Crude oil stuck in Oklahoma could soon reach Ga.

by: Jim Strickland Updated:

CUSHING, Okla. - Millions of barrels of crude oil are stuck in tanks in Oklahoma, but a new initiative could get the oil closer to gas pumps in Georgia.

Channel 2’s Jim Strickland went inside a storage facility in Cushing, Okla. ready to be tapped. Cushing, known as the "Pipeline Crossroads of the World," is home to hundreds of giant oil storage tanks. Some of them hold more than a half million gallons each, and 127 more tanks are either under construction or in the planning stages.

Strickland got rare access to a facility at Enbridge Energy, which operates part of the pipeline chain linking Cushing to the booming Canadian oil sands.

"Right now we're at 16 million barrels of capacity, and our goal is to be around 21-22 million barrels at the end," supervisor Scott Sweich told Strickland.

Enbridge is Cushing's largest tank operator with 87 tanks currently on line. 

In Canada's oil country "drill baby, drill" isn't just a slogan.  It's the five-year plan.

"Production is going to grow by almost six times," said Alan Reid, senior vice president of Cenovus Energy.

Cenovus produces a raw oil product called diluted bitumen.  At the time of Strickland’s interview in early April, Reid said the product was bringing about $65 per barrel.

"We want it to go to a market where it's going to attract a good price," Reid said.

But it requires extra refinement, and like all Canadian oil it has no efficient way to reach Gulf refineries, which make Georgia's gasoline.

"There isn't a pipeline that directly connects Canadian oil to Atlanta, Georgia today to my knowledge," Cenovus Energy senior vice president Alan Reid told Strickland.

Strickland found the end of the southern-most pipeline to Canada, the Keystone One pipeline.

The Canadian government estimates Cushing is now storing more than 40 million barrels of oil, about two-thirds of its capacity.
         
"If you've got all this crude oil stuck up in Oklahoma, that's a problem," said oil analyst Greg Haas.  Strickland met him in Houston, Texas outside an oil refinery.
         
Haas explained rail cars are simply too expensive to move large volumes of oil to the Gulf from Oklahoma.   
Builders of the controversial Keystone XL pipeline, sister to the Keystone One, have found a path around a key water source in Nebraska. They anticipate opening the southern section from Cushing to Texas next year.

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Haas said the need is immediate. The refineries in the area, which process half the fuel in the country, including for Atlanta, would be able to have a better source of local crude rather than buying from overseas.

An existing pipeline called Seaway, which had been designed to flow northward from the Gulf into Cushing, is now being reversed to become the first pipeline linking Canadian oil in Oklahoma with refiners who serve Georgia. Enbridge and a partner company own the line.

The oil is expected to start flowing May 17. They'll start at 150,000 barrels per day, and ramp up to 850,000 in two years. 

"Reliability of supply is such a key thing to making sure that we have the products that you need in markets like Atlanta," said Enbridge spokesman Larry Springer.

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