l****z
发帖数: 29846 | 1 80-Year Record Inventory of Crude Oil Straining Nation’s Storage Capacity
March 26, 2015 - 4:17 PM
By Barbara Hollingsworth
(CNSNews.com) – U.S. energy companies are producing so much crude oil these
days that they are running out of places to store it.
“U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) increased by 8.2 million barrels from the previous week,
” according to the March 20 weekly summary issued by the Energy Information
Administration (EIA).
“At 466.7 million barrels, U.S. crude oil inventories are at the highest
level for this time of year in at least the last 80 years,” the agency
noted. The last time the U.S. had so much oil in storage was 1930.
Crunch time is expected sometime in May. But John Felmy, the American
Petroleum Institute’s (API) chief economist, told CNSNews.com that it’s
still “too soon to tell” whether the glut of oil will completely fill the
nation’s working storage capacity, “which most estimates put at 520
million barrels."
“There’s no question that crude oil production is up significantly, but so
is the capacity to store it,” he noted, adding that the Department of
Energy counts extra “contingency space, which could be used but generally
is not,” in case oil inventories continue to rise.
“It’s certainly possible that we would have to use contingency space,”
Felmy told CNSNews.com.
Inventories at a major oil hub in Cushing, Oklahoma are at a record high
after increasing for 15 consecutive weeks, according to a March 23 report by
EIA.
That’s due in part to two new pipelines: the 690-mile Pony Express Pipeline
, which has been transporting oil pumped from the Bakken and Powder River
oil fields in Wyoming since last October; and the Flanagan South Pipeline
Project, a 593-mile pipeline that started shipping crude oil from central
Illinois to Cushing in December.
“The 70.8 million barrels of storage capacity in Cushing represent more
than 60 percent of all crude oil working storage capacity in the Midwest…
and about 19 percent of all commercial crude oil storage in the United
States,” the EIA report stated.
On Thursday, U.S. crude was trading for $51.43 a barrel, up significantly
from $44 a barrel in January, but still less than half of the $115 a barrel
it was going for last June.
Felmy pointed out that although oil slated for May delivery is priced at $51
a barrel, the futures price is $7 a barrel higher for delivery in May 2016
and even higher the following year. So buyers have a financial incentive to
“buy now, store and deliver in the future if the price differential is
sufficient compared to the cost of storage,” he explained.
There are several other reasons why energy companies will keep pumping oil
despite the current glut in supply, he told CNSNews.com.
One is that they could lose their expensive leases to the land if they do
not drill. A second reason is that some of the smaller oil producers have
cash-flow problems that force them to keep pumping and selling oil in order
to make their loan payments.
Despite a record inventory that is straining the nation’s storage capacity,
“the latest data we have, which was available at the end of 2014, does not
show much of a slowdown” in production, Felmy noted.
That includes an anticipated 10 percent “surge” in Bakken oil production
in June beyond the 1.2 million barrels North Dakota currently produces per
day, according to the state Department of Mineral Resources.
Only 99 active rigs are still drilling in North Dakota, the nation’s number
two oil producer, down from 198 last year. But energy companies there have
two strong financial incentives to keep pumping.
About 125 new wells must start producing oil by the end of June in order to
comply with a state mandate that drilling begin within a year of digging,
Platts reports.
In addition, a two-year exemption from North Dakota’s 6.5 percent
extraction tax for wells in production would be triggered if oil prices
remain under $55 a barrel at the end of May. |
|
