTI Cushing Oklahoma Oct Nov WTI -0.20 1,613
WTI Cushing Oklahoma Oct Nov WTI -0.20 1,000
WTI Cushing Oklahoma Oct Nov WTI -0.25 3,226
WTI Cushing Oklahoma Oct Nov WTI -0.25 2,258
WTI Cushing Oklahoma Oct Nov WTI -0.25 1,487
WTI Magellan East Houston Oct Oct WTI +1.35 2,000
WTI Magellan East Houston Oct Oct WTI Midland +2.35 3,000
WTI Midland Texas Oct Oct WTI -0.95 2,000
WTI Midland Texas Oct Oct WTI -0.95 1,087
WTI Midland Texas Oct Oct WTI -0.95 1,000
WTI Midland Texas Oct Oct WTI -0.95 1,000
WTI Midland Texas Oct Oct WTI -0.95 1,000
WTI Midland Texas Oct Oct WTI -0.95 1,000
WTI Midland Texas Oct Oct WTI -1.05 290
HLS Empire Louisiana Oct Oct WTI +1.70 5,000
HLS Empire Louisiana Oct Oct WTI +1.70 1,000
LLS St. James Louisiana Oct Oct WTI +1.85 1,000
LLS St. James Louisiana Oct Oct WTI +1.80 950
LLS St. James Louisiana Oct Oct WTI +1.75 1,000
LLS St. James Louisiana Oct Oct WTI +1.70 1,000
LLS St. James Louisiana Oct Oct WTI +1.65 1,000
LLS St. James Louisiana Oct Oct WTI +1.65 200
LLS St. James Louisiana Oct Oct WTI +1.60 2,000
Mars Clovelly Louisiana Oct Oct WTI -2.90 1,000
Mars Clovelly Louisiana Oct Oct WTI -3.00 5,000
Southern Green Canyon Nederland / Texas City Oct Oct WTI -3.00 3,000
Thunder Horse Clovelly Louisiana Oct Oct WTI -0.65 1,000

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Argus Americas Crude
Infrastructure news
Sunoco restarts Permian Express 2 line
Sunoco Logistics restarted its 200,000 b/d Permian Express 2
crude pipeline at 9am ET today after the line was shut on 10
September following an 800 bl leak near Sweetwater, Texas.
“We are making deliveries into Corsicana and once system
inventories have returned to operational levels we will begin
movements to final destinations,” Sunoco said.
The company completed repairs on 16 September and a
restart plan was approved by federal regulators.
The US Pipeline and Hazardous Materials Safety Adminis-
tration (PHMSA) on 14 September issued a Corrective Action
Order to Sunoco which set requirements needed before the
pipeline could return to service.
The order indicated that Sunoco identified pressure
fluctuations on Permian Express 2 more than a week before
it identified the leak on 10 September. Sunoco's control
center identified the fluctuations beginning on 30 August
which were possible indications of a leak.
PHMSA also said that a previous construction inspection
had identified issues with welding on the pipeline.
Permian Express 2 transports crude from Colorado City and
Garden City, Texas, to Nederland, Texas.
iNDUSTRY news
US Senate bill aims to boost Alaska output
The years-long decline in Alaska’s crude output is prompting a
novel attempt in the US Congress to significantly increase oil
production on federal lands in the state.
US Senate Energy and Natural Resources Committee chairman
Lisa Murkowski (R-Alaska) yesterday touted a bill that would force
federal regulators to turn over federal lands to the state if produc-
tion on those lands does not rise by at least 500,000 b/d by 2026.
Production across all of Alaska, including on state lands,
totaled only 483,000 b/d in 2015, a 38-year low, the US Energy
Information Administration reported. Alaska's oil output
peaked in 1988 at 2mn b/d.
Murkowski has urged federal regulators repeatedly to open
more federal lands in Alaska to oil and gas exploration. That
request is driven in part by concerns over declining volumes be-
ing transported through the Trans-Alaska Pipeline System. The
pipeline system's throughput has dropped 33pc over the past 10
years and last year reached an all-time low of 508,000 b/d. The
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Issue 16-184  |  Friday 23 September 2016
Citgo shuts Corpus Christi gasoline unit
Citgo shut a struggling gasoline unit yesterday at its 165,000
b/d refinery in Corpus Christi, Texas.
The refiner shut a fluid catalytic cracking (FCC) unit yester-
day after discovering a leak from a reactor on the unit, accord-
ing to a filing to state environmental regulator.
Shutting the unit down increased emissions beginning at
3:42pm ET, according to the filing.
Citgo previously reported trouble with the same FCC on 15
September.
Phillips 66 plans Los Angeles maintenance
Phillips 66 will begin planned maintenance early next week
in the Carson plant of its 139,000 b/d refinery in Los Angeles,
California.
