Oil: Making Millions From Transport, Trading and Storage at Cushing Oklahoma

 Back in 2007-2009 when the Journal's Ann Davis was probably the best oil biz journalist (now I'd have to say it's Izabella Kaminska at FT Alphaville) on the beat she had a couple Cushing stories we linked to that are still worth a read, links below the jump.

From BusinessWeek:
The Oil Hub Where Traders Are Making Millions

Tugboat pilot Barry Meredith hauls barges of oil as big as football fields for a living. He calls his route “the loop,” which starts with him guiding his boat and two empty 300-foot barges into the Port of Catoosa, outside Tulsa, Okla. Meredith steers toward a cluster of seven storage tanks brimming with crude that’s been trucked in from wells in Oklahoma and Kansas. 

Moving 43,000 barrels of oil from the tanks into the barges is a 12-hour process, and one mistake can mean disaster. “You get 4,000 barrels going through that hose every hour, and you let something ass up. … Man, it makes a big mess,” Meredith says in his Florida drawl, his face deeply tanned from 19 years on a tugboat. At dawn the next day he’ll leave for Mobile, Ala. The route of winding rivers is more than 1,300 miles long and takes about a week.

“It’s a haul, man,” says Meredith. “You leave here and go back out the Arkansas River. Then you hit the Mississippi and take it down to New Orleans and into some industrial locks. Once you’re through those, you scoot across Mississippi Sound and on over to Mobile Bay and into the Mobile harbor.” Next stop is a storage facility in Mobile leased by Hunt Oil. Meredith says Hunt will take this domestic crude and mix it with lower-grade oil from Venezuela. He’ll then barge the blend up to Hunt’s refinery in Tuscaloosa, where it’ll be turned into gasoline, diesel fuel, jet fuel, and asphalt. Meredith then will head back to Catoosa and start all over again.

These are 24/7 days for oil production in the U.S. North Dakota now produces more oil than Alaska—and more than Ecuador, too. Geologists estimate that Oklahoma still has 80 percent of its reserves in the ground. The majority of this oil is of the highest quality: light, sweet crude that’s low in sulphur, lighter than water, and cheaper to refine into gasoline than the heavier sour (high in sulphur) crude from Venezuela and the Canadian tar sands. Goldman Sachs (GS) predicts that by 2017 the U.S. will be the world’s biggest oil producer. 

All this oil needs to get stored somewhere, and the largest facility in the country is 60 miles west of Catoosa in the small town of Cushing (pop. 7,890). Each day some 900,000 oil futures and options contracts are traded on the New York Mercantile Exchange (CME). The oil at Cushing is what’s bought and sold. The town’s hundreds of storage tanks are the country’s biggest bank vault of oil. And it’s getting bigger. In September 2008 there were fewer than 15 million barrels of oil parked there. Today there are 44 million, 16 million more than in January. And that’s a problem. Oil is flowing into Cushing faster than it’s getting piped out.

The giant pool of crude stuck in the middle of the country has done strange things to the oil market....MUCH MORE

Among a shelf-full of tschotskes Ann Davis received the 2007 Gerald Loeb Award in Deadline Writing for her coverage of the Amaranth natural gas trading fiasco. We also had a lot of stuff on Mssrs. Hunter et al but Ann did it better, backward and in heels.

Here are a couple of the Cushing stories, not under deadline pressure:
Where Has All The Oil Gone?
Oil, Computers, and Momentum Trading

Here's Ms. Iz back in 2008:
Oil: "It’s all about Cushing"
And again in 2009:
Oil: Record Inventories at Cushing. And: Oil Traders Seek Another 10 Tankers for Storage
From 2011:
Oil: "Bye, bye Cushing syndrome (possibly)" USO