HOUSTON, Oct 2 (Reuters) - Royal Dutch Shell willformally seek more binding commitments from shippers before theend of 2014 for its delayed Lousiana-to-Texas Westward Ho crudeoil pipeline, the company said this week.
Shell confirmed on Tuesday that the project was on hold soit can focus on securing those commitments. The company willsolicit that interest in a so-called open season where shipperssign binding agreements to ship specific volumes.
Proposed in 2011 at a top capacity of 900,000 barrels perday depending on shipper interest, Shell said in mid-2012 thatthe first open season results supported an initial capacity of300,000 bpd.
At that time, the pipeline's design was incomplete,spokeswoman Kimberly Windon said. Shell has since finished thedesign and determined that the first open season showed enoughshipper interest to move 400,000 bpd. The line would still beexpandable to 900,000 bpd.
Westward Ho was proposed to move foreign and Gulf of Mexicocrude from the St. James oil storage hub in Louisiana topipeline and storage connections just across the Texas stateline in Nederland and Port Arthur.
However, since early last year other pipelines have begunmoving inland U.S. output, mostly light sweet crudes, to theNederland/Port Arthur area. Traders say that market is flooded,leaving little interest in Westward Ho.
Those startups include TransCanada Corp's 400,000bpd MarketLink, which in January began transporting crude fromthe once-clogged U.S. crude futures hub in Cushing, Oklahoma.Shell's own reversed Houston-to-Houma pipeline, which movesTexas crude to Louisiana, has a delivery point in Nederland on a250,000 bpd segment.
But Windon said Westward Ho was designed to accommodategrowth in medium sour crudes as well as others, both domesticand imported.
Some of that growth will come from Shell's output in theGulf of Mexico, where the company is the largest oil producer.Earlier this year Shell started up its new Olympus oil andnatural gas platform about a mile from its Mars platform,expanding medium sour production from its Mars oilfield.
The Olympus startup is helping push the oilfield's output to100,000 barrels of oil equivalent per day by 2016, up from anaverage of 60,000 boepd last year, Shell said. (Reporting By Kristen Hays; Editing by Peter Galloway)