Plains Says Crude on Texas, New Mexico Pipeline Getting Too Light

Plains All American's told shippers on Friday that crude moving through its West Texas and New Mexico pipeline systems is surpassing pressure limits, according to a notice reviewed by Reuters.

It was the latest sign of how pipeline companies are struggling with higher volumes of very light crude from domestic shale plays when refiners have a limited appetite for it.

Plains' notice said crude at some Permian Basin connection points is reaching or exceeding limits for Reid Vapor Pressure (RVP), a measure of volatility in oil or refined fuels. The connection points affected include the Delaware Basin in the far west part of the Permian.

Trade sources indicated the problem could stem from more ultra-light crude known as condensate, entering the mixed stream. The lighter the crude, the higher its RVP.

"We want to make all shippers aware of the issue," Plains' notice said.

If increasing amounts of condensate move in the systems, refiners could receive crude blends with too much condensate. This can overwhelm their systems, or shrink the amount of fuels they can make from each barrel of crude.

Permian output has traditionally been much like typical West Texas Intermediate, with an API gravity specification of about 38 to 40. API gravity is a measure of how light or heavy crude is compared to water.

Plains pegs condensate as having an API gravity of 45 or higher. The company's website also says Plains can reject crude with an API gravity over 78.9.

Oil producers say Delaware production is more condensate-heavy than other parts of the Permian. Plains also is considering new condensate-only pipelines and storage tanks in the Delaware.

Some pipelines move condensate in batches separate from other crudes. But Plains' Basin system is "common stream," meaning everything moves together in one blend.

The Basin Pipeline, with capacities ranging from 240,000 bpd to 450,000 bpd depending on the segment, stretches from Jal, New Mexico, to Odessa and Midland in West Texas, then to the U.S. crude futures hub in Cushing, Oklahoma. Parts of the system are being expanded to accommodate growing Permian output.

Other pipelines connect to the Basin system at various points to move crude to refineries along the Texas Gulf Coast. (Reporting by Catherine Ngai in New York and Kristen Hays in Houston; editing by Terry Wade, Bernard Orr and David Gregorio)