With a staggering 3.8 MMb/d of inbound pipelines, 3.1 MMb/d of outbound pipes and 94 MMbbl of storage capacity in between, the crude oil hub in Cushing, OK, surely has earned its nickname, “Pipeline Crossroads of the World.” But Cushing is more than a mere collection of pipelines and tankage, and crude doesn’t simply flow through the hub like cars and trucks flowing through a Los Angeles freeway interchange. Instead, much of the crude coming into Cushing from Western Canada, the Bakken, the Rockies, the Permian and other plays is mixed and blended within the hub, primarily to meet the specific needs of U.S. refineries and the export market regarding API gravity, sulfur content and the like. In other words, what goes in can be materially different than what goes out. Today, we continue our look at the central Oklahoma hub with an examination of the characteristics of the crude flowing in and out, and how they differ.
This is Part 5 of our deep-dive review of the Cushing hub, which is located midway between Oklahoma City and Tulsa. We started in Part 1 with a discussion of why Cushing’s role in the crude oil market has been in flux — key factors being the surge in Permian production, the end to the ban on U.S. oil exports, and the resulting pull of crude to the Gulf Coast, with its concentration of refineries and export docks. In Part 2, we looked at the 94 MMbbl of crude oil storage at Cushing — where it’s located (mostly South Cushing, with a little 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). Part 3 focused on 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) — see black pipes in Figure 1. Then, in Part 4, we looked at the pipes that transport crude oil from Cushing to U.S. refineries and export terminals — gray pipes in Figure 1. 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 other half of the pipeline capacity out of Cushing flows to inland refineries, the biggest of these pipes being the Ozark, Osage, Diamond, BP1 and Red River pipelines.