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America's Pipe Dream


America’s energy infrastructure is finally starting to catch up with the shale boom. Seven new oil pipeline projects are in the works in Texas, part of a badly-needed shoring-up of the Midwest’s oil supply chain.

The shale boom came out of nowhere, and though the new addition of oil and gas to America’s energy mix was certainly welcome, it produced some logistical problems. Even though the US has the largest pipeline network in the world (and number two is not even close), it wasn’t set up to bring oil from the Midwest down to refineries along the Gulf Coast. Producers have been getting creative, shipping oil by train and setting up small, “mobile” refineries close to the North Dakotan oil fields. But bottlenecks in the supply chain are preventing a lot of this new oil from wending its way to consumers. The WSJ reports on the good news from Texas:

Magellan Midstream Partners’ Longhorn pipeline began shipping oil from West Texas to Houston in April—the first of at least seven pipeline projects that could send as much as two million barrels a day from oil-saturated choke points in Oklahoma and the interior of Texas to the largest concentration of refineries in the country. But domestic oil production is at such a high level that the Gulf Coast refineries won’t be able to process all of the crude.

The pipelines, all set to come online by the end of next year, mark a new phase in the U.S. oil boom.

We hope to see more of this kind of infrastructure built out in the coming months and years. But this is only the beginning. We still lack the refinery capacity to handle the influx of light, sweet crude (many Gulf Coast refineries were built to refine the heavier, lower-quality oil we import). Without further investment in our pipeline and refinery infrastructure, the boom could still go bust.

[Pipeline image courtesy of Shutterstock]

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