ConocoPhillips is in the early stages of discussions to sell its 50% share in the Texas-Oklahoma Seaway crude pipeline, a company spokesman said Thursday.
The 410,000 b/d pipeline is jointly owned by ConocoPhillips and Enterprise Products, which operates the pipeline.
ConocoPhillips has "had some discussion with the operator of the pipeline about the sales process but we are still in the early stages of that process," spokesman Aftab Ahmed said in an email.
ConocoPhillips initiated the discussions in early September, Jeff Sheets, the company's chief financial officer, said during ConocoPhillips' third quarter earnings call Wednesday.
He added that ConocoPhillips is "active in the marketing process for that pipeline."
Ahmed said Thursday that ConocoPhillips had no further comment beyond what Sheets said "where he indicated that we would be open to selling our interest."
Previously, in April, ConocoPhillips said it would consider reversing the flow of the Seaway Pipeline. At that time, Enterprise said it was committed to developing a crude line from Cushing, Oklahoma, to the Gulf Coast.
Enterprise has since joined with Enbridge to develop the 800,000 b/d Wrangler pipeline to ship crude from Cushing to the Texas Gulf Coast. The Wrangler pipeline is currently in the midst of an open season which closes November 2.
An Enterprise representative did not immediately respond to a request for comment Thursday.
Market sources have attributed the low value of WTI compared to Brent during the past year to a lack of outlets for crude stored in Cushing. The WTI-Brent spread Thursday morning was about minus $19/barrel.
As a result of the disconnect between the grades, ConocoPhillips' consideration to sell its portion of Seaway carries implications for the Brent-WTI relationship, Pavel Molchanov, an analyst with Raymond James Equity Research, said in a report Thursday.
If the Seaway pipeline is sold and possibly reversed, ConocoPhillips would need to use "more expensive means" to meet the crude requirements of its 187,000 b/d refinery in Ponca City, Oklahoma, located about 62 miles north of Cushing, Molchanov said. ConocoPhillips will take this "extra cost" into consideration when capaculating a price for its Seaway stake, if it decides to sell, he said.
