The movement of Oklahoma’s energy production to market is very much a geographic story with location at the very center of current Energy themes like markets, competition, capacity, proximity, and movement. “Where?” questions abound as we focus on the movement of oil and gas produced in our state to markets throughout the U.S. and beyond. Given the increase in production from the STACK and the SCOOP plays, industry experts have pipeline infrastructure top of mind as their products move to market. Here’s just a few of the questions we’ll be addressing in this article:
- Where does oil and gas produced in Oklahoma go and how does it reach its destination?
- Where are the market destinations for these products?
- Where will there be growth occurring as production increases in the STACK and SCOOP?
Proximity & Movement – Where does the oil and gas produced in Oklahoma go? How does it get there?
Oklahoma, as a leading U.S. energy producer, defies the notion that production and consumption don’t usually occur in the same place. According to 2015 figures from the EIA, we consume almost half of the energy we produce in this state. Where does the other half go? Much of it is transported through a vast pipeline network to areas of the U.S. where oil and gas are either not produced, or in short supply. Increasingly, our energy products are also being exported for consumption in other parts of the world. So, how does oil and gas produced at the wellhead make its way to from the field to its ultimate destination and in the form its consumed in? <Insert ngpipelines_map.jpg> Many wells drilled in Oklahoma produce oil and natural gas as well as natural gas liquids (NGL’s) such as ethane, propane, butane,
Many wells drilled in Oklahoma produce oil and natural gas as well as natural gas liquids (NGL’s) such as ethane, propane, butane, isobutane, and pentane. This is especially true in the liquids-rich STACK and SCOOP plays where these products must be separated from each other as the first stage of preparation for processing and marketing.
The separation between oil and gas is done just past the wellhead by a piece of equipment appropriately called a “separator.” Natural gas exits the separator and enters a pipeline gathering system where it will be directed either to a natural gas processing plant or directly to the mainline transmission pipeline, depending upon the initial quality of the wellhead product. Gas directed to a processing plant will be processed to remove NGL’s and cleansed of any impurities before continuing to a transmission line feeding in to one of our nation’s market centers or hubs. A hub is a physical transfer point for natural gas where several interstate or intrastate pipelines are connected to local distributors and storage facilities or transmission lines extending throughout (or between) U.S. regions. Some hubs also offer services that facilitate the buying, selling, and transportation of natural gas. These hubs are referred to as Market hubs. The map below depicts the vast network of natural gas intrastate and interstate pipelines connected by hubs/market hubs throughout the nation.
In contrast, oil is directed from the wellhead to gathering systems or stored onsite in tanks until it is ready for transport by truck, ship, rail, or pipeline to a storage facility or market hub. The next destination is a refinery where the oil is processed and made into various products such as gasoline, kerosene, fuel oils, and lubricants. From there, the refined products will be transported closer to where they will be consumed or to a storage facility until the products are needed. Massive oil storage facilities, such as the one located in Cushing, Oklahoma are vital in managing the balance of oil supply and demand as well as prices for various types of oil, such as West Texas Intermediate (WTI), sold in the marketplace.
Where are the markets for Oklahoma oil and gas?
Traditionally, the most OK natural gas production made its way eastward towards Chicago and the Midwest U.S. via transmission pipelines emanating from western Oklahoma.
These transmission lines are integrated into a larger natural gas transportation corridor moving product eastward to the Midwest markets. The map below from the Energy Information Administration (EIA) depicts major natural gas transportation corridors in relation to market centers and hubs across the U.S. As you can see, Oklahoma has 2 main outlets – one emanating from the Oklahoma panhandle and the other originating from central Oklahoma both transporting natural gas to Chicago and other regional markets. This historic route may be changing as production grows in the STACK and SCOOP and competition increases from new production and pipeline infrastructure originating in the East. More on that in the next section.
As for our state’s oil production, it follows a similar, yet alternative path to market. According to the EIA, Oklahoma ranked in the top 5 U.S. oil-producing states in 2015. Oil produced in Oklahoma supplies the 5 refineries located within our state where petroleum products are transported via product pipelines to local markets as well as other states. Produced, unrefined oil may also be routed via pipeline directly to Cushing for storage and/or transmission to other destinations in the Midwest or Gulf Coast for refining.
