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Ships Shore Up US Energy Infrastructure


The shale boom has given the US a massive windfall of new natural gas and oil, and it’s happened very quickly. So quickly, in fact, that the infrastructure to bring these resources to market has struggled to keep up. In the past three years, Texas’s Eagle Ford shale formation went from producing nearly zero barrels of oil to more than 500,000 per day. That oil needs to wend its way toward refineries along the eastern Gulf Coast, but a lack of pipelines is creating a bottleneck.

Fortunately, American industry is nothing if not resourceful: most of this oil is now being transported to these refineries by ship. And the change is happening quickly: the number of tankers carrying oil from shipping hubs in Texas to refineries along the eastern Gulf Coast has jumped six-fold since February. Reuters reports:

While the eastern Gulf Coast is a refining hub, pipeline capacity to move oil from west Texas is limited and the region has relied largely on imports. Shipments from the port of Corpus Christi have surged from near zero to more than 340,000 barrels per day, over half of total Eagle Ford output, in the past year. Two-thirds of that oil has remained in the Gulf, with much of the rest heading to Canada, shipping data shows. […]

Meanwhile, new pipelines are being built, and existing pipelines are being adapted to account for the new supply:

[S]ome refiners currently taking Eagle Ford crude by tanker may soon have cheaper options. By the end of 2013, the reversal of a crude pipeline from Houston to Houma, Louisiana, will pump up to 250,000 bpd to the eastern Gulf of Mexico for rates as low as 59 cents per barrel.

Reworking America’s energy infrastructure is going to take some time. But while infrastructure catches up to supply, oil and gas companies will continue to find creative ways to bring their products to market. Whether by rail, as much of the oil coming out of North Dakota’s Bakken shale has to be transported, or by ship, as Texas’s oil is now travelling, we’re finding ways to keep shale booming.

[Oil tanker image courtesy of Wikimedia]

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  • Corlyss

    The story of how the first oil pipelines came to be used for transport over long distances warms my tiny little capitalist heart. Pierpont Morgan colluded with Tom Scott, Carnegie’s mentor, to jack the transport charges on Rockefeller’s oil barrel shipments by train. To counter that, Rockefeller built a pipeline east, and one-upped Scott and Morgan, left ’em with all that rolling stock and nothing, or very little, to carry on it. Ahhhhhh those were the good ol’ days . . . .

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