Update On Crude Oil Storage At St James Hub -- RBN Energy -- April 12, 2016

Active rigs:

	4/12/2016	04/12/2015	04/12/2014	04/12/2013	04/12/2012
Active Rigs	31	93	190	186	209

RBN Energy: update on storage at St James.

Two midstream operators have added at least 13 MMBbl of crude storage to the St. James hub during the past 8 years (NuStar and Plains All American). These companies have invested in the hub because of its proximity to the Gulf Coast and pipeline connectivity to refineries throughout the Eastern U.S. and as far northwest as Edmonton, Alberta. St. James has also been an active recipient of crude flowing east across the Gulf by barge and tanker from the Eagle Ford via Corpus Christi. These crude movements require terminal, storage and blending facilities. Today we describe crude storage facilities at St. James.

In Part 1 of this series we discussed how the St. James, LA crude trading hub (located on the Mississippi River 60 miles upriver from New Orleans) provides feedstock to 2.6 MMb/d of regional refining capacity on the Eastern Gulf Coast as well as to refineries in the Midwest. St. James is also an important storage and distribution hub for crude produced in North Dakota, South Texas, the Gulf of Mexico and onshore Louisiana as well as imports arriving at the Louisiana Offshore Oil Port (LOOP). We detailed the 12 refineries that St. James supplies directly in the Gulf Coast region as well as pipeline connections bringing crude into and out of St. James. This time we detail the growth of storage capacity at St. James. 

According to our friends at Genscape, total crude storage at St. James is just under 32 MMBbl currently operational with another 3 MMBbl in maintenance. Storage capacity has grown rapidly in recent years in response to new flows of crude into St. James from domestic shale production in North Dakota and Texas. In their weekly supply hub report, Genscape list 7 storage operators at St. James and we provide more details on each of these below. Just two of these companies – NuStar and Plains All American – offer significant commercial storage at St. James with 20 MMBbl of capacity between them.

As we shall see, the rest is either privately owned by refiners or used operationally by the 8 pipeline systems that connect St. James with refinery capacity in the Gulf region and the Midwest. The chart in Figure 1 shows Genscape data estimating NuStar and Plains storage use over the past year at St. James. Storage use peaked in February and March of 2016. NuStar is currently (as of April 1, 2016) using 76% (6.8 MMBbl) of their 9 MMBbl of storage at St. James and Plains is using 8.2 of their 11 MMBBl capacity (76%).

In part the increased storage reflects record overall crude storage levels in the U.S. (569 MMBbl according to the latest Energy Information Administration – EIA data for the week ending April 1, 2016) and the Gulf Coast region (278 MMBbl) in the past several weeks – in response to low prices today and prospects of a higher prices in the future (a market condition known as contango.