F1: MIDCONTINENT CRUDE LOGISTICS
EXPECTATION VS. REALI TY
One might think that Midcontinent crude logistics is simple.
The reality of Midcontinent crude logistics tends to be
Gathering System Pipeline Movement Pipeline Movement
Refinery Delivery Refinery Delivery
F2: MULTIPLE PIECES OF THE LOGISTICS PUZZLE
Vessel movement Vessel movement
Railcars may be used for storage of crude oil while waiting to load a tanker.
Even without trucking or blending, the movement to export markets can become complex.
Multiple destinations create opportunities but also add complexity.
exporting near the same level as Kuwait or Nigeria. These
countries’ economies are almost entirely dependent upon crude
oil exports, which means US exports can be expected to change
a lot more than Midcontinent logistics in future years.
EXPORT LOGISTICS – A NEW LOGISTICS PUZZLE
For some grades of crude, exporting means that the blending
step can be eliminated, resulting in cost reductions and fewer
management headaches such as the need to balance light and
heavy crude movements across stations to facilitate blending.
Similarly, if one’s light crude is already trucked directly to Gulf
Coast refineries, it could be trucked a few more miles to offload
to a tanker (if the tanker is onloading). The ports that export
crude oil are located in the same cities as the Gulf Coast refineries that much of the Midcontinent crude oil traditionally
flows to. So, except for blending in some instances, all of the
existing pieces of the Midcontinent Logistics Puzzle remain.
New pieces of the logistics puzzle are added for vessels as
existing pieces like railcars may be used differently and the
pieces may be re-arranged. Exporting Midcontinent crude oil
can be very profitable, but it also presents organizations with
a very complicated transportation puzzle. Since storage facilities
near the ports are generally dedicated to feedstocks, crude may
be stored at existing stations for longer periods of time as it
waits for tankers. Another option is to use railcars for the leg
to the port and store the crude in the railcars while it awaits a
tanker. Ocean-going vessels are an entirely different transportation method than trucks, railcars, pipelines, or even barges.
They have different processes, regulations, cost structures, and
terminology than trucks, railcars and pipelines. This all has to
be internalized by the logistics organization to enable effective
Tankers also open up an entirely new set of destinations for
crude oil and the possibility of multiple destinations on the