Cushing to see oil reversal by one pipeline operator

Pipeline operator Lotus Midstream LLC may reverse flows on a line now sending crude from West Texas to Cushing, Oklahoma, the main hub for pricing U.S. crude futures, three people familiar with the matter told Reuters, an unusual move that could lift U.S. benchmark prices by draining supplies.

Reversing the flow on a portion of Lotus’s Centurion pipeline would send oil on a circuitous route from the country’s main storage hub at Cushing to the its top shale field in West Texas and then via new pipelines into Gulf Coast export hubs, they said.

But with the operators of the new pipelines offering discounted prices to attract shippers and as oil in West Texas fetching higher prices than in Cushing, the reversal would be lucrative for shippers, traders and analysts said.

“Centurion is always evaluating the best ways to serve its shippers,” said Lotus spokeswoman Casey Nikoloric, declining further comment.

Centurion, which consists of two lines rated at 170,000 barrels per day (bpd) combined, had the smaller line flowing to West Texas. But in 2014 former owner Occidental Petroleum shifted its direction to Cushing to take advantage of the then-deep discounts on shale in the Permian Basin.