That Was Then, This Is Now, Part 2 - New Crude Pipeline Capacity Out of the Cushing Hub

Every so often, there’s talk that the crude oil hub in Cushing, OK, isn’t as important as it used to be. Don’t believe it. Want proof that Cushing is alive and well? Consider the growing list of pipeline projects into and out of the hub that have been coming online or advancing to final investment decisions, as well as the efforts to push Cushing’s storage capacity toward the 100-MMbbl mark. Midstream companies have committed to building more than 800 Mb/d of new pipeline capacity from Cushing to other hubs and to refineries, and another 1.6 MMb/d of capacity is in the pre-FID development stage. Today, we conclude a mini-series on recent developments at the Oklahoma oil hub with a look at storage expansions, new Cushing players, and outbound pipeline projects.

In Part 1, we said that a lot has been happening on the Cushing-related midstream front since we concluded our comprehensive, eight-part blog series on the Oklahoma hub a year ago. Pipeline projects have been completed, proposed pipelines have either gotten the final go-ahead for their developers or been set back, and a midstream giant — Energy Transfer — has reached a deal to acquire SemGroup, which has more storage capacity in Cushing than all but three other companies. We also discussed in detail the inbound pipelines that have reached FID in recent months, including Phillips 66 and Bridger Pipeline’s Liberty Pipeline from the Bakken to the Rockies to Cushing and a 100-Mb/d expansion on the Saddlehorn/Grand Mesa Pipeline from the Denver-Julesburg (D-J) Basin to Cushing. And we detailed the recent 20-Mb/d expansion to Tallgrass Energy’s Pony Express Pipeline, the potential for further expansions to Pony Express, the ongoing conversion of one of White Cliffs Pipeline’s two pipes to NGL service, and the apparent demise of the planned 65-mile, 90-Mb/d Cimarron Express Pipeline from the STACK play in Kingfisher County, OK, to Cushing.

This time, we turn our spotlight to what’s been going on with Cushing storage capacity and pipelines out of the hub. Regarding storage, the biggest ongoing project is Keyera Corp.’s build-out of the $200 million Wildhorse Terminal, which when it comes online in the second half of 2020 will consist of 12 new tanks with a combined working capacity of 4.5 MMbbl. Keyera holds a 90% ownership interest in the project; partner Lama Energy Group from the Czech Republic has a 10% stake. The majority of the capacity is backed by fee-for-service, take-or-pay storage arrangements. Wildhorse Terminal will initially be pipeline-connected to two existing storage terminals at Cushing, which will provide customers with access to the majority of the crude oil streams flowing in and out of Cushing on several major pipeline networks.