Enterprise Offers Crude Shipments From Gulf Coast to Cushing
Enterprise Products Partners LP said it would offer spot shipments of crude on an existing pipeline from the U.S. Gulf coast to Cushing, Oklahoma, the delivery point for benchmark U.S. crude futures, as demand to store oil inland surges.
The move marks a sharp reversal from recent pipeline projects that were all built connecting inland markets to the Gulf Coast as U.S. crude exports climbed to record highs after Washington lifted a ban in late 2015.
However, the coronavirus pandemic has crushed global oil demand and dented U.S. crude exports, and put a premium on finding places to store oil as a worldwide glut builds.
About 54% of total U.S. crude working storage capacity is full as of April 3, according to the U.S. Energy Information Administration. Stockpiles in Cushing are rising fast, with traders expecting the storage hub to hit maximum capacity by May.
"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," Enterprise said in a filing late Monday with the U.S. Federal Energy Regulatory Commission (FERC).
The company said it would offer service from Enterprise Katy in Fort Bend County, Texas, to Cushing, Oklahoma, on capacity that it has acquired by lease on an existing pipeline system.
It was not immediately clear which pipeline system the new service would be available on. Enterprise did not immediately respond to a request for comment.
Enterprise plans to charge spot shippers $3 a barrel for the new service, effective May 1, 2020, according to the filing.
Earlier this month, Phillips 66 Partners LP said it will offer shippers storage on its Gray Oak crude oil pipeline system in Texas because of an urgent need for tank space.
(Reporting by Devika Krishna Kumar in New York; editing by Jonathan Oatis and Marguerita Choy)