With global lockdowns already sharply reducing demand for oil, a lack of storage would weigh further on already depressed prices, leaving producers with few financial or physical alternatives but to turn off the taps.
The system still has the capacity to continue absorbing crude at the current rate for a few more weeks, and longer if the inflow is slowed by production cuts from OPEC and its allies as well as U.S. and Canadian producers.
But a more severe constraint is likely to come from the refined fuels system, where storage capacity is lower and logistics constraints are tougher.
U.S. Energy Information Administration data on working storage capacity covers crude rather than refined products – where storage is split between refiners, blenders, wholesalers, retailers and end users.
But once fuel storage is full, refineries will have no choice but to cut back crude processing, which will cause crude stocks to back up even more rapidly.
Working storage capacity for crude oil at refineries and tank farms amounted to 653 million barrels at the end of September 2019, the latest data available, according to the EIA.
Net stocks of crude held at refineries and tank farms amounted to 375 million barrels at the end of last week, implying storage facilities were about 57% full (“Weekly petroleum status report”, EIA, April 16).
Storage utilization has climbed from 50% four weeks ago, before the economy started to go into lockdown, but it remains well below the recent peak of 68% set back in March 2017 (https://reut.rs/3aiBCSv).
There is still around 280 million barrels of unused storage capacity available, down from 328 million barrels four weeks ago, but more than the 175 million barrels available at the tightest point in March 2015.
However, crude inventories have been rising at an average of 16 million barrels per week over the last three weeks. If tank farms continue to fill at this rate, spare capacity will fall back to its recent lows by the end of May.
REGIONAL DISTRIBUTION
U.S. petroleum markets, refining and storage are organized regionally rather than nationally, with limited transfer capacity and flexibility between regions.
Most crude storage capacity is concentrated on the Gulf Coast and in the Midwest, which together account for 83% of the total, with more limited volumes on the East and West Coasts and in the Rocky Mountain region.
Crude storage utilization in the Gulf Coast refining region is at 55%, up from 50% four weeks ago, though still well below its recent peak of 72%.
In the Midwest refining region storage utilization is at 60%, up from 48% four weeks earlier, but still well below the recent peak of 80%.
There is still 166 million barrels of spare capacity in the Gulf Coast, compared with a recent low of just 90 million, and 69 million barrels in the Midwest, compared with a recent low of just 27 million.
OPERATIONAL CONSTRAINTS
Working storage capacity is defined as that part of the tank from which crude can readily be withdrawn; it excludes tank bottoms, where pumping cannot effectively remove the oil.
Even so, working storage capacity cannot be filled 100%; some must remain available for receiving new deliveries, tank-to-tank transfers, blending, and other routine operations.
Operational requirements suggest the tank system could become effectively full well before working capacity reached 100% (“Weekly U.S. and regional crude oil stocks and working storage capacity”, EIA, April 8).
But experience has shown the system can operate with relatively high storage utilization rates. The system managed to cope with a nationwide average of 69% (in March 2017) and with regional averages as high as 80% in the Midwest (March 2015) and 72% on the Gulf Coast (Feb 2017).
If the global oil market remains oversupplied into June and July, crude and products storage could start to become a more significant problem.
Cash prices for crude and fuels, as well as near-dated futures contracts, are trading at big discounts to compel those without firm buyers or access to storage in June and beyond to slow down their wells and refining capacity.
DT on Sat, 18th Apr 2020 10:07 pm
The big prob is shutting the wells in, ya start doing that and restart is very expensive. The oil patch will be out o buizz quik.
Abraham van Helsing on Mon, 20th Apr 2020 2:21 am
Of course it is filling:
https://www.bloomberg.com/news/articles/2020-04-17/texas-oil-at-2-a-barrel-raises-specter-of-negative-prices
“Texas Oil at $2 a Barrel Raises Specter of Negative Prices”
Peak oil supply, priceless (pun intended).
Converting the energy contained in $2 oil in a fine 100 m steel wind tower, makes said towers real cheap!
https://www.youtube.com/watch?v=D-4zIJfkWqA
Theedrich on Mon, 20th Apr 2020 4:58 am
Demoniac Nancy Pelosi is killing America. Forget the oil issue. As she sucks distractingly on her false teeth, she sneers at the millions of paycheckless Americans losing their jobs and tells them she is doing what is “right.” Like the pedophile priests she gets her “morality” from, she makes insane demands to turn America Communist in order to save it. She — and the squads of “experts” the Left calls upon as backup — demand that every suspected virus carrier be tested and their contactees tracked to the greatest extent possible.
It turns out that Stanford University medical researchers recently completed a study of residents of Santa Clara County (CA) to find the number of them that had COVID-19 antibodies, thereby revealing previous infection by the virus. The results from 3,300 testees indicated a rate of 2.5% ≤ infection ≤ 4.2%, or an actual virus population of from 48,000 to 80,640 people, far higher than the 1,100 cases thitherto confirmed in the county.
