Processing Magazine

Oklahoma oil producers call for pipeline infrastructure improvement

November 27, 2012

TULSA, Okla. — U.S. oil production is facing a bright future, according to various estimates, some of which even see the country becoming the largest oil producer globally in several years'' time. But in order to capitalize on the growing possibilities and to utilize resources to their full capacity, the country''s oil industry needs to improve on its infrastructure, the Tulsa World has reported.

According to industry representatives, the current pipeline infrastructure does not match the increased production of oil in the United States. Bruce Heine, spokesman for Magellan Midstream Partners LP, commented that while the growing output of the industry is certainly a positive development, it needs to be accompanied by investments in a new pipeline system because pipelines are safer and more reliable than other means of crude oil transportation. The Tulsa-based company used to operate a refined petroleum pipeline before 2010 but is currently involved in a couple of major pipeline projects in Texas, set to be completed and in action over the course of a year or two.

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Another Tulsa-based company, ONEOK Partners LP, which specializes in natural gas infrastructure, is also looking for its place in the crude oil business. It intends to have the 1,300-mile Bakken Crude Express, which is planned to ship oil from the Bakken Shale to Oklahoma''s Cushing center, completed by 2015. Bakken Shale, situated in North Dakota, is one of the richest sources of oil in the United States, a staple for the much-desired U.S. energy independence. Over 600,000 barrels per day are produced in North Dakota alone, statistics reveal.

The solid performance of these and other businesses in Oklahoma has contributed to a 15-year high crude oil numbers, whereas nationwide, levels have reached their highest point since May 1994, with total oil output of 6.7 million barrels per day, figures from the Energy Department show. Thanks to the increased domestic output, not just in Oklahoma, oil imports by the United States have dropped by 11 percent in the year so far.

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Oklahoma ranks fifth in oil production, lagging behind only Texas, North Dakota, Alaska and California. According to data from the U.S. Energy Information Administration, the state''s oil production came in at 7.28 million barrels in August, which marks the highest point in output level since March 1997.

Bob Sullivan, chairman of the Oklahoma Independent Petroleum Association and head of oil firm Sullivan and Co., is convinced that the growth in the sector could continue in the long run, provided a future economic decline does not restrict consumption and cause prices to fall. However, he raised concerns that action from the government might have an impact on the industry.

Oil production in the United States has been given a mighty push forward over the past few years because of the shale gas boom. However, Sullivan and other industry representatives fear that the government might interfere because of worries that shale production practices reduce water quality.