(Adds Midland crude price milestone)
By Collin Eaton
HOUSTON, Aug 15 (Reuters) - EPIC Midstream Holdings LLC on Thursday began shipping crude oil on its 400,000 barrel per day (bpd) pipeline from the Permian Basin to the U.S. Gulf Coast, pushing Midland crude prices to the highest in six months, traders said.
Terminal operator Moda Midstream LLC confirmed it would be accepting the Permian crude from the EPIC line at its export facility in Ingleside, Texas, by Friday. Oil prices in Midland WTC-WTM, the heart of the Permian shale field, rallied to 60 cents per barrel over U.S. crude futures.
San Antonio-based EPIC is the second pipeline operator this year to open a major line from the top U.S. oil field to the Corpus Christi, Texas, area. It followed the start of initial operations on Plains All American Pipeline LP’s 670,000 bpd Cactus II this week.
A third line, Phillips 66’s, Gray Oak, will open later this year. The three combined will boost the Permian’s total takeaway capacity by about two-thirds.
EPIC, which did not respond to requests for comment, previously said it expected to begin operations in the third quarter.
The new pipeline will help alleviate a crude oil bottleneck that has weighed on prices in the Permian of West Texas and New Mexico for more than a year.
Crude inventories in West Texas last week topped 20 million barrels, utilizing more than 60% of the region’s storage capacity monitored by market intelligence firm Genscape.
Midland crude prices firmed this week to as much as 60 cents per barrel above U.S. crude on Thursday, the highest since February and up from a 25-cent premium on Wednesday. Shippers bid up barrels to fill the new pipelines. A year ago, it had traded at a $18 per barrel discount.
EPIC and Plains have offered discounted rates to attract shippers. EPIC recently halved its spot rate to $2.50 a barrel, and Plains set contract rates between $1.05 and $3.20 a barrel, below what analysts and traders anticipated.
Rivals have faced pressure to cut their rates as new takeaway capacity in the Permian squeezed the spread between Midland and Houston crude prices.
Earlier this week, BridgeTex Pipeline Company LLC and Seaway Crude Pipeline Co LLC both proposed cutting rates for shipments to the Gulf Coast, according to filings with the Federal Energy Regulatory Commission.
Reporting by Collin Eaton in Houston Editing by Chizu Nomiyama, Marguerita Choy and Cynthia Osterman