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Enterprise Pipeline Offers Oil Route To Cushing Storage As Glut Grows

Enterprise Products Partners is opening the northbound capacity of its Seaway pipeline, offering U.S. oil producers struggling to place their oil near the Gulf Coast to ship their barrels to the primary storage hub at Cushing, Oklahoma.   

“Given the current turmoil in the crude oil market, including impacts on both refinery and export demand, there is strong market interest to access the Cushing storage market,” the pipeline operator said in a filing with the U.S. Federal Energy Regulatory Commission (FERC) this week, as carried by Reuters.  

The Gulf Coast-Cushing oil flow would have been an unusual occurrence just a year ago when the Seaway pipeline was mostly carrying oil in the other direction-from the inland to the U.S. Gulf Coast refineries and export terminals. The Seaway pipeline was expanded with a southbound flow from Cushing to the Gulf Coast in 2012 when rising U.S. production meant more oil needed to the carried from the oilfields to the coast and major refineries there.

But this year, the massive oil demand drop in the U.S. and overseas due to lockdowns in the COVID-19 pandemic has had U.S. oil producers scrambling to find storage for their produced barrels when no one wants more oil right now.

Enterprise Products Partners is now offering the unused capacity on its pipeline system from Fort Bend County, Texas, to Cushing. Oil could also flow south to the Gulf area, a company spokesman told Reuters in a statement.

The U.S. Department of Energy is also trying to help U.S. oil producers with finding storage for their unwanted oil. The DOE said on Tuesday that it was negotiating contracts with nine U.S. oil producers to store a total of 23 million barrels of their produced oil in the Strategic Petroleum Reserve (SPR), to help U.S. oil producers with storage availability amid the huge demand loss from the pandemic.    

By Tsvetana Paraskova for Oilprice.com

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