The US is running low on available oil storage.
Crude oil storage capacity is about 60% full in the US, compared to about 48% last year.
Things are particularly tight in the South and the Midwest, where most of the crude oil storage facilities in the US are located. The Energy Information Administration writes:
Capacity is about 67% full in Cushing, Oklahoma (the delivery point for West Texas Intermediate futures contracts), compared with 50% at this point last year. Working capacity in Cushing alone is about 71 million barrels, or more than half of all Midwest (as defined by Petroleum Administration for Defence District 2) working capacity and about 14% of the national total.
Here’s a chart of storage capacity and inventories around the country, from the EIA (PADD stands for Petroleum Administration for Defence District):
What’s the difference between working storage capacity and net available shell capacity?
Glad you asked. Below is a diagram of what a crude oil storage tank looks like.
The net available capacity is how much total storage a tank has. But working storage capacity is the amount of oil that the tank can handle. Below the suction line, there’s water and sediment, and oil that you can’t suck out. For safety, there’s normally a bit of contingency space at the top.
Here’s more on working storage capacity, and why we need some of it to remain empty in order to have a functioning oil industry:
Working storage capacity, which excludes contingency space and tank bottoms, is perhaps a more useful measure of capacity. From September 2013 to September 2014, total crude oil working storage capacity increased from 502 million barrels to 521 million barrels. Operation of crude oil storage and transportation systems requires some amount of working storage to be available to be filled at all times in order to receive deliveries by pipeline, tanker, barge, and rail. Therefore, it is not possible to completely fill all the working storage capacity reported by EIA for the United States and PADD regions. The exact amount of storage capacity that must be available to maintain operation of crude oil storage and transportation systems is unknown.
The storage utilization rates reported above reflect crude oil inventories stored in tanks or in underground caverns at tank farms and refineries as a percentage of working storage capacity. Simply dividing the total commercial crude inventory by the working capacity can lead to overestimates of storage capacity utilization, because some inventory data include crude oil that is not truly in stored in tankage, such as:
- Pipeline fill, or oil that is being transported by pipeline
- Lease stocks, or oil that has been produced but not yet put into the primary supply chain
- Crude oil on ships in transit from Alaska
“The exact amount of storage capacity that must be available to maintain operation of crude oil storage and transportation systems is unknown,” the EIA said.