Energy firms in the US are considering building more crude storage tank farms among other options as US commercial crude storage is expected to fill to the brim by May. Unavailable storage space pushed US WTI futures to negative territory on Monday, with analysts warning of recurring negative-pricing as all spaces in the Cushing storage hub are all booked.
In North Dakota’s Bakken Shale, energy regulators are mulling offers for firms to construct two new crude storage tank farms with a combined capacity of 1 million barrels in six weeks, using spare land owned by the companies, which includes an oilfield waste-treatment facility. This move receives support from the American Petroleum Institute.
Some storage hubs such as the Port of Corpus Christi and the Houston Ship Channel have started construction of new tank storage before the pandemic. Port of Corpus Christi CEO Sean Strawbridge said Pin Oak Terminals had added about 2.5 million barrels of crude storage, with 12 million more barrels to come soon. South Texas Gateway Terminal and Moda Midstream will also soon expand their storage. Corpus Christi’s storage capacity has doubled to more than 40 million barrels from four years ago, yet Strawbridge said it would reach tank top status within 60 days.
Amid limited storage options, companies are even considering converting railcars into storage facilities for longer periods of time. Energy analyst Ethan Bellamy from Robert W. Baird & Co. said using railcars to store oil is more practical than building new tank farms as it requires less permitting and investments. The Association of American Railroads said companies could use railcars to store oil as long as they follow all safety regulations.
