The Latest Dilemma for the Oil Industry
The ever-growing supply of U.S. crude, made possible in part by the success of shale oil drilling, has been putting a strain on oil storage operations. A number of America’s biggest and most relied-on facilities are feeling the squeeze, including terminals in Cushing, Oklahoma. The Financial Times reported record high storage in the complex last month, with crude reserves approaching 90% of its current capacity.
This is causing serious logistical problems. Reuters has recently reported that delivering crude from Cushing can be a difficult process, with effects including increasingly-regular shipping delays. While these delays have not been severe enough to create contractual difficulties, they remain a concerning issue—especially if storage levels continue to increase.
The Hunt for Solutions
Industry experts have floated a number of ideas for solving the storage shortage problem. Building more tanks might seem an obvious option, but this route poses some difficulties. As reported by MarketWatch, it takes a fair amount of time to construct these facilities, and it remains unclear how the cost burden would be distributed. Other stopgap measures that are being explored include using railcars as temporary storage units for excess crude.
New Crude Exports: a New Hope?
One solution may lie with aggressive selling to new markets. The recent lift of the crude export ban in the United States has presented an opportunity to open markets for domestic oil supplies. While this cannot solve all of the industry’s storage problems, it could be a good start—and two Texas storage facilities are already taking the lead.
Two companies, ConocoPhillips and NuStar Energy, have reported that they may have performed the first U.S. crude export since the ban was lifted. On December 31st in Corpus Christi, around 600,000 barrels of light crude oil were loaded at NuStar’s North Beach Terminal onto a tanker headed for Italy. Soon after on January 8th, a second crude shipment was made from the Enterprise Hydrocarbon Terminal in the Houston Ship Channel. Shipments like these could begin to lessen overtaxed storage facilities in the region while providing some much-needed sales and revenue.
Expanding Markets and Infrastructure
The Enterprise terminal is currently expanding its storage capacity, with facilities under construction that will accommodate an additional 3.5 million barrels of oil. NuStar has had its own share of expansion in recent years, adding additional tanks and dock space to allow for export-sized loads. While the whole scale of the effects of lifting the oil ban may not be fully felt for some time, Texas companies are taking the initiative by offering solutions to domestic oil storage problems.
Doing Our Part
Whether drilling, storing, or transporting oil, customers in the industry need the best quality equipment. We are proud to do our fair share with premium fluid system control parts such as fittings, valves, connections, gauges, hoses, and more. A full range of products from the best manufacturers are available, including an extensive array from Hy-Lok. We are proud to partner with oil customers at every step of the process. For more information, please contact us today.