Plains Resources Inc., Oklahoma City, plans to build a 7 million bbl crude oil tank farm at Cushing, Okla.
Plains has acquired a 280 acre site at the Cushing pipeline interchange for the $60 million facility. It is designed to be a major interconnect and segregation point for crude oil moving through the Cushing complex.
Construction is to begin late this year.
Plains Pres. Patrick Collins said, "Shortfalls in storage capacity at Cushing are expected to reach critical levels in the near future as domestic production continues to decline and inland refiners grow increasingly reliant on long haul shipments of crude oil for feedstock."
An Oil & Gas Journal assessment late last year showed an increasing strain on Gulf Coast-Midwest crude oil pipelines as a result of inland refiners' demand for waterborne imports (OGJ, Dec. 24, 1990, p. 14).
Plains intends to open its storage facility to producers, crude oil traders, and marketers who require storage at Cushing for transactions on the futures and spot markets, as well as to refiners who rely on the interchange.
The company is holding talks with oil producers and trading, marketing, and refining companies that have expressed an interest in participating in the project.
"New storage capacity at the interchange will not only benefit refiners and transporters, but it should also increase independent producers' ability to hedge production against widely fluctuating prices," Collins said.
The Cushing interchange is the largest wet barrel trading hub in the U.S., as well as the delivery point for crude oil futures contracts traded on the New York Mercantile Exchange.
Plains' new facility is to connect with all major transporters in the exchange area and increase Cushing storage capacity by about 30%.
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