Houston (Platts)--31Jan2013/141 pm EST/1841 GMT

Recent bottlenecks on the reversed Seaway Pipeline will be alleviated later this year by a new lateral line that will transport crude coming off of the joint venture pipeline to operator Enterprise's ECHO terminal in Houston, a company official said Thursday.

Additionally, Enterprise is considering a project to use the company's shipping fleet to give crude supplies from Seaway Pipeline additional access to the Gulf of Mexico by barge or larger vessels, Bill Ordemann, senior vice president of unregulated liquids, crude oil and natural gas, said during a call to discuss the company's fourth quarter 2012 earnings.

"As far as the barge fleet, we are looking at a project right now that would give Seaway access to the water," Ordemann said, adding "that [it] is going to be later this year before we shake [it] out."

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The recently expanded 400,000 b/d Seaway Pipeline runs from Cushing, Oklahoma, to the Jones Creek, Texas, terminal near Freeport. The pipeline system is a 50:50 joint venture between Enterprise and Enbridge.

Last week, Enterprise said it had reduced throughput to a total of 175,000 b/d because of high inventory at the Jones Creek Terminal.

"Seaway as we look at it today is operating as per design for injections out of Cushing and the ability for the pipeline to move crude oil down to Jones Creek," Ordemann said on the call, adding that the line's throughput fluctuates daily on depending on shipping nominations and third-party takeaway ability at the end of the line.

An official on the call Thursday said that the line has been as full as 380,000 b/d since the expansion came online in January.

Enterprise had said last week that inventory levels were high at the Jones Creek terminal due to turnaround work at the 260,000 b/d Phillips 66 Sweeny refinery in nearby Old Ocean, Texas.

The Phillips 66 refinery is a major recipient of Seaway crude, Tudor Pickering analyst Brad Olsen said in an interview Thursday. On the Enterprise call, Olsen asked officials about their plans to relieve the recent bottlenecks.

"In the third quarter of 2013, they are going to be hooked into enough storage that they won't care about refinery outages," Olsen said. "Storage works as a shock absorber."

The ECHO terminal currently has two storage tanks in service and a third is expected to be available mid-February, A.J. "Jim" Teague, executive vice president and chief operating officer of Enterprise's general partner said during the call. He did not say the total amount of storage now available. An additional 900,000 barrels of capacity and will be up and running in early 2014, he said.

Previously, Enterprise said that the ECHO terminal's initial capacity would be 750,000 b/d.

The lateral pipeline should begin service in the third or early fourth quarter, Ordemann said. The pipeline will be 36 inches in diameter, Enterprise spokesman Rick Rainey previously said.

Refiners have noted that there is more crude on the west side of the Gulf Coast than on the east side, and players are already barging crude from the Eagle Ford Shale in South Texas and from the Seaway Pipeline to the Louisiana market and to the East Coast, Olsen said.

Another Seaway lateral, which will move the crude to the Port Arthur market from ECHO, is expected to start up in early 2014, Ordemann said. This lateral and Shell's Ho-Ho pipeline reversal project are expected to help relieve a growing crude supply glut in the Houston market.

The Houston to Nederland, Texas, segment of Shell Pipeline's Houston to Houma, Louisiana, crude pipeline reversal project was recently opened for shippers. subsequent phases of the project include reversing the pipeline between Nederland/Port Neches and delivery points in Louisiana to service facilities in the Lake Charles, Clovelly and St. James areas.

Earlier Thursday, Enterprise, in its earnings statement, said it increased the volume of crude oil, products and other liquids pumped through its US pipeline system by 13% to a new record high of 4.5 million b/d in the fourth quarter of 2012 (See story, 1154 GMT). Despite the increased volumes, Q4 net income was down 15% at $617 million compared with the same period of 2011.

--Bridget Hunsucker, bridget_hunsucker@platts.com
--Edited by Katharine Fraser, katharine_fraser@platts.com

--Edited by Jeff Barber, jeff_barber, jeff_barber@platts.com

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