Houston is the central hub for oil refining and processing in North America, and is the location for major benchmarks for gasoline, distillates, jet fuel, refinery feedstocks, natural gas liquids, and gasoline. The rebirth of US domestic crude production in the backyard of the Houston refining center has prompted a massive build-up of infrastructure to connect crude oil production to potential buyers along the Texas Gulf Coast.
At the heart of this infrastructure wave, from Corpus Christi north to Beaumont/Port Arthur, is the greater Houston refining center – where four Houston, one Baytown, and three Texas City refineries total more than 2.2 million b/d of refining capacity.
Compared to Corpus Christi and Beaumont/Port Arthur, Houston has more refining capacity, storage, and waterborne loading infrastructure, which positions Houston to become a key pricing hub in the Americas.
Additional storage is being added and distribution systems are being expanded to handle the 1.7 million b/d of crude oil pipeline capacity, completed and proposed, aimed at the greater Houston/Galveston area. In total, 31 million barrels of crude storage will sit in the Houston area by the end of 2014.
Crude oil pipelines from Cushing, Oklahoma, the Permian Basin, and the Eagle Ford shale have started to bring light crude into Houston this year and will continue to deliver more supply as pipeline expansions and new lines are completed by the middle of 2014.
Following a review of the various crude streams flowing into Houston, Platts determined that WTI Midland will be the quality basis for its LHS assessment due to the expected increase in pipeline flows and the quality consistency relative to Domestic Light Sweet and Eagle Ford.
WTI at Midland is sourced from Permian Basin produced streams, both conventional and unconventional. Field blending is taking place with conventional WTI streams mixed with lighter, lower sulfur unconventionally produced Permian barrels, but the result is a consistent quality without high metals or a "dumb-bell” distillation curve (abnormally high light ends and high residual fuel oil yields for a light crude).