Crude oil oversupply at the Cushing, Oklahoma, storage hub is likely to continue through 2016, given the surge in US and Canadian production and the constraints from insufficient pipeline infrastructure, an industry expert said Thursday.
In fact, so great is the emerging production from US shale plays and Canadian oil sands thanks to new technologies, that it will likely rival, if not exceeded, peak production of the early 1970s, Russell Braziel, a vice president with Bentek Energy, said at the Platts sixth annual Pipeline Development and Expansion conference in Houston. Bentek is a unit of Platts, a division of The McGraw-Hill Companies.
It is an ironic twist, Braziel said, for a fossil-based industry that was largely "left for dead" just a few years ago.
The shift is also seen in the geographic boundary between production and demand. With natural gas, the challenge was to cross the "great divide" between production in the Midwest to the demand in the US East Coast.
The recently- built network of pipelines has erased that divide For crude and NGL that dynamic has shifted 45 degrees, with production in North, struggling to make to the markets in the US Gulf Coast, he said.
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