Wide Open Spaces, Part 2 - The Ins and Outs of Crude Storage at the Permian's Crane Hub

Midland may be the king of crude oil hubs in the Permian, with its immense storage capacity and robust trading activity, but the hub in Crane, TX, is at least a prince — and a particularly interesting one at that. In addition to its 7 MMbbl of tankage for storing, staging, and blending crude (and another 1 MMbbl on the way), Crane offers a slew of inbound pipelines from both the Delaware and Midland basin, plus links to and from the Midland hub and a number of outbound pipelines to both the Corpus Christi and Houston markets. Just as important to know about, are the various intra-hub connections among Crane’s 10 terminals, because they reveal how you can get crude to pretty much wherever you need it to be. Today, we continue a series on crude storage in West Texas and southeastern New Mexico.

As we said in Part 1, storage and distribution hubs play important and often underappreciated roles, both in helping to choreograph the transport of crude oil from the lease to end-users and in enabling traders and others to take advantage of commercial opportunities. This is especially true in the Permian, the U.S.’s leading oil-producing region, where multiple hubs have developed over the past few years to keep pace with production growth and pipeline build-outs. We also questioned the widely held view that the sudden fall-off in Permian production last year and the current expectation for only modest production growth in 2021 and beyond has left the region overbuilt from a midstream infrastructure perspective. In fact, while the Permian generally has sufficient takeaway capacity, there has been recent evidence of tightness in the Permian storage market. To understand why and where such issues may develop, today, we begin our hub-by-hub review, starting with the one in Crane, TX.

One hundred years ago there were a dozen sprawling ranches and more than 20,000 cattle and sheep in Crane County (just south of Odessa), but only 37 people and a couple of newly built roads. Everything changed in 1926 with a major oil discovery by Church & Fields Exploration Co. By the following year, Crane County’s population had soared to 6,000 and the county was the leading oil producer in all of Texas, with production of more than 12 Mb/d — two barrels a day for every man, woman, and child. Fast-forward to 2021: the county’s population is down a bit, but crude oil production is up, averaging about 20 Mb/d, according to the Texas Railroad Commission, ranking Crane around 30th among the state’s counties in that regard. Crane County — or more specifically, the county seat in Crane, TX — isn’t known as much for crude oil production lately, though, as it is for its oil storage and distribution hub.

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