The refining world is going through a market reversal thanks to a "tight oil revolution," which is creating positive trends in the industry, said an industry analyst speaking at Hart Energy's DUG Eagle Ford conference in San Antonio. Odette Eng, WorleyParsons' vice president of global refining, said the industry has a lot to be happy about.

"It is good news for the refining industry," said Eng during the conference's crude panel. "No. 1, we have less dependency on foreign crude oil. Second, we get access to lower crude prices— though the question is how sustainable that will be — and the third point is that the success factor really depends on logistics and how we can get this tight oil to refineries in an effective manner. A balance between light and heavy crude is going to be essential."

In the past, the U.S. has seen high volumes of crude imported from overseas, as well as Canada and Mexico. However, Eng said that tight oil is now causing a reduction in overseas imports and causing a displacement of crude there. She added that crude imports from Canada and Mexico will likely continue due to the investment the refining industry has already made in processing heavy crude.

The crude coming from those countries is fairly heavy, unlike the tight oil being extracted in the U.S., said Eng.

"There's a contrast between tight oil quality versus the quality from exports in North America," she said. "The quality of tight oil is higher but the advantage for the refining industry is its lower cost. It is less energy intensive."

Crude oil from shale plays, including the Eagle Ford, has translated into a flurry of activity for companies like NuStar Energy LP. Company Chief Executive Curt Anastasio said NuStar was the first company to move Eagle Ford crude oil in a pipeline to market. It now has four active pipelines in the play with "a lot more to come."

Already, the company has reactivated and reversed pipelines to accommodate crude oil service and move crude to Corpus Christi refineries and terminals. NuStar has also developed a new pipeline system with TexStar Midstream Services. TexStar constructed pipelines that transport Eagle Ford crude and condensate to Three Rivers. That pipeline has been interconnected with a NuStar 16-inch crude line at Three Rivers that can move 200,000 barrels (bbl.) per day of Eagle Ford crude south, said Anastasio.

"In addition to modifying existing pipeline assets, we've also been building some new ones for Eagle Ford shale," said Anastasio. "I think what you're going to see from us is a lot more announcements about Eagle Ford but also the other shale plays."

Greg Haas, Hart Energy's manager of integrated oil and gas research, production and capacity, spoke to the delivery needs associated with the resurgence of inland crude production. Haas—lead author of a recently released study on U.S. oil infrastructure, production and capacity —said his research team found a significant amount of pipeline capacity expansion throughout the country. Much of the crude, he said, is heading south.

"We actually do see a lot of this crude aiming for the Gulf Coast, and we've seen a potential for the Gulf Coast to turn into what we have coined the 'Cushing Coast.' With all this crude rushing down and with little high-volume pipeline capacity out, we could see a Cushing scenario across the two regional hubs."

Haas added that the industry might be able to avoid too much crude heading to the Gulf Coast with some help from the rail industry. As of last June, he said there were 55 announced crude-by-rail terminals that were either loading or offloading crude in various parts of the country.

"This crude-by-rail opportunity can perhaps forestall the rush of crude all coming and getting stuck in the Gulf Coast region," said Hass. "… but if it all does come to the Gulf Coast, we're going to need storage capacity to act as a buffer and to act as an offloading capacity and maybe storage as prices fluctuate."

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