NEW YORK Cushing, the world's largest oil storage hub, has always been critical for traders given its role as the delivery point of the U.S. benchmark oil futures.
But focus on the hub has rarely been greater after an unprecedented three-month drawdown in stockpiles that fueled talk of squeezes on immediate supplies and fears that oil in storage could be drawn to minimal levels.
Below is information about:
Crude oil pipelines into Cushing by capacity
Crude oil pipelines out of Cushing by capacity
Pipeline projects into and out of Cushing 2010-2012
Pipeline projects into and out of Cushing 2013-2014
Refineries directly connected to Cushing
Operators of crude oil storage at Cushing by capacity
Estimates of minimum operational levels at Cushing
CRUDE OIL PIPELINES INTO CUSHING Pipeline name Capacity bpd Description Cherokee 18,000 Parnon. Cherokee, Oklahoma-Cushing. Blueknight 20,000 Gathering system within Oklahoma. Great Salt Plains 20,000 Parnon. Western Oklahoma-Cushing. Red River 22,000 PAA. Medford LPG 25,000 PAA. Medford, Oklahoma-Cushing. Northern Cimarron 32,000 Rose Rock. Kansas-Cushing. White Cliffs 72,000 SemGroup. Platteville, Colorado-Cushing. Hawthorn 90,000 Hawthorn. Stroud, Oklahoma-Cushing. Cashion 100,000 PAA. Cashion, Oklahoma-Cushing. Centurion North 110,000 Occidental. New Mexico-Texas-Cushing. Spearhead 190,000 Enbridge. Flanagan, Illinois-Cushing. Basin 450,000 PAA. Permian Basin, West Texas-Cushing. Keystone 590,000 TransCanada. Nebraska-Cushing. Total 1,739,000
CRUDE OIL PIPELINES OUT OF CUSHING Pipeline name Capacity bpd Description Eagle North 20,000 Blueknight. Cushing-Ardmore, Oklahoma Magellan Tulsa 30,000 Magellan. Cushing-Tulsa, Oklahoma. Sunoco OK1 35,000 Sunoco. Cushing-Tulsa, Oklahoma. Sunoco OK2 35,000 Sunoco. Cushing-Tulsa, Oklahoma. Phillips 59,000 NuStar. Cushing-Borger, Texas. Centurion South 60,000 Centurion. Cushing-Artesia, New Mexico. Coffeyville 110,000 CVR Energy. Cushing-Coffeyville, Kansas Ponca 122,000 Phillips 66. Cushing-Ponca City. Osage 150,000 Magellan. Cushing-El Dorado, Kansas BP1 180,000 BP. Cushing-Whiting, Indiana. Ozark 235,000 Enbridge. Cushing-Wood River, Illinois. Seaway 400,000 Enbridge. Cushing-Freeport, Texas. Total 1,436,000
PIPELINE PROJECTS COMING INTO AND OUT OF CUSHING, 2010-2012 Name Additional Capacity bpd Start Date Description
Pipelines delivering crude oil into Cushing Hawthorn 90,000 Jan 2010 Hawthorn new pipeline Keystone 590,000 Feb 2011 TransCanada new pipeline White Cliffs 40,000 3Q 2011 SemGroup expansion Medford LPG 25,000 July 2012 PAA conversion from LPG Basin 50,000 1Q 2012 PAA Expansion Great Salt Plains 20,000 Oct 2012 Parnon new pipeline Total 815,000
Pipelines taking crude oil out of Cushing Seaway 150,000 May 2012 Embridge/Enterprise reversal Total 150,000
(source: EIA report February 2013)
PIPELINE PROJECTS COMING INTO AND OUT OF CUSHING, 2013-2014
Name Additional Capacity bpd Start date Description
Pipelines taking crude oil out of Cushing Seaway 250,000 Jan 2013 Enbridge/Enterprise expansion Gulf Coast 700,000 4Q 2013 TransCanada new pipeline. Cushing-Nederland, Texas Seaway twin 450,000 1Q 2014 Enbridge/Enterprise new pipeline Total 1,400,000
Pipelines delivering crude oil into Cushing Mississippian Lime 175,000 mid-2013 PAA new pipeline. Alfalfa county, Oklahoma-Cushing Glass Mountain 140,000 fall 2013 SemGroup/Gavilon new pipeline. Alva, Oklahoma and Arnett, Oklahoma-Cushing White Cliffs 80,000 1H 2014 Expansion Flanagan South 600,000 mid-2014 Enbridge new pipeline Pony Express 320,000 3Q 2014 KinderMorgan new pipeline Total 1,315,000
