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Valero 32MBD P/L Link Cushing CA Sour to Ardmore Refinery Soon

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    basil parmesan

    Valero oil refinery to link to Cushing hub soon

    Reuters – Wednesday, October 6, 2010

    * Eagle North pipeline to link Valero refinery to Cushing
    * Capacity may exceed 30,000 bpd -Reuters estimate
    * Added offtake capacity at Cushing could boost WTI prices
    By Robert Campbell
    NEW YORK, Oct 5 – Valero’s Ardmore, Oklahoma refinery will soon start receiving cheap crude from the giant Cushing, Oklahoma storage hub, possibly easing a bottleneck that has distorted benchmark U.S. oil prices for years.
    Blueknight Energy Partners LP expects to complete its Eagle North pipeline reactivation project in the fourth quarter, a Blueknight spokesman said.
    The line, which terminates in Ardmore, will allow Valero Energy Corp’s refinery there to source crude from Cushing for the first time, an industry source said.
    “Oklahoma crude prodcution is not going up and there are attractive discounts at Cushing so it would make sense for them to buy from Cushing if possible,” said the source.
    Blueknight, controlled by global oil trading giant Vitol, declined to discuss the capacity or expected throughput of the pipeline, citing competitive concerns and regulatory constraints.
    An industry rule of thumb suggests the 8-inch pipeline could carry up to 32,000 barrels per day of crude oil, according to Reuters calculations.
    U.S. West Texas Intermediate crude oil futures, which have their delivery point at Cushing, have often traded at a substantial discount North Sea Brent due to a shortage of outbound pipeline capacity at Cushing.
    The 90,000 bpd Ardmore refinery currently runs crude oil produced in Oklahoma as well as oil brought up from the coast of the Gulf of Mexico, Valero spokesman Bill Day said.
    “Anything that boosts offtake from Cushing will likely have an impact on the pricing structure of WTI but I’m not sure a 30,000 bpd line will offset the impact of all the Canadian barrels coming in,” said one U.S. crude oil trader.
    Growing Canadian oil production and the reversal of pipelines that once carried West Texas and Oklahoma crude oil to the upper Midwest have been blamed for the glut at Cushing.

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