Projecting this rate onto the entire country would mean that the above-cited Democrat demand for testing, if implemented, would destroy the country in a paroxysm of bankruptcy, placing all power in the hands of unelected Leftists with their carefully doctored “science.” With a viral prevalence 50 to 85 times greater than current “official” figures, we could expect the Democrat solution to result in instant Middle Ages.
The only rational reaction to the Chicom virus is the immediate reopening of the economy, with careful protection of the elderly and vulnerable. Already countless small businesses have been ruined forever, the so-called “gig economy” has been devastated, and the banking system is overtaxed. We do not yet know how tragic the psychological, physical and financial consequences will be if the current crisis continues any longer — but horrific they will be. A number of states such as Illinois and New York had already squandered their present and future income on corrupt, union-demanded payoffs, and are now pleading for help from the federal government to make up for their endemic profligacy.
If the Democrat Left, captained by Pelosi, Biden, Shiff, etc., and its media propaganda arm continues, with the help of medicine-obsessed, economy-blind doctors, to keep the nation frozen with fear, the global collapse warned of by Tainter will be inevitable.
DT on Mon, 20th Apr 2020 7:40 am
Love the video clogiee shows the tip of the ice berg of industrial civilizations impact with the use of FF. Just look at all the shipping and steel involved. How’s about the welding? More FF inputs. Great illustration of the BS nature of clean green FF driven renewables.
JuanP on Mon, 20th Apr 2020 7:51 am
Love the video clogiee shows the tip of the ice berg of industrial civilizations impact with the use of FF. Just look at all the shipping and steel involved. How’s about the welding? More FF inputs. Great illustration of the BS nature of clean green FF driven renewables.
Abraham van Helsing on Mon, 20th Apr 2020 7:55 am
Love the video clogiee shows the tip of the ice berg of industrial civilizations impact with the use of FF. Just look at all the shipping and steel involved. How’s about the welding? More FF inputs. Great illustration of the BS nature of clean green FF driven renewables.
Where is the FF?
Hydrogen welding:
https://www.youtube.com/watch?v=x07QDamYuec
Hydrogen ships (fuel cells):
https://www.youtube.com/watch?v=1QL7QjfE5-8
https://new.abb.com/news/detail/60295/abb-scales-up-fuel-cells-for-shippings-greener-future
The trouble with 21st century Americans like you is that you have no creative imagination, no will power to create a new future.
All you do is lazily whine about collapse.
After all, climbing the renewable energy Mount Everest is so much more difficult than jumping from the fossil fuel Annapurna, now isn’t it. You are just looking for an excuse NOT to sustain First World High Civilization, because you instinctively feel you are not up to it.
Maybe you even have a point. You know yourself better than I know you.
Abraham van Helsing on Mon, 20th Apr 2020 8:18 am
Today in the Netherlands, the sun is shinning and the wind is blowing. Result:
Production:
https://www.energieopwek.nl/
5 GW wind
5 GW sun
———
10 GW renewable
Load:
https://www.tennet.eu/nl/elektriciteitsmarkt/data-dashboard/belasting/
9.4 GW (highest today)
Note that within the EU, the Netherlands is the renewable energy laggard (we had to burn most of our natural gas first).
DT: renewable energy transition is not happening
Uhuh.
SocialRevolutionComing on Mon, 20th Apr 2020 11:44 am
Watch them try to reopen the economy as fast as possible as the price of oil goes down to zero. Watch them panicking. Well you brought down the whole world supply chain down with your COVID hysteria.
Watch them panicking and reopen the economy as fast as they can because they are now stating to fear social revolution and their own death
Richard Guenette on Mon, 20th Apr 2020 11:57 am
This world needs higher seawalls to protect our coastal areas from rising sea levels, more roads bridges to ease traffic congestion, mixed architecture (both old and new), mass production of electric, self-driving vehicles, hydrogen powered waste incinerators where space for landfills is scarce, a combined human/robotic work place is established.
Richar Guenette on Mon, 20th Apr 2020 12:35 pm
People from South America that live in Miami Beach are parasites and assholes.
JuanP on Mon, 20th Apr 2020 12:35 pm
so true richard so true
SocialRevolutionComing on Mon, 20th Apr 2020 12:36 pm
juanPee, you are one of those asshole egotistical Soth American parasites. LMFAO
JuanP on Mon, 20th Apr 2020 12:37 pm
so true SRC so true
SocialRevolutionComing on Mon, 20th Apr 2020 12:46 pm
Below 2$ loooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooool
COVID hoax is a total success. Welcome social revolution.
Speedy Gonzales Parasite on Mon, 20th Apr 2020 12:46 pm
I am an egotistical asshole Mexican bastardo living in the Florida keys drinking Caronas!
supremacist muzzies so sweet so soft so cudly on Mon, 20th Apr 2020 2:07 pm
On This Day…
Apr 20, 1876: Koprivshtitsa, Bulgaria
The April Uprising against the Muslim occupation
of Bulgaria ends in massacre: 30000 Killed