(source: EIA report February 2013)
REFINERIES DIRECTLY CONNECTED TO CUSHING Refinery Name State Refinery Operator Capacity bpd Tulsa East Oklahoma HollyFrontier Corp (HFC.N) 70,300 Tulsa West Oklahoma HollyFrontier Corp 85,000 Ardmore Oklahoma Valero (VLO.N) 85,000 Coffeyville Kansas CVR Refining (CVRR.N) 115,700 El Dorado Kansas HollyFrontier 138,000 Borger* Texas Phillips 66 (PSX.N) 146,000 Ponca City Oklahoma Phillips 66 198,400 Wood River** Illinois Phillips 66 333,000 Whiting Indiana BP Plc (BP.L) 405,000 Total 1,584,400
(source: Genscape, capacities from EIA)
Has onwards pipeline connection to HollyFrontier's 105,000 bpd Navajo refinery
Has onwards pipeline connection to CVR's 70,000 bpd Wynnewood refinery
OPERATORS OF CRUDE OIL STORAGE TANKS AT CUSHING BY CAPACITY Storage operator Capacity bbls Planned bbls Enbridge Energy Partners LP (EEP.N) 19,500,000 1,000,000 Plains All American (PAA.N) 19,000,000 1,000,000 Magellan Midstream Partners (MMP.N) 12,000,000 Rose Rock Midstream LP* (RRMS.N) 7,000,000 600,000 Bluenight Energy Partners LP (BKEP.O) 6,600,000 Gavilon 4,100,000 Enterprise Energy Partners LP (EEP.N) 3,100,000 JP Energy 3,000,000 Deeprock 1,750,000 TransMontaigne 1,000,000 CVR Energy 1,000,000 Phillips 66 800,000 Sunoco Logistics Partners LP (SXL.N) 400,000 Occidental (OXY.N) 300,000 TransCanada Corp (TRP.TO) 2,250,000 Total 79,550,000 4,850,000
(source: company information, Reuters)
an LP formed by SemGroup Corp (SEMG.N)
ESTIMATES OF MINIMUM OPERATIONAL LEVELS AT CUSHING
Estimates vary as to what the operational minimum is but the calculation hangs around two factors -- maintaining a level of oil to keep the tank's floating roof up and having enough flexibility in the tanks to operate them smoothly at an optimal pressure level.
Most oil storage tanks have floating roofs that rise and fall with the amount of oil in the tank. The roofs have "feet" which are not supposed to "land" on the tank bottom.
"There's always a portion of the oil that isn't reachable, you'd never pump a tank dry. It varies in terms of the design of the tank but I would say it's about 10 percent," said Mark Shaw, executive director at E3 Consulting LLC, an engineering firm that has reviewed designs of Cushing tanks.
A spokesman for Magellan Midstream Partners (MMP.N), the third largest storage operator at Cushing with capacity of 12 million barrels, said its facilities would need up to 10 percent volume of the shell capacity to "maintain normal operations".
But, Shaw said operators would usually have another extra few percentage points to maintain a practical level.
With total shell capacity at almost 80 million barrels, according to Reuters calculations (see above), that would point to a minimum operational level of at least 8 million barrels.
Vikas Dwivedi, analyst at Macquarie Capital, estimates the minimum at 16 million barrels based on calculating how much is needed for maintaining floating roofs and enabling smooth operations at optimal pressure levels.
In a research note issued earlier this week, Dwivedi said stocks at Cushing could fall to 20 million barrels by the end of November.
"If Cushing levels test operational minimums, the WTI-Brent spread could go positive," he wrote in the note.