The refiner confirmed a filing to local air quality regulators
reporting potential increased emissions from 26 September to
13 October.
Phillips 66 has not commented on the units involved or the
duration of the work.
pipeline needs at least 350,000 b/d for safe operation.
Murkowski in response has released a bill that would give
the US Interior Department one year to develop a plan to
increase oil production on federal lands by 500,000 b/d.
If oil production on those lands failed to reach that
amount by 2026, the bill would require Interior to transfer
1mn acres (4,050km2) of federal land to Alaska every year,
until the target is reached.
The bill would address a “brick wall of opposition” that has
curbed drilling in the non-wilderness portion of the Arctic Na-
tional Wildlife Refuge, the National Petroleum Reserve-Alaska
(NPR-A) and offshore areas in Alaska, Murkowski said yesterday
at a committee hearing. Murkowski introduced the bill in July
but did not receive testimony on it until yesterday.
President Barack Obama’s administration has approved some
oil projects in Alaska. ConocoPhillips last year became the first
company to achieve commercial oil production on federal land
in the NPR-A. And the administration last year let Shell drill in
Argus Americas Crude
iNDUSTRY news
the state's arctic waters, although permitting delays contributed
to the company's decision to cancel the program.
But beyond permitting and leasing difficulties, one of the
largest obstacle to development has been the decline in oil prices
since mid-2014. Operational costs are comparatively high in Alas-
ka because of the state's rugged terrain and extreme weather.
It could be a challenge for US regulators to hit the bill’s
production target. Interior could open more regions to leasing,
but it could not require companies to drill new wells, particu-
larly if low oil prices made them uneconomic.
The bill has almost no chance of passage this year
because of the dwindling number of days in which the US
Congress will be in session.
The White House opposes the bill, which would make other
policy changes to increase oil and gas development in Alaska,
such as forcing Interior to hold offshore lease sales for arctic
areas in 2017, 2019 and 2022.
Congress targets Obama Middle East policies
The Republican-led US Congress is making a last-minute
show of force opposing President Barack Obama’s Middle
East policies before lawmakers head home to campaign for
the November elections.
The US House of Representatives yesterday voted 254-
163 to approve a bill blocking cash payments to Iran. Earlier
this week, the House, by a 282-143 vote, passed another bill
that would require the US Treasury Department to track and
publish online its estimates of the financial holdings of Iran’s
senior political and military leader.
The bills are meant as a rebuke to the $1.7bn in cash trans-
fers the US administration made to Tehran this year. Those
payments stemmed from a 1979, pre-revolution arms sale, but
critics argue they were “ransom” payments used to secure the
release of US citizens detained in Iran. The bills passed with
mostly Republican votes.
Obama has threatened to veto the bills. The White House
said the legislation banning cash payments to Iran would,
instead, block “virtually any payment” to Tehran, even pay-
ments the US is legally required to make. The administration
said the financial tracking bill would impose “onerous” new
reporting obligations on the US Treasury that would drain
resources from elsewhere.
The uptick in legislative action comes as Obama prepares
to veto a bill that would allow families of victims of the 11
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Issue 16-184  |  Friday 23 September 2016
September 2001 terrorist attacks to bring lawsuits in US courts
against Saudi Arabia. The White House says it opposes the bill
because it would allow the US to be sued in courts around the
world and strain its relations with other countries.
It remains unclear if Congress has enough votes to make
the first veto override of Obama's presidency. Although the
bill received strong support from both chambers of Congress,
the White House has said lawmakers have privately expressed
concerns with the bill. The White House has not named any of
these lawmakers.
The US Senate on 21 September voted 71-27 to defeat a bill
that would have blocked a planned $1.15bn sale of tanks and
other military equipment to Saudi Arabia. Democrats and some
Republicans supported the bill because of concerns about the
country’s involvement in the war in Yemen, but most Republi-
cans opposed the bill.
Senate Armed Services Committee chairman John McCain
(R-Arizona), who opposed the bill, said blocking the arms sale
would be seen by allies in the Mideast Gulf as a sign the US is
“abandoning its commitment to the region.” Another oppo-
nent, senator Lindsey Graham (R-South Carolina), said dis-
rupting US’ relationship with Saudi Arabia would increase the
influence of Iran and Russia in the region.
White House seeks tribes' input
The Obama administration will meet with Native American
tribes to ensure their input into large infrastructure projects
in the wake of a legal fight between the Standing Rock Sioux
tribe and Energy Transfer’s Dakota Access pipeline (DAPL).
The Department of Justice and two other agencies on
9 September halted DAPL construction on federally con-
trolled land near Lake Oahe in North Dakota, and said
more consultation with tribes was needed on such proj-
ects. The decision to stop the DAPL construction coun-
tered a ruling by a US federal judge hearing a challenge to
the project from the Standing Rock Sioux tribe.
