*

Midland/Houston oil price difference widens to as much as

74

cents/bbl, vs 22 cents on average in 2023

*

Permian-to-Corpus Christi pipelines about 97% full

*

Permian-to-Houston lines at about 73% of capacity

*

Wide spread to remain until more pipe capacity comes

online

By Arathy Somasekhar

HOUSTON, Nov 4 (Reuters) -

The difference in prices for U.S. shale oil in West Texas

and at Houston has widened in the last two months on dwindling

pipeline space to move the crude to the export hub on the Gulf

Coast, pricing data showed.

Record crude production

at the top U.S. oilfield in the Permian basin that

straddles Texas and New Mexico, combined with export demand for

its light sweet crude due to a shortfall of the grade from

OPEC member Libya

has about tripled the price difference from last year's

average.

Permian-quality crude arriving by pipeline to the Magellan

East Houston (MEH) terminal, the main price assessment point

along the Gulf Coast, traded last month about 63 cents a barrel

higher than prices for the same crude in the Midland center of

U.S. shale production, data from pricing service Argus showed.

The difference was as high as 74 cents a barrel in

September, compared with an average of 22 cents last year. In

May, it had briefly widened to around 80 cents due to

maintenance on a pipeline from the Permian basin to the Gulf

Coast.

"The pipelines to Corpus Christi (from West Texas) are

pretty much full, and the pipelines to Houston are filling up

very quickly," said Brian Freed, CEO of oil pipeline and storage

operator EPIC Midstream.

"You will continue to see it" widen, he predicted.

Lines from the Permian in West Texas to the top U.S. export

port in Corpus Christi, Texas, were about 97% full in September,

while lines to Houston were at 73% of capacity, according to

data from consultancy Wood Mackenzie.

Those figures were up from the average in 2023 - 91% on the

Permian-to-Corpus lines and 63% on Permian-to-Houston lines.

Rising Texas shale oil production this year has consumed

more of the limited pipeline space along the Permian-to-Houston

corridor, said Dylan White, a Wood Mackenzie analyst.

Oil can still get to overseas markets by detouring to the

Cushing, Oklahoma, storage hub, and moving from there to the

Gulf Coast. But most oil producers would prefer to go directly

to seacoast hubs as it is more economical.

"The market is starting to get nervous with Corpus Christi

pipelines full. And Houston really is the only available spare

capacity to push Midland quality (crude) to waterborne markets,"

said Jeremy Irwin, a senior oil markets analyst at Energy

Aspects.

A temporary curtailment of oil exports at major Libyan ports

in September had buoyed demand for U.S. crude, helping to widen

the spread. Light, sweet Midland crude has been a top choice as

a Libyan crude substitute, traders said, but the curtailment has

since eased.

The constraints may ease next year. Pipeline operator

Enbridge ( ENB ) plans to add 120,000 barrels per day capacity

by 2026, with about 80,000 bpd expected to become available in

April. An oil pipeline that was converted last year to carry

gas-liquids is expected to revert to crude oil transportation in

2025.

In the meantime, Permian oil output is forecast to rise by

360,000 bpd this year to about 6.27 million bpd, according to

U.S. government forecast. Top U.S. oil producers Exxon Mobil ( XOM )

and Chevron ( CVX ) on Friday sketched out plans to

boost their shale output next year, adding to future pipeline

needs.