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New pipelines will relieve Cushing oil glut — eventually

New pipeline capacity is slowly relieving the glut in Cushing, but full relief is not expected until at least 2015. The oil backlog has caused local producers to receive as much as $20 per barrel less than the international price for their crude.
by Adam Wilmoth Published: February 15, 2013

The expanded line became operational last month, but delays on the Texas end have prevented the line from consistently operating near its new capacity.

Seaway operator Enterprise Products Partners LP is expanding a connecting line that will help transport oil from the Seaway terminal to refineries in the area.

Bill Ordemann, Enterprise Products Partners executive vice president, last month said the line is expected to be operational in the third or fourth quarter. When that is complete, he said, “I think we'll have the ability to alleviate most of the bottlenecks we're seeing right now.”

Goldman Sachs Group Inc. last month predicted Seaway to quickly reduce the spread between WTI and Brent to as little as $6.

With the export delays, some analysts have said the spread could reach as high as $30 by the end of the year. Hume, however, said he expects the difference to remain close to $20 a barrel.

Seven more new or expanded pipelines expected to be operational by the end of next year will either carry oil away from Cushing or bypass the Oklahoma terminal altogether.

Easing imbalance

The U.S. Energy Information Administration said Wednesday that the pipeline upgrades should help bring the local crude oil sales price more in line with international levels.

“Over the next two years, planned additions to pipeline takeaway capacity should be sufficient to ameliorate the current imbalance at the Cushing hub,” the agency said.

by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
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