The tribe sued to stop the pipeline, alleging that it would
destroy sacred, culturally significant and historic sites. Energy
Transfer disputes the allegations.
The tribal consultations will explore how to better ensure
meaningful tribal input into infrastructure projects to protect
tribal lands, resources and treaty rights within the current le-
gal framework. They will also explore whether new legislation
should be proposed to Congress to meet those goals.
Argus Americas Crude
iNDUSTRY news
The Obama administration has invited the 567 federally-
recognized tribes to participate in the forums.
Six meetings are planned over the next two months,
including in Phoenix, Arizona; Seattle, Washington; Albu-
querque, New Mexico; Billings, Montana; Minneapolis, Min-
nesota: and Rapid City, South Dakota.
A seventh meeting will consist of a teleconference on
21 November.
DAPL would move at least 470,000 b/d of crude across
four states from the Bakken shale in North Dakota to Patoka,
Illinois, for further delivery to the US Gulf coast.
The Standing Rock Sioux tribe has appealed the federal
judge’s ruling that would have allowed the pipeline to move
forward in the contested North Dakota location, with a hearing
and oral arguments slated for 5 October.
Colombia diversifies slate with US crudes
Three recent Thunder Horse cargoes leaving St James, Louisi-
ana, mark the first US exports of the offshore light sour crude
and resumption of Colombian receipts of US oil.
Colombian state-controlled Ecopetrol imported at least
500,000 bl of Thunder Horse in a recent purchase tender to
supply its new 165,000 b/d Cartagena refinery (Reficar). This
marks the third cargo of its kind that Ecopetrol has imported
for Reficar, totaling roughly 1.5mn bl.
The Aframax British Robin is expected to arrive at St
James on 25 September after a return trip from the port of
Cartagena, Colombia, where it arrived earlier this week, ac-
cording to vessel tracking data.
Aframax Adygeya made the same trip recently, leaving Loui-
siana 31 August to arrive at Cartagena on 1 September. The ship
last checked in at Corpus Christi, Texas, 21 September.
The Aframax Eagle Kinarut was loaded at Plains All
America's St James terminal on 21 August with 516,178 bl of
the 31.5°-31.6°API crude for discharge at Reficar on 28 August,
according to shipping intelligence firm ClipperData.
Two of these cargoes were supplied by BP Products
North America, according to shipping fixture reports.
Ecopetrol signed a one-year commercial agreement with
BP earlier this year to identify the optimum domestic and
foreign crude mix to process at Reficar, which was brought
to full processing capacity in July.
The company imported a cargo of Bonito Sour crude in
May, marking Colombia’s first and only US crude import until
Copyright © 2016 Argus Media group Page 10 of 12
Licensed to: Cortney Becker, Argus Media Inc (New York)
Issue 16-184  |  Friday 23 September 2016
Thunder Horse imports began in August.
The refinery runs a base slate of about 70pc of domestic
Colombian crude oil including heavy sour Castilla Blend,
Magdalena and Vasconia, while the remaining 30pc is im-
ported. Incoming crude processed in Reficar so far includes
medium sweet Brazilian crude like Lula or Sapinhoa, Nige-
rian Bonny Light and US Bonito Sour.
Ozark apportionment highest level since 2015
Apportionment on Enbridge's 215,000 b/d Ozark pipeline,
which runs from Cushing, Oklahoma, to Wood River, Illinois,
will climb in October to the highest level since October 2015.
Ozark is apportioned by 50.11pc for October after receiving
adjusted nominations of 447,078 b/d for the month. The line
has an estimated capacity of 223,036 b/d in October.
High Ozark apportionment for October follows the
highest apportionment on lines of the Mainline system that
ship heavy crude from western Canada to Superior, Wis-
consin, since August 2015. The 796,000 b/d Line 4, which
originates in Edmonton, Alberta, and the 800,000 b/d Line
67, which originates in Hardisty, Alberta, were apportioned
by 22pc for September, leaving shippers able to transport
just 78pc of nominated volumes.
The 193,000 b/d Spearhead pipeline, which runs from Fla-
nagan, Illinois, to Cushing is not apportioned for October. The
line received adjusted nominations of 183,752 b/d for October
and has an estimated capacity of 183,752 b/d for that month.
Spearhead is apportioned by 7.87pc for November after re-
ceiving adjusted nominations of 186,210 b/d for the month. The
line has an estimated capacity of 171,560 b/d in November.
Spearhead remained unapportioned from December 2015
through October 2016.
US rig count reverses last week's fall
The US drilling rig count rose, reversing last week’s fall and gaining
for three of the past four weeks amid a gradual uptick in activity.
