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Friday, April 1, 2011

More Storage To Be Built At Cushing -- Bakken, North Dakota, USA

I was recently told that the reason for oil supplies exceeding storage capacity at Cushing is this: Cushing was built to store oil coming out of Oklahoma and Texas. It was built long before anyone knew how big the Bakken was, and now, simply put, Bakken production is exceeding what Cushing can handle. In addition, to the Bakken, we now have the Niobrara in Colorado/Wyoming.

Good news: SemCrude is going to build more storage capacity at Cushing.

In this case, however, it appears all the new storage will be reserved for oil coming out of the Niobrara in Wyoming-Colorado. 

Data points (some numbers rounded):
  • SemCrude's current storage capacity: 5 million bbls
  • New capacity to be built: 2 million bbls
  • The one pipeline out of Denver-Julesburg, Colorado/Wyoming entered service in 2009; capacity of 30,000 b/d, expandable to 50,000 bbls
  • New capacity is reserved for Noble Energy, Anadarko Wattenberg, and Plains All American.
  • The new tanks should be completed in mid-year 2012.
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4 comments:

  1. AnonymousApril 2, 2011 at 8:25 AM

    Where do you think the Bakken oil will go?

    ReplyDelete
  2. Bruce OksolApril 2, 2011 at 9:37 AM

    That's a long answer; almost deserves a stand-alone post.

    But for now, the best answer is in a seven-page NDIC pamphlet on ND pipeline and takeaway solutions:

    https://www.dmr.nd.gov/pipeline/assets/01062011/NDPA%20Dec%202010%20Oil%20Report.pdf

    It is linked at my "Data Links" tab at the top of the blog, under "North Dakota Pipeline Infrastructure."

    The pamphlet noted above will answer your question.

    a) The Enbridge system is the biggest pipeline system serving the Bakken and is getting bigger. It moves oil to the east, and as far as I know, not to Cushing.

    b) The Butte Pipeline is the next biggest and takes oil to Guernsey, Wyoming. I assume this is where the oil connects to pipelines taking it to Cushing, through the Plains All-American Pipeline, a subsidiary of the Rocky Mountain Pipeline System.

    c) Railroads are trying to bypass Cushing and going directly to the Texas/Louisiana coast.

    d) The Bakken Marketlink in which TransCanada will ship Bakken oil to Cushing is not expected to be complete until 2013. And, unless they increase storage tanks at Cushing, it looks like this won't help.

    Unfortunately the refineries have throttled back and there is more than enough oil in the pipeline for refineries to use.

    When you look at a) - d) above, the greatest help will be when Enbridge has completed its project to double its capacity, which I understand is to be within the next 12 months.

    ReplyDelete
  3. Bruce OksolApril 2, 2011 at 9:39 AM

    I didn't mention TransCanada's Keystone XL which will take crude directly to the coast (Texas/Louisiana) because as optimistic as some folks are, I think this is a long way off, and might not even happen.

    ReplyDelete
  4. Bruce OksolApril 2, 2011 at 3:28 PM

    From the Enbridge website: normally oil is shipped FROM Cushing to Chicago through the Spearhead Pipeline. Due to excess Bakken oil coming from the west (Clearbrook, Minnesota, via Chicago), the Spearhead was reversed, and now Bakken oil, making a very long and circuitous through the Enbridge system does get to Cushing. So, there are two ways Bakken oil can end up at Cushing through pipelines: via the Enbridge system going east to Chicago,and then southwest to Cushing. The other way is southwest on the Butte Pipeline to Wyoming and then southeast to Cushing.

    ReplyDelete

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