Adds Magellan comment, detials on conversion.
Magellan Midstream Partners is looking for ways to increase crude storage on its system, including converting space at a marine terminal along the Houston Ship Channel in Texas.
The company is considering converting space at its Galena Park terminal to crude storage, Magellan said today while reporting first quarter earnings.
"We are in the process of evaluating the conversion of a portion of our clean product storage into crude storage at Galena Park," the company told Argus. Magellan declined to specify how much crude storage could be added at the facility.
US storage is filling up rapidly as efforts to contain the Covid-19 pandemic have caused a plummet in oil demand. Crude storage at the key Cushing, Oklahoma, hub has increased by 20.5mn bl in the four weeks ended on 24 April, the US Energy Information Administration said earlier this week.
Midstream companies have warned that Cushing could fill next month. The rapid rise of US storage stocks along with other factors wreaked havoc in the crude market last week, with the WTI front-month futures contract plunging to a negative settle of -$37.63/bl on 20 April, a historic first. Front-month prices have since rebounded into positive territory.
Midstream operators are trying to find creative ways to help producers find new storage locations for crude. US midstream company Energy Transfer is weighing a plan to store crude in idle pipelines. Phillips 66 is offering on-system crude storage on its 900,000 b/d Gray Oak pipeline from the Permian basin in west Texas to the US Gulf coast.
The US government is also leasing space in its Strategic Petroleum Reserve (SPR) to domestic producers.
