Crank Up the Tubular Goods Production, New Pipelines Are a Comin’

Already one of the major crude oil hubs and oil storage facilities in the world, Cushing, Oklahoma will continue to see an influx of tubular goods in order to build additional pipelines.  Cushing serves as the pricing settlement point for West Texas Intermediate crude on the New York Mercantile Exchange.  More than 70 million barrels of crude oil are stored in tank farms at this hub.  Majority of the oil stored here includes holding terminals for Rose Rock, Plains All-American Pipeline, Enbridge, Magellan Midstream Partners all of whom are major oil companies.

The construction of three new pipelines are behind the vast expansion of this important oil storage site.  Flanagan South, White Cliffs II and The Grand Mesa pipelines will be connected to Cushing’s already busy hub.  Both White Cliffs II and The Grand Mesa pipelines will transport oil from Colorado, while Flanagan South will be moving oil from the Chicago area.  

The Grand Mesa Pipeline

            This 550-mile pipeline system is a joint venture between NGL Energy Partners and Rimrock Midstream LLC.  Once complete the pipeline will be capable of moving 130,000 barrels per day from production.  However, NGL and RimRock are still waiting for sufficient commitments from oil producers.  NGL Energy Partners was quoted saying “the pipeline does not just support continued growth and production in the area, but does so in a cost-effective and environmentally responsible way by reducing current utilization of rail and truck transportation.”  Basically, NGL and Rimrock will be investing in the pipeline as a long-term option to minimize the impact rail and truck transportation has on expenses.  

Flanagan South Pipeline

            Built by Enbridge, Inc., the 600-mile Flanagan South pipeline is no small operation.  Stretching from Flanagan, Illinois near Chicago, this massive pipeline will transport 600,000 barrels of crude oil per day.  If necessary, this pipeline was built to move as much as 850,000 barrels of oil per day.  Flanagan South runs along the same route as another Enbridge built pipeline known as Spearhead.  This pipeline is not quite complete, yet should be operational within a few weeks time.  

White Cliffs II

               

            Running parallel to the already existing White Cliffs pipeline, White Cliffs II will increase the capacity of crude oil by 150,000 barrels per day.  The White Cliffs addition will stretch the same 527 miles from Platteville, Colorado to Cushing that the original system does.  CEO of SemGroup, Carlin Conner, said “the additional pipeline capacity being added to deliver crude oil in Cushing underscores the critical role Cushing plays as a major crude oil logistics interchange and marketing hub.”  White Cliffs II is already in operation, contributing to the mass influx of oil into the Cushing hub.

            Once all three pipeline systems are fully operational, Cushing will be seeing almost one million barrels of crude oil per day from the three pipelines alone.  That is a quite a significant amount of oil when taking into consideration the 70 million barrels of oil in storage tanks at Cushing.  Just think, it would take roughly two months of transporting oil to Cushing to reach the quantities that are in storage.  Will this minimize our dependence on foreign oil and help reduce our gas prices?  We can only hope.