Capacity – Where will there be growth as production increases in the STACK and SCOOP?
As I’ve described in my previous “Trakin’ the STACK” articles, oil production is on the increase in the Play as well as in the neighboring SCOOP. This means natural gas production is also on the rise causing some industry analysts to express concern that oil production could be negatively without additional infrastructure to move and process gas. In researching for this article, I see several projects are planned or underway to address this issue. The question is, will it be enough?
New/proposed pipeline projects
- Plains All America/Phillips 66 JV Project providing Phillips with more efficient transport of crude to refinery facilities- (oil) STACK expansion Cashion-Cushing, Extending deeper into STACK – new origin 35mi west of Cashion. The project will expand the STACK pipeline capacity from 100,000 barrels per day to as much as 350,000 barrels per day, if there is sufficient demand. The line is expanded to be in service near the end of this year.
- Midship – The 200-mile long Midship Project (gas) will connect production from the Scoop and Stack areas of the Anadarko Basin to the U.S. Gulf Coast and Southeast markets. Its capacity will be up to 1.4 million dekatherms per day. Specifically, laterals, compressor stations and interconnects will send gas to Bennington, Okla., the TexOk hub near Atlanta, Texas and the Perryville Hub near Tallulah, Louisiana.
- Cana/STACK expansion project (CaSE) & Project Wildcat
- Enable Midstream Partners said its planned Project Wildcat pipeline will move up to 400 million cubic feet of natural gas per day to a processing plant and pipeline hub in north Texas. Enable’s Project Wildcat will connect Oklahoma natural gas production to existing processing and pipeline capacity outside the state. Project Wildcat is expected online in the second quarter of 2018.
- Cana and STACK Expansion (CaSE) pipeline project, which is designed to transport up to 205 million cubic feet of natural gas per day from the STACK to existing natural gas markets.
- Oklahoma Express – EnLink Midstream Partners – Current operations = Gas Gathering, compression, Processing, Future operations = Crude/condensate gathering, storage,
- Expanded Growth Platform. EnLink has the opportunity to build out the Tall Oak systems by connecting its existing Cana assets to the Tall Oak assets, which would create a super-system in the heart of the STACK play. Longer term plans include the potential for connecting EnLink’s Oklahoma assets to EnLink’s North Texas assets through a multi-phase pipeline development called the Oklahoma Express project. Tall Oak also holds crude oil dedications from major customers on its gas gathering and processing system including Felix. EnLink expects to work closely with Devon and other STACK customers to develop a mutually-beneficial crude oil gathering system.
- Semgroup – Canton and Glass Mountain expansions
- Tulsa-based SemGroup Corp.’s Canton Pipeline will connect the company’s natural gas processing complex in northern Oklahoma to the STACK play, initially transporting up to 200 million cubic feet per day, with the ability of expanding to 400 million cubic feet per day. SemGroup’s Canton Pipeline is designed as a 24-inch pipeline that would extend about 50 miles from the company’s Rose Valley processing facility in Woods County to north central Blaine County. The project is expected online by the end of the year.
- In the same area, SemGroup’s jointly owned Glass Mountain Pipeline LLC is building a 44-mile pipeline extension to move STACK oil to the Cushing storage hub, where it will have access to Mid-Continent and Gulf Coast refineries. That project also is expected online by the end of the year.
In a future article, we’ll check in on the progress of these projects and any additional ones that might be planned. Feel free to reach me at [email protected], I’m always ready to help.
Julie Parker has a decade of experience serving the Energy industry where she became an expert in the integration and application of geospatial technologies to exploration and production projects and workflows. Ms. Parker entered the industry in 2006 when she became the first GIS Director for Chesapeake Energy, a large independent producer of natural gas headquartered in Oklahoma City, Oklahoma with operations throughout the U.S. During her tenure at Chesapeake, Ms. Parker built and lead a robust, cross-functional GIS department that gained a reputation for developing and deploying leading edge solutions for nearly all areas of the company.