I was doing some research as I keep hearing people talk about Cushing, OK and its status as the nation's largest storage facility of oil. The main narrative is that it's nearing capacity, could run out in a few short weeks, etc, etc.

One of the things that I found provocative in the discussion within the media was that, "storage levels are at near 80% of capacity," and that was one of the highest levels ever seen.

I started doing some research and it turns out that these claims seem to be grossly misrepresenting the truth about our storage capacity, nevermind discounting some seasonal factors impacting production. Mainly:

Cushing is only the largest facility, but there are several other large facilities available that are at best comfortably being utilized. Nationwide, we're at around 60% of storage capacity. From the link below:

quote:
The EIA reports that across the U.S., total crude oil working storage capacity was 521 million barrels as of last September, and as of March 6, approximately 320 million barrels of that volume was being used. (While the Weekly Petroleum Status Report currently lists crude oil inventories at 444 million barrels, the EIA states that about 120 million barrels of this is in pipelines, on ships, or oil that is locally stored and has not entered the supply chain.)

To put this another way that may be easier to grasp:

quote:
If Cushing continues to fill, oil producers will start looking at some of those other areas to store their crude. And with 200 million barrels still available, oil producers could continue to add a million barrels a week (roughly the average weekly gain over the past year) for nearly 4 years before crude oil storage is actually full.

To add to the section I just quoted, this is with oil storage capacity remaining static at its current levels. There are massive upgrades to capacity ongoing currently in Cushing and elsewhere. So we're a good long ways away from peak capacity utilization.

But as I said there are also some other factors some may not be taking into account:

quote:
We are currently in the season when refinery utilization is lowest. Refiners take equipment offline in fall and spring to do maintenance, so they use less crude oil at this time of year. This maintenance usually peaks in March, and then crude oil demand picks back up as refiners gear up for the summer driving season. The difference in refinery demand between this time of year and summer is generally around a million barrels per day, so even if nothing else changes that storage build should start to flatten.

Most of you from the SoLA area know that right now it's prime-time turnaround time in the petrochem sector. A lot of my friends in the plants are kinda scarce right now, up to their ears in overtime on turnarounds, getting plants ready for summer driving season and producing fuel blends for gas.

So in closing...We're just fine in terms of our current production levels. Ramping them down will only slow our ascent, and we're within comfortable levels here stateside. The next big impact should be if and when Iran gets back onto the market globally, but even then we'll be-at best-in peak drive time during the summer.

ETA: Forgot to share the link I found re: this.

LINK

This post was edited on 3/31/15 at 9:32 am