NEWS: Wall Street Journal: "Pipeline-Capacity Squeeze Reroutes Crude Oil
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August 26, 2013

The Wall Street Journal today highlights the need for a new Architecture of Abundance with domestic oil production at its highest level in two decades. Advancements in technology and innovation have flipped the scales from energy scarcity to a new era of energy abundance. Energy and Commerce Committee Chairman Fred Upton (R-MI) is working to ensure the proper infrastructure is in place to realize our newfound energy potential. In July, Upton wrote, “Instead of holding on to outmoded laws and regulations, we need to build the new Architecture of Abundance to create jobs, power our economy, and lower prices to consumers.” As one analyst told The Wall Street Journal, the impact of abundant energy supplies on the economy is “one of the best things that has happened in our economy in the past 10 years. It is better than the iPad." We just need to ensure we have the right policies in place to fulfill our energy future.

Pipeline-Capacity Squeeze Reroutes Crude Oil
More U.S. oil is moving via truck, barge and train than at any point since 1981

August 26, 2013

More crude oil is moving around the U.S. on trucks, barges and trains than at any point since the government began keeping records in 1981, as the energy industry devises ways to get around a pipeline-capacity shortage to take petroleum from new wells to refineries.

The improvised approach is creating opportunities for transportation companies even as it strains roads and regulators. And it is a precursor to what may be a larger change: the construction of more than $40 billion in oil pipelines now under way or planned for the next few years, according to energy adviser Wood Mackenzie.

"We are in effect re-plumbing the country," says Curt Anastasio, chief executive of NuStar Energy LP, a pipeline company in San Antonio. Oil is "flowing in different directions and from new places."

U.S. oil production has reached its highest level in two decades, while imports have fallen dramatically. A system built to import oil and deliver it to coastal refineries has become ill-equipped to handle rising production in Texas, North Dakota and Canada's Alberta province.

"All of the pipes are pointed in the wrong direction," says Harold York, an oil researcher at Wood Mackenzie. "We are turning the last 70 years of oil-industry history in North America on its head, and we are turning it on its head in the next 10 to 15 years."

With oil prices persistently above $100 a barrel, companies drilling new wells don't want to forgo revenue while they wait years for new pipelines. That leaves them with trucks, trains and barges to move an increasing amount of crude. …

In the Eagle Ford, a large four-year-old South Texas oil field, production has grown to more than 500,000 barrels a day, from less than 1,000 in 2009, according to state statistics. Getting that torrent out of the sparsely populated region has required modifications to the oil-delivery system.

For example, last year NuStar reversed a 16-inch pipeline built to carry crude imported from Africa and Europe northward from the Port of Corpus Christi. Now, the pipeline flows south, taking delivery from hundreds of trucks that fill up at individual wells. Some of the 175,000 barrels a day moving through the pipe is loaded onto barges at Corpus Christi and towed toward refineries near Houston.

Earlier this year, Phillips 66 began putting some of this crude on ships for a 2,200-mile journey around Florida to its refinery in Linden, N.J. …

Steve Kean, president and chief operating officer of Kinder Morgan Inc., one of several interrelated companies that own or operate 82,000 miles of North American pipeline, says government agencies thoroughly vet new projects.

Falling imports, infrastructure investments and increased manufacturing are just some of the benefits of newly abundant energy supplies, he says. "This has got to be one of the best things that has happened in our economy in the past 10 years. It is better than the iPad."

Read the entire story online here.

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