The total rose by five to 511 after dropping by two last
week, according to weekly data from Baker Hughes. That’s the
highest since the mid-February count of 514. The number of
rigs drilling for oil rose by two to 418, while those looking for
gas rose by three to 92.
Producers have added more than 100 rigs since the end-May
low of 404, the lowest since at least 1987, as the recovery in
crude prices to near $50/bl and their relative stability gives com-
Argus Americas Crude
iNDUSTRY news
panies confidence that the market has bottomed out. The count
first rose for the week of 3 June, ending 22 straight weeks, which
saw the overall US count dip by 79pc below the peak in 2014.
As drilling activity picks up, US crude output has reversed
a downward trend, moving up by 19,000 b/d to about 8.5mn
b/d. Output in the Lower 48 rose by 13,000 b/d and in Alaska
was up by 6,000 b/d, the US Energy Information Administration
(EIA) said in its latest weekly oil inventory report.
US oil and gas companies will step up activity in 2017 as
they start to increase their spending amid a recovery in prices,
consultancy Deloitte said. A survey by the consultancy of 251
oil and gas industry executives shows that 43pc expect an
increase in upstream capital expenditures (capex) next year,
while 25pc expect an increase this year.
"The study found optimism, however cautious, has returned
for an industry recovery," it said. The recovery will be "tied di-
rectly to oil prices, expected to return to a level high enough
to restore profitability and growth by next year."
Pioneer Natural Resources chief executive Scott Shef-
field cautioned that oil markets will become more volatile
and price swings shorter going forward. A steep decline
in drilling costs amid improvements in technology and
efficiency have made operations economic at much lower
prices particularly in top basins such as the Permian in
Texas. Higher output will in turn add to the existing supply
overhang, capping any increases in prices.
"We will see $80/bl oil price, but we will also see $40/bl,"
Sheffield said.
The total North American rig count rose by 11 to 649.
The Canadian count rose by six to 138. The number of US rigs
drilling horizontally rose by eight to 402, while the tally of
those drilling vertically fell by four to 60. Offshore rigs held
unchanged at 20.
By state, Oklahoma and Texas added two each, while Loui-
siana, New Mexico and West Virginia lost one each.
Petrobras seeks to revive mature basin
Brazil’s state-controlled Petrobras is looking for partners
to increase production from deepwater fields in the aging
Campos basin, where declines threaten to outpace near-
term growth from sub-salt fields.
The Campos basin accounts for around 60pc of the 2.58mn
b/d of crude produced in Brazil, and a little more than half of
2.22mn b/d produced by Petrobras alone. Sub-salt production,
Copyright © 2016 Argus Media group Page 11 of 12
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Issue 16-184  |  Friday 23 September 2016
mainly from the Santos basin, is expected to overtake Campos
output in the coming years, but Petrobras says there is still
unrealized potential in the mature basin.
“Our intention is to find strategic partners, not neces-
sarily divestments, that can help us deliver more from Cam-
pos basin assets, partners with expertise that compliments
Petrobras’ own,” Petrobras upstream director Solange
Guedes said on 21 September.
Campos basin flows have been sliding for years, with natu-
ral declines erasing around 10pc year-on-year production in
August. Flow rates from the basin are expected to decline at
an average annual rate of 9pc through 2021, Petrobras said.
Petrobras has signaled that increasing sub-salt produc-
tion is the top priority under its new $74.1bn 2017-21 busi-
ness plan. Sub-salt spending accounts for around 66pc of
the $60.6bn Petrobras plans to invest in upstream projects
under the plan, with the remaining 34pc earmarked for the
post-salt projects in Campos.
Of the 19 production systems Petrobras plans to bring on
stream through 2021, 16 are sub-salt.
Recent extensions of existing Campos basin licenses will
allow Petrobras to stem the decline from 2020, when the
company plans to add new production units at the 171,000 b/d
Marlim field, the company says.
But Petrobras needs partners to share the cost of reversing
the decline trend.
Last month, Petrobras and Norway’s Statoil signed an
agreement that included joint projects aimed at improving
recovery from mature fields, without specifying the type of
assets or amounts involved.
Petrobras said it would like to conclude similar agree-
ments with other companies, including specialized firms
dedicated to oil services.
Petrobras has been ramping up recently installed sub-
salt platforms throughout 2016 and is scheduled to bring
a new 100,000 b/d sub-salt unit on stream in “a matter of
days,” Guedes said.
Increased sub-salt flow rates should help the company
meet its 2.145mn b/d domestic oil production target this year,
but will not be enough to offset production losses from im-
pending upstream asset sales and declines in Campos output.
In its recently released 2017-21 business plan, Petrobras says
domestic oil production will drop to 2.07mn b/d in 2017, a 3pc
year-on-year decrease, but will climb to 2.77mn b/d in 2021.
 Argus Americas Crude Issue 16-184  |  Friday 23 September 2016

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