The crude oil hub in Cushing, OK, is a big numbers kind of place: 94 million barrels of storage capacity, 3.8 MMb/d of inbound pipelines and 3.1 MMb/d of outbound pipes, not to mention a spaghetti bowl of connections between the many tank farms within greater Cushing. To truly understand the “Pipeline Crossroads of the World” — what it does and how it works — you need to know the hub’s assets and how they fit together. Today, we continue our series with a look at the pipes that transport crude from Cushing to Gulf Coast refineries and export docks, and to inland refineries in the Midcontinent, the Midwest and what you might call the Mid-South — places like Memphis, TN; El Dorado, AR; and Shreveport, LA.
This is the fourth blog in our deep-dive review of the Cushing hub and — given its significance to the oil market as well as the many angles from which it needs to be considered — we’ve only just begun. In Part 1, we discussed the fact that Cushing’s role in the crude oil market has been in flux. Permian oil production has been surging, the ban on U.S. oil exports is long gone, and the Gulf Coast — not Cushing — is the premium market for U.S. crude owing to its concentration of refineries and export docks. Part 2 looked at the 94 MMbbl of crude oil storage at Cushing — where it’s located (mostly South Cushing, with some at North Cushing), the companies that own the storage (with Plains All American, Enbridge and Magellan Midstream Partners leading the pack), and how much they each own. We also split the users of Cushing storage into six categories (producers, midstream companies, refiners, marketers, or some combination thereof) and explained how each group uses its storage in different ways (some purely operational, some purely commercial and the rest some mix of the two). Finally, we put Cushing’s tank farms into one of three buckets: those with “big hubs” and “big spokes” (a lot of storage capacity, plus tie-ins to major inbound and/or outbound pipelines, as well as strong links to other storage within Cushing); “small hubs” and “big spokes” (less storage capacity, big pipes in and/or out — focused on crude oil throughput); and “small hubs” and “small spokes” (relatively small amounts of storage capacity and only limited pipeline connections into, out of and within Cushing). In Part 3, we turned our attention to the pipelines that transport crude oil to the Cushing hub from Western Canada (Keystone, Flanagan South and Spearhead), the Bakken (Pony Express, with assists from Enbridge’s Mainline system), the Rockies (Pony Express, Saddlehorn/Grand Mesa and White Cliffs), the Permian (Basin and Centurion), and within Oklahoma itself (STACK, Glass Mountain and Mississippi Lime).
Today, we look at the pipelines that transport crude oil from Cushing to U.S. refineries and export terminals. About half of the existing pipeline capacity out of the central Oklahoma hub makes a beeline to the Gulf Coast on either Enterprise Products Partners and Enbridge’s jointly owned Seaway pipeline system or TransCanada’s Marketlink system. The Seaway system (dark green line in Figure 1) consists primarily of two parallel, 30-inch-diameter pipelines between Cushing and the Jones Creek Terminal just northwest of Freeport, TX. The first of the two pipelines initially flowed north from Freeport to Cushing; it was reversed in June 2012 to flow south, and its 150-Mb/d capacity was increased to 400 Mb/d in January 2013. A new, parallel pipeline (capacity 450 Mb/d) came online in July 2014, boosting the Seaway system’s total capacity to Freeport to 850 Mb/d. From the Jones Creek Terminal, crude can flow northeast on a lateral pipeline to the Enterprise Crude Houston (ECHO) Terminal in southeastern Houston, and east from ECHO to refineries in the Port Arthur/Beaumont (TX) area on another lateral. TransCanada’s four-year-old Marketlink system (teal line) in turn, runs from the Cushing hub to Nederland (TX; between Port Arthur and Beaumont) and has the capacity to transport 700 Mb/d; the company’s Houston Lateral branches off from Marketlink at Liberty (TX) and enables crude to flow to the Houston area as well.