US midstream company Energy Transfer is weighing a plan to store crude in idle pipelines as shippers scramble to find available storage.
The company is looking for ways to idle two pipelines in Texas by “moving product around” and use them as storage space by mid-May, Energy Transfer told Argus today. The two lines would provide about 2mn bl of storage.
The company is in the process of asking the Texas Railroad Commission for permission to change the method of operation on the lines. “After that it will be a matter of adding pumps to the lines, which we can easily achieve,” the company said.
US crude storage is filling up rapidly as efforts to contain the Covid-19 pandemic have caused a plummet in oil demand. Storage at the key Cushing, Oklahoma, hub has increased by 20.4mn bl in the four weeks ended on 17 April, the US Energy Information Administration said.
Midstream companies have warned that Cushing could fill next month. The rapid rise of US storage stocks along with other factors wreaked havoc in the crude market this week, with the WTI front-month futures contract plunging to a negative settle of -$37.63/bl on 20 April, a historic first. Front-month prices have since rebounded into positive territory.
Midstream operators are trying to find creative ways to help producers find new storage locations for crude.