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Shell confirms has canceled Westward Ho pipeline project

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Screen Shot 2015-07-31 at 19.22.09HOUSTON | BY KRISTEN HAYS: Tue Sep 8, 2015

Royal Dutch Shell shelved its Louisiana-to-Texas Westward Ho pipeline after years of delays, reductions in scope and after other new pipelines began flowing, a spokeswoman confirmed on Tuesday.

“After a thorough review and as a result of changing market conditions, Shell Pipeline Company LP has decided to not proceed with the proposed Westward Ho Pipeline project,” spokeswoman Kimberly Windon said.

Proposed in 2011 at a top capacity of 900,000 barrels per day, Shell said Westward Ho would move Gulf of Mexico and imported crudes from the St. James, Louisiana oil hub to Houston. The leg between Nederland, Texas and Houston would move up to 500,000 bpd, and the entire project was targeted to start in late 2015.

The line was intended to accommodate growth in medium sour and other crudes. It also would restore a flow from Louisiana to Texas after Shell reversed its Houma-to-Houston pipeline – now called Zydeco – to move Texas crudes to Houma, St. James and Clovelly, Louisiana.

However, in mid-2012 Shell slashed Westward Ho’s initial capacity to 300,000 bpd after wrapping up an open season to gauge shipper interest. Shell said it could be expanded to 900,000 bpd if shipper interest warranted.

Then other pipeline projects began moving inland U.S. output to Houston and the Nederland/Port Arthur area, flooding the region with crude while interest in Westward Ho waned.

Those projects include TransCanada Corp’s 700,000 bpd MarketLink pipeline, which transports oil from the U.S. crude futures hub in Cushing, Oklahoma, to Nederland, and Enterprise Products Partners’ 780,000 bpd pipeline from its ECHO hub in Houston to Beaumont.

In October last year, Shell said Westward Ho was on hold to allow for another open season, and proposed initial capacity rose to 400,000 bpd. Shell pushed the target startup date to late 2017.

Shell did not announce results of the second open season. The company also did not elaborate on canceling Westward Ho on Tuesday except to say the decision was in line with company strategy to manage projects “to meet ever-changing market conditions and optimize resources.”

(Reporting By Kristen Hays; Editing by Chris